WAIVER OF STATUTE OF LIMITATION (BEYOND 3 YEARS) by Facebook.com/EmelinoTMaestro

WAIVER OF STATUTE OF LIMITATION (BEYOND 3 YEARS)
by Facebook.com/EmelinoTMaestro

To extend the prescriptive period for the BIR to assess taxpayer’s tax liabilities, the BIR requested the taxpayer to execute a series of waivers of the statute of limitations. But the Court declared the waivers executed by the taxpayer as defective for the following reasons, among others: (1) the signatory signed the waivers without any notarized written authority from the taxpayer’s Board of Directors; (2) the respective dates of their acceptance by the BIR were not indicated in the waivers. The waivers, being defective, have no binding effect on the taxpayer. (Next Mobile, Inc. vs. Commissioner of Internal Revenue, CTA Case No. 7965, December 11, 2012)

K Corp, through its accountant, executed two Waivers of Defense of Prescription. The Bureau of Internal Revenue (“BIR”) issued an assessment, which K Corp duly protested. The BIR denied the protest and required K Corp to pay deficiency tax liabilities. In its petition for review before the Court of Tax Appeals (“CTA”), K Corp raised the defense of prescription on the ground that the waivers executed by its accountant were invalid and thus did not extend the BIR’s period to assess. The Court held that the waivers were defective for the following reasons: (a) the waivers were executed without the notarized written authority of the accountant to sign on behalf of K Corp; (b) the waivers failed to indicate the BIR’s date of acceptance of the same; and (c) the fact of receipt by K Corp of its file copy was not indicated in the original copies of the waivers. A valid waiver should strictly comply with the requirements set forth in RMO 20-90 and RDAO 05-01, otherwise the period to assess will not be tolled and prescription will set in. (Commissioner of Internal Revenue v. Kudos Metal Corporation, G.R. No. 178087 dated May 5, 2010)

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Thanks for sharing this.