Choose the letter of the correct answer.

1.

Is an official document that empowers a Revenue Officer to examine and scrutinize a taxpayer’s
books of accounts and other accounting records, in order to determine. The taxpayer’s correct
internal revenue tax liabilities.

a. Letter of Authority (LOA)

b. Letter Notice (LN)

c. Preliminary assessment notice (PAN)

d. Final assessment notice (FAN)

2. Statement 1: The Bureau of Internal Revenue (BIR) must issue an LOA prior to issuing a PAN,
FAN or FDDA.

Statement 2: Absence of a Letter of Authority makes the assessment unauthorized and thus,
void.

a. Only statement 1 is correct

b. Only statement 2 is correct

c. Both statements are correct

d. Both statements are incorrect

3. Is issued if after review and evaluation by the Commissioner or his duly authorized
representative, as the case may be, it is determined that there exists sufficient basis to assess
the taxpayer for any deficiency tax or taxes.

a. Preliminary assessment notice (PAN)

b. Final assessment notice (FAN)

c. Final letter of demand (FLD)

d. Final decision on a disputed assessment (FDDA)

4. As a rule, PAN is issued to a taxpayer as the first step in assessment. It serves as notice that
the taxpayer still has some taxes due. PAN is issued when:

a. The taxpayer fails to file a return

b. The taxpayer files a return but fails to pay the tax

c. Tax taxpayer pays the tax but the same is insufficient

d. All of the above

5. Preliminary assessment notice is not required in the following cases, except:

a. Tax deficiency is due to mathematical error

b. Tax deficiency is due to unpaid VAT

c. Tax deficiency is due to unpaid excise taxes

d. Tax deficiency is due to withholding tax

PAN is not required in the following cases:

 When the finding for any deficiency tax is the result of mathematical error in the
computation of the tax as weappearing on the face of the return; or
 When a discrepancy has been determined between the tax withheld and the amount
actually remitted by the withholding agent, or
 When a taxpayer who opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was my determined to have carried over and
automatically applied the same amount claimed against the estimated tax liabilities for
the taxable quarter or quarters of the succeeding taxable year, or
 When the excise tax due on excisable articles has not been paid, or
 When an article locally purchased or imported by an exempt person, such as, but not
limited
 To, vehicles, capital equipment, machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.

6. A written notice and demand by the BIR on the taxpayer for the settlement of a due tax
liability that is there definitely set and fixed-

a. Assessment

b. Forfeiture

c. Audit engagement letter

d. Institution of criminal action

7. A pre-assessment notice is required

a. When a discrepancy has been determined between the amount of sales declared and the
purchases recorded by the seller’s customers.
b. When a discrepancy has been determined between the tax withheld and the amount actually
remitted by the withholding agent.

c. When an article locally purchased or imported by an exempt person has been sold, traded or
transferred to non-exempt persons.

d. When the deficiency tax is the result of mathematical errors in the computations appearing
on the face of the return.

8. Statement 1: The formal letter of demand (FLD)/final assessment notice (FAN) shall be issued
by the Commissioner or his duly authorized representative.

Statement 2. The FLD/FAN calling for payment of the taxpayer’s deficiency tax or taxes shall
state the facts, the law, rules and regulations, or jurisprudence on which the assessment is
based; otherwise, the assessment shall be void.

a. Only statement 1 is correct

b. Only statement 2 is correct

c. Both statements are correct

d. Both statements are incorrect

9. Which of the following statements is not true?

a. If a taxpayer is acquitted in a criminal violation of the Tax Code, this acquittal does not
exonerate him from his civil liability to pay the taxes.

b. A conviction for tax evasion is not a bar for collection of unpaid taxes.

c. A tax assessment is necessary to a criminal prosecution for willful attempt to defeat and
evade payment of taxes.

d. Criminal proceedings under the Tax Code is now a mode of collection of internal revenue
taxes,

fees or charges.

10. Where a return was filed, as a general rule, the prescriptive period for assessment after the
date the return was due or was filed, whichever is later, is within

a. Three years

c. Five years

b. Ten years
d. Answer not given

11. Allan filed his ITR for 2018 on October 15, 2019. The last day for BIR to assess is on?

a. October 15, 2024

b. October 15, 2022

c. April 15, 2022

d. October 14, 2022

12. Donor’s tax return for a donation made on January 15, 2018 was filed on January 31, 2018.
Last day for BIR to assess is on?

a. February 28, 2021

b. January 31, 2021

c. February 14, 2021

d. January 15, 2021

13. Based on the preceding number, but assume the return filed was fraudulent and was
discovered on March 31, 2018. The last day for BIR to assess is on?

a. February 28, 2028

b. January 31, 2028

c. February 14, 2028

d. March 31, 2028

14. Mr. A seasonably filed a protest and submitted supporting documents with the BIR. Within
how many days shall the former await the decision of latter before he assumes that the protest
has been indirectly denied?

a. 180 days

b. 90 days

c. 60 days

d. 30 days

15. If the taxpayer did not file a return, what is the prescriptive period for the issuance of Final
Assessment Notice?

a. Three (3) years counted from the time of filing or deadline whichever is earlier
b. Three (3) years counted from the time of filing or deadline whichever is later

c. Ten (10) years counted from the time of filing or deadline for filing whichever is later

d. Ten (10) years counted from the date of discovery by the Bureau of Internal Revenue that no
return was filed.

16. Rosalie, a compensation income earner, filed her income tax return for the taxable year
2015 on March 30, 2016. On May 20, 2019, Rosalie received an assessment notice and letter of
demand covering the taxable year 2015 but the postmark on the envelope shows April 10,
2019. Her return is not a false and fraudulent return. Can Rosalie raise the defense of
prescription?

a. No. The 3 year prescriptive period started to run on April 15, 2016, hence, it has not yet
expired on April 10, 2019.

b. Yes. The 3 year prescriptive period started to run on April 15, 2016, hence, it had already
expired by May 20, 2019.

c. No. The prescriptive period started to run on March 30, 2016, hence, the 3 year period
expired on April 10, 2019.

d. Yes. Since the 3-year prescriptive period started to run on March 30, 2016, it already expired
by May 20, 2019.

17. On April 15, 2016, the Commissioner of Internal Revenue mailed by registered mail the final
assessment notice and the demand letter covering the calendar year 2012 with the QC Post
Office. Which statement is correct? (2012 Bar Question)

A. The assessment notice is void because it was mailed beyond the prescriptive period;

b. The assessment notice is void because it was not received by the taxpayer within the three-
year period from the date of filing of the tax return;

c. The assessment notice is void if the taxpayer can show that the same was received only after
one (1) month from date of mailing;

d. The assessment notice is valid even if the taxpayer received the same after the three-year
period from the date of filing of the tax return.

18. On March 30, 2016 Emmett Foods, Inc. received a notice of assessment and a letter of
demand on its April 15, 2012 final adjustment return from the BIR. Emmett Foods then filed a
request for reinvestigation together with the requisite supporting documents on April 25, 2015.
On June 2, 2015, the BIR issued a final assessment reducing the amount of the tax demanded.
Emmett Foods was satisfied with the reduction, it did not do anything anymore. On April 15,
2020 the BIR garnished the corporation’s bank deposits to answer for the tax liability. Was the
BIR action proper (2012 Bar Question)?

a. Yes. The BIR has 5 years from the filing of the protest within which to collect.

b. Yes. The BIR has 5 years from the issuance of the final assessment within which to collect.

c. No. The taxpayer did not apply for a compromise.

d. No. Without the taxpayer’s prior authority, the BIR action violated the Bank Deposit Secrecy
Law.

19. On March 10, 2018, Continental, Inc. received a preliminary assessment notice (PAN) dated
March 1, 2018 issued by the Commissioner of Internal Revenue (CIR) for deficiency income tax
for its taxable year 2016. It failed to protest the PAN. The CIR thereupon issued a final
assessment notice (FAN) with letter of demand on April 30, 2018. The FAN was received by the
corporation on May 10, 2018, following which or on May 25, 2018, it filed its protest against it.
The CIR denied the protest on the ground that the assessment had already become final and
executory, the corporation having failed to protest the PAN. Is the CIR correct? (2010 Bar
Question)

a. Yes. The FAN shall become final and executory upon failure of the taxpayer to protest the PAN
within 15 days from receipt thereof.

b. No. The issuance of preliminary assessment notice (PAN) does not give rise to the right of the
taxpayer to protest. What can be protested by a taxpayer is the final assessment notice (FAN) or
that assessment issued following the PAN. Since the FAN was timely protested, within 30 days
from receipt thereof, the assessment did not become final and executory.

c. Yes. The BIR has the sole discretion to accept or deny any protest from the taxpayer.

d. None of the above.

20. Omega Corporation received a notice of assessment and a letter from the BIR demanding
the payment of P3 million pesos in deficiency income taxes for the taxable year 2018. The
financial statements of the company show that it has been suffering financial reverses. Its asset
position shows that it could pay only P500,000.00 which it offered as a compromise to the BIR.
Which among the following may the BIR require to enable it to enter into a compromise with
Omega?

a. Omega must show it has faithfully paid taxes before.

b. Omega must promise to pay its deficiency when financially able.

C. Omega must waive its right to the secrecy of its bank deposits.
d. Omega must immediately deposit the P500,000 with the BIR.

21. _______Refers to a plea of re-evaluation of an assessment on the basis of existing records

without need of additional evidence. It may involve a question of fact or of law or both.

a. Formal letter of demand

b. Preliminary assessment notice

c. Request for reconsideration

d. Request for re-investigation

22. ______Refers to a plea of re-evaluation of an assessment on the basis of a newly discovered

Or additional evidence that a taxpayer intends to present in the reinvestigation. It may involve a

Question of fact or of law or both.

a. Formal letter of demand

b. Preliminary assessment notice.
c. Motion for reconsideration
d. Motion for re-investigation

23. The taxpayer shall state in his protest:

a. The nature of protest, whether reconsideration or reinvestigation, specifying newly

discovered

or additional evidence he intends to present if it is a request for reinvestigation.

b. Date of the assessment notice

c. The applicable law, rules and regulations, or jurisprudence, on which his protest is based.

d. All of the above

24. As a rule, within what period must a taxpayer elevate to the Court of Tax Appeals a denial of
his application for refund of income tax overpayment?

a. Within 30 days from receipt of the Commissioner’s denial of his application for refund.

b. Within 30 days from receipt of the denial which must not exceed 2 years from payment of
income tax.

c. Within 2 years from payment of the income taxes sought to be refunded.

d. Within 30 days from receipt of the denial or within two years from payment.

25. What is the effect on the tax liability of a taxpayer who does not protest an assessment for
deficiency taxes?

A. The taxpayer may appeal his liability to the CTA since the assessment is a final decision of the
Commissioner on the matter.

b. The BIR could already enforce the collection of the taxpayer’s liability if it could secure
authority from the CTA.

c. The taxpayer’s liability becomes fixed and subject to collection as the assessment becomes
final and collectible.

d. The taxpayer's liability remains suspended for 180 days from the expiration of the period to
protest.

Answer: C

26. The taxpayer seasonably filed his protest together with all the supporting documents. It is
already July 31, 2021, or 180 days from submission of the protest but the BIR Commissioner has
not yet decided his protest. Desirous of an early resolution of his protested assessment, the
taxpayer should file his appeal to the Court of Tax Appeals not later than

a. August 31, 2021

b. August 30, 2021

c. August 15, 2021

d. August 1, 2021

27. Mr. Alvarez is engaged in the retail business. He received a deficiency tax assessment from
the BIR containing only the computation of the deficiency tax and the penalties, without any
explanation of the factual and legal bases for the assessment. Is the assessment valid?

a. The assessment is invalid; the law requires a statement of the facts and the law upon which
the assessment is based.

b. The assessment Is valid; all that Mr. Alvarez has to know is the amount of the tax.

c. The assessment is valid but Mr. Alvarez can still contest it.

d. The assessment is invalid because Mr. Alvarez has no way to determine if the computation is
erroneous.
28. Which among the following circumstances negates the prima facie presumption of
correctness of a BIR assessment?

a. The BIR assessment was seasonably protested within 30 days from receipts.

b. No preliminary assessment notice was issued prior to the assessment notice.

c. Proof that the assessment is utterly without foundation, arbitrary, and capricious.

d. The BIR did not include a formal letter of demand to pay the alleged deficiency.

29. What is the effect on the tax liability of a taxpayer who does not protest an assessment for
deficiency taxes?

a. The taxpayer may appeal his liability to the CTA since the assessment is a final decision of the
Commissioner on the matter.

b. The BIR could already enforce the collection of the taxpayer’s liability if it could secure
authority from the CTA.

c. The taxpayer’s liability becomes fixed and subject to collection as the assessment becomes
final and collectible.

d. The taxpayer's liability remains suspended for 180 days from the expiration of the period to
protest.

30. Statement 1: A tax due from the taxpayer whose amount does not justify the expenses to be
incurred in collecting it may be compromised.

Statement 2: In case of false or fraudulent return with intent to evade the tax, assessment may
be validly made on the 10th year from discovery thereof and collection may be effected within
five (5) years thereafter.

a. Both statements are correct

b. Both statements are not correct

c. Only the first statement is correct

d. Only the second statement is correct

31. Statement 1: Where the tax withheld as shown on the tax return and the actual tax remitted
by the withholding agent to the Bureau of Internal Revenue (BIR) do not match, a final notice of
assessment (FAN) may be issued without need of a pre-assessment notice.
Statement 2: The taxpayer who filed a protest case has 180 days from the filing of the written
request for reinvestigation to elevate an appeal to the Court of Tax Appeals (CTA) in case the
Commissioner of Internal Revenue (CIR) fails to act on the protest.

A. Both statements are correct

b. Both statements are not correct

c. Only the first statement is correct

d. Only the second statement is correct

32. Albert received a final assessment notice (FAN) from the BIR on October 30, 2019. He
submitted his protest and the supporting documents within the time prescribed by the Law.
After 180 days, the subsequent step/s available to him shall be:

1. Elevate the case on appeal to the CTA, alleging inaction of the CIR, within 30 days from the
180th day since he submitted the supporting documents on his protest.

II. Wait for the decision of the Commissioner of Internal Revenue (CIR) and if adverse, appeal
the case before the CTA within thirty days.

a. I only

b. II only A

c. I and II

d. I or II

33. The taxpayer seasonably filed his protest together with all the supporting documents. It is
already July 31, 2023, or 180 days from submission of the protest but the BIR Commissioner has
not yet decided his protest. Desirous of an early resolution of his protested assessment, the
taxpayer should file his appeal to the Court of Tax Appeals not later than:

a. August 31, 2023

b. August 30, 2023.

c. August 15, 2023

d. August 1, 2023

34. Spanflex Int’l Inc. received a notice of assessment from the BIR. It seasonably filed a protest
with all the necessary supporting documents but the BIR failed to act on the protest. Thirty days
from the lapse of 180 days from the filing of its protest, Spanflex still has not elevated the
matter to the CTA. What remedy, if any, can Spanflex take? (2011 Bar Question)
a. It may file a motion to admit appeal if it could prove that its failure to appeal was due to the
negligence of counsel.

b. It may no longer appeal since there is no BIR decision from which it could appeal.

c. It may wait for the final decision of the BIR on his protest and appeal it to the CTA within 30
days from receipt of such decision.

d. None. Its right to appeal to the CTA has prescribed.

35. The running of the prescriptive period for assessment is suspended, except.

a. When the taxpayer requests for a reinvestigation which is granted by the Commissioner of
internal revenue;

b. When the warrant of distraint has been duly served upon the taxpayer and no property could
be located

c. When the taxpayer is out of the Philippines;

d. If the taxpayer informs the Commissioner of any change in address.

36. Statement 1: A tax retum, statement or declaration filed by a taxpayer may be modified by
the taxpayer.

Statement 2: When a letter of authority or investigation of tax return, statement or declaration

has been actually served upon the taxpayer, amendment of such return shall no longer be
allowed.

a. Statements 1 and 2 are false

b. Statement 1 is true but statement 2 is false

c. Statement 1 is false but statement 2 is true

d. Statements 1 and 2 are true

37. Which of the following statements is incorrect?

a. The prescriptive period of three (3) years commences to run after the date the return is due
(last day prescribed by law for filing) or filed, whichever comes later.

b. If the return is filed before the last day for filing, the prescriptive period begins to run only
from such last day.

c. If the return is filed after the last day or due date, the period shall be counted from the day
the return is filed.
d. If the return was amended substantially, the period starts from the due date of the return.

38. Zenaida filed her 2018 Income Tax Retum (ITR) on April 10, 2019. On June 20, 2019, she filed
an amended return which is substantially different from the original return. The last day to
release, mail or send an assessment is-

a. April 10, 2022

b. April 15, 2022

c. June 20, 2022

d. June 20, 2024