Proposed taxpayer bill of rights
Credit to Author: Euney Marie Mata-Perez| Date: Wed, 26 Feb 2020 17:18:19 +0000
In my article titled “Model taxpayer charter” that was published in The Manila Times on Nov. 15, 2018, I discussed the need for a taxpayer charter to protect taxpayers against threats on their rights, especially in the advent of various world-wide initiatives such as Base Erosion and Profit Shifting Action Plans (BEPS) and the drive of governments to raise revenues.
Thus, it is pleasing to know that on Nov. 11, 2019, Sen. Ralph Recto filed Senate Bill (SB) 1163, a proposed act ordaining a Bill of Rights for Taxpayers. In his explanatory note, Recto acknowledged the need to protect taxpayers vis-à-vis the government’s mandate to collect revenues pursuant to the National Internal Revenue Code (NIRC) and the Customs Modernization and Tariff Act (CMTA), as implemented by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC), respectively.
SB 1163 divided the bill of rights into three main pillars, namely: taxpayers’ basic rights; taxpayers’ rights in civil cases; and taxpayer’s rights in criminal cases.
The taxpayers’ basic rights set out in SB 1163 are as follows:
– The right to be informed of any pending assessment or investigation for criminal cases;
– The right to obtain simple, nontechnical statements, which explain the reason for audit selection and the procedures, remedies and rights available during audit, appeals and collection proceedings;
– The right to have a speedy and impartial disposition of cases, the right to due process, and the observance of rules regarding assessments, refunds or any other proceedings, including request for advisory rulings, clearances, termination letters and lifting of seizure, garnishment and forfeiture orders;
– The right to privacy, and the right to have any case or proceeding, including third-party information requests, to be devoid of publicity;
– The right to have taxpayer’s tax information kept confidential unless otherwise authorized by law;
– The right to fair and consistent application of the tax laws;
The right to have the BIR begin and complete its audits in a timely and expeditious manner after notification of intent to audit through a letter of authority;
– The right to request for installment payment of tax liabilities under any compromise settlement or any assessed tax liabilities;
– The right to recover attorney’s fees and litigation costs for tax assessments made without substantial justification, and for claims for refunds which are not acted upon for an unreasonable length of time at the administrative level, or denied at the administrative level but subsequently allowed by the Court of Tax Appeals (CTA) if it appears that such denial is unjustified;
– The right to have interests and penalties abated in case of any unjustified error or delay caused by the tax authorities or their agents, including ministerial acts such as loss of records, personnel transfers, etc.; and
– The right to have the assistance of counsel in criminal proceedings, should the taxpayers request for it.
There are eight proposed rights of taxpayers in civil cases and six rights of taxpayers in criminal cases. (We will discuss these other rights in more detail in the next article).
The right to due process, which includes the right to be informed of the facts and law upon which an assessment is based, has been settled and upheld by the courts. However, some rights are newly expressed, such as the taxpayer’s right to recover attorney’s fees for baseless assessments and the right to speedy disposition of cases and rulings. It is a known fact that the BIR is still slow in releasing and issuing rulings.
The taxpayer’s bill of rights though should also set out principles of good taxation, as a foundation or basis, such as the following: the right to a fair and equitable tax system that is administered fairly, honestly and with integrity, according to the law, without bias or preference; the right to have tax rules and system which are clear and certain; and, in case of appeals, the right to be entitled to an independent, objective, speedy and cost-effective appeal process.
SB 1163 proposes the creation of the office and the appointment of a National Taxpayer Advocate (NTA), who shall be under the Office of the President. The main functions of the NTA include: assisting taxpayers in resolving their problems with the BIR and BoC; proposing changes to the administrative practices of the BoC and BIR; identifying needed legislative changes; and issuing taxpayer assistance orders, upon application of taxpayers who are suffering or about to suffer significant hardships as result of the manner in which tax laws are being administered by the BIR, BoC, or the local treasurer.
SB 1163 provides that violations of the bill of rights of rights are punishable by imprisonment of not less than six years but not more than twelve years, and a fine of not less than P100,000, but not more than P500,000.
Without a doubt, the filing of SB 1163 and, hopefully, its passage will benefit taxpayers.
The charter or bill of rights, if seriously followed, will definitely foster a relationship of mutual trust respect between taxpayers and tax authorities.
As mentioned in my article dated Nov. 15, 2018, the Asia-Oceania Tax Consultants’ Association, the Confédération Fiscale Européenne, and the Society of Trust and Estate Practitioners collaborated on the development of a Model Taxpayer Charter. The Model Taxpayer Charter is accessible online at http://www.taxpayercharter.com. Such model charter can also be a basis in the adoption of our taxpayer bill of rights.
Euney Marie J. Mata-Perez is a CPA-lawyer and the managing partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). She is a corporate, M&A and tax lawyer. She is the president of the Asia-Oceana Tax Consultants’ Association. This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. If you have any question or comment regarding this article, you may email the author at info@mtfcounsel.com or visit MTF website at www.mtfcounsel.com.