Who should receive the Formal Letter of Demand and Final Assessment Notice?

Considering the prescriptive period to assess, the Final Assessment Notice (FAN)/ Final Letter of Demand (FLD) should be issued by the BIR Commissioner or his duly authorized representative within such prescribed period, unless there is a waiver of said statute of limitations to assess as agreed between the BIR and the taxpayer. The FAN/FLD, which requires the payment of the assessed deficiency taxes, should state the facts, the law, rules and regulations, or jurisprudence on which the assessment is based; otherwise, the formal letter of demand and assessment notice shall be void.
Likewise, service of the FAN/FLD to the taxpayer should be made only by registered mail or by personal delivery. If sent by personal delivery, the taxpayer or his duly authorized representative shall acknowledge receipt thereof in the duplicate copy of the letter of demand, showing the following: (a) His name; (b) signature; (c) designation and authority to act for and in behalf of the taxpayer, if acknowledged received by a person other than the taxpayer himself; and (d) date of receipt thereof.
It is therefore imperative on the part of the tax authorities to comply with these requirements in order to validly assert the right of the Government to assess and collect the correct taxes from the taxpayers. The necessity of these requirements is recognized by the Supreme Court in one case, in which it held that “the issuance of a valid formal assessment is a substantive prerequisite to tax collection, for it contains not only a computation of tax liabilities but also a demand for payment within a prescribed period, thereby signaling the time when penalties and interests begin to accrue against the taxpayer and enabling the latter to determine his remedies therefor. Due process requires that it must be served on and received by the taxpayer.” 
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BIR HALTING PROBES: LOA O ELA

BIR TO HALT TAX AUDIT AND PROBES

The Commissioner of Internal Revenue (CIR) has issued Revenue Memorandum Order No. 26-2016 dated 13 June 2016 (the "Order") to prescribe policies and uniform guidelines and procedures in handling disputed assessments and in issuing Final Decision of Disputed Assessment (FDDA) and revision thereof by the CIR.

The Order provides the following guidelines and policies, among others:

1. A taxpayer must be given an opportunity to explain his/her/its objection to an assessment and present necessary supporting documents before an FDDA is issued.
2. Protest against a Preliminary Assessment Notice (PAN) is not mandatory.
3. Final Assessment Notice (FAN) and Formal Letter of Demand (FLD) shall be issued 15 days from date of receipt by taxpayer of the PAN, whether protested or not.
4. If the taxpayer accepts and pays the assessment fully or partially upon receipt of the PAN, a FAN/ FLD shall be issued to formalize the assessment. Payment Form 0605 shall be filed and paid to acknowledge and provide evidence for the settlement of the assessment or portion thereof.
5. Within 30 days from receipt of FAN/FLD, taxpayers shall either accept the assessment fully or partially and pay the amount due, or protest the assessment fully or partially by either filing a request for reconsideration or reinvestigation. Filing of one precludes the other.
6. If the taxpayer accepts and pays the assessment in full upon receipt of FAN/FLD, Payment Form 0605 shall be filed and paid as evidence of the settlement. But if the taxpayer accepts only a portion of the assessment, Payment Form 0605 shall be filed and paid for such portion, and an FDDA shall be issued for the unsettled portion. For the portion of assessment resolved in favor of the taxpayer, an Authority to Cancel Assessment shall be prepared as evidence of cancellation.
7. A request for reinvestigation shall be available in a protest to a FAN/FLD only. If such request was made, all supporting documents shall be submitted within 60 days from date of filing of the protest.
8. All decisions on protest to the FAN shall be communicated to the taxpayer through the issuance of an FDDA.
9. All protests shall be considered a request for reconsideration unless it is clearly indicated that it is for reinvestigation.
10. If the protest is not acted upon within 180 days from filing of the protest in the case of a request for reconsideration, or from the lapse of 60 days to submit documents in the case of a request for reinvestigation, and the taxpayer appeals to the Court of Tax Appeals (CTA) within 30 days after the expiration of the 180 day period, an FDDA shall be automatically issued.
11. All the periods provided under RR No. 18-2013 is mandatory and non-extendible.
12. After issuance of the FDDA, the taxpayer may accept and settle the assessment fully or partially. Within 30 days from receipt of the FDDA issued by the CIR's authorized representative, a motion for reconsideration shall be filed with the CIR or an appeal to the CTA.
13. Appeal to the CIR or to the CTA of the FDDA shall not preclude the taxpayer from voluntarily settling the assessment fully or partially.
14. Grounds that will render an assessment final, executory and demandable are listed in this Order.