The Taxpayers Bill of Rights and Obligations Act

Dina of d TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) ) AUG -4 P5:08 First Regular Session SENATE RECEIVED BY S. No. 844 Introduced by Senator Jinggoy Ejercito Estrada AN ACT PROVIDING FOR THE BILL OF RIGHTS AND OBLIGATIONS OF TAXPAYERS, CREATING THE OFFICE OF THE NATIONAL TAXPAYER ADVOCATE, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES EXPLANATORY NOTE Taxes are considered as the lifeblood of the government, the main funding source used for the operations of the bureaucracy and the implementation of social programs for the citizenry. Without such vital resource, the nation would come to a complete halt. While it is important to administer an efficient tax collection, plug legal loopholes that result in revenue erosion, and ensure full compliance with prevailing tax regulations, it is imperative to be reminded that taxation is not a one-way street, where the burden falls solely on the taxpayer. It is important that the government sees the entire process from the lens or standpoint of the general public. How can we make the processes easier to follow? How can the seemingly highly technical and complicated procedures be further simplified for the ordinary Filipino? What courses of action and remedies are available to individuals and businessmen should they find themselves with outstanding tax liabilities and unsettled assessment?

This bill codifies the bill of rights of the taxpayers that are provided under different tax and revenue laws, to wit: 1) Right to be Informed; 2) Right to Fair, Uniform and Faithful Application of Laws; 3) Right to Challenge the Position of and be Heard by Revenue Authorities; 4) Right to Fair and Impartial Proceedings; 5) Right to Present Evidence and Witnesses; 6) Right to be Assisted or Represented by a Qualified Professional; 7) Right to Timely and Expeditious Completion and Finality of Tax Audits; 8) Right Against Baseless Assessment; 9) Right to be Given an Opportunity for Amicable Settlement; 10) Right to Avail of Installment Payment; 11) Right to Pay No More Than the Correct Amount of Tax; 12) Right to Relief from Paying Interests, Surcharges and Penalties; 13) Right to Recover Actual Costs and Actual Damages Arising from Judicial Actions; 14) Right to Quality Service and Assistance; 15) Right to Privacy; and 16) Right to Confidentiality. This legislation also proposes the creation of the Office of a National Taxpayer Advocate (ONTA) which will assist the taxpaying public in complying with their obligations through legal and procedural advice, representation of low-income earners in tax cases, and information/education programs on tax laws. The ONTA follows the template and success of Taxpayer Advocate in other jurisdictions which helped countless taxpayers in resolving their disputes and concerns with revenue authorities and in fulfilling their responsibilities as citizens. This measure was reported out by the Senate Committee on Ways and Means and was already approved on Third and Final Reading by the Upper Chamber during the 19th Congress. The passage of this bill is hereby endorsed. JINGGOY EJERCITO ESTRADA

Oil: of ti TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES ) First Regular Session ) 25 AUG -4 P5:08 SENATE RECEIVED BY S. No. 844 Introduced by Senator Jinggoy Ejercito Estrada AN ACT PROVIDING FOR THE BILL OF RIGHTS AND OBLIGATIONS OF TAXPAYERS, CREATING THE OFFICE OF THE NATIONAL TAXPAYER ADVOCATE, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

Section 1. Title. - This Act shall be known as " The Taxpayer's Bill of Rights and

2 Obligations Act.

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to

4 provide increased protection of taxpayer's rights in complying with their obligation to 5 pay national and local taxes to the government, to the end that abuses committed against taxpayers are prevented, if not completely eradicated, and taxes are collected responsibly. In turn, taxpayers are expected to faithfully comply with their tax obligations to the government.

Sec. 3. Definition of Terms. - As used in this Act, the following terms shall

mean: a) Assessment refers to the process of determining the amount of taxes, duties, and other charges to be paid by the taxpayer; b) Revenue Authority refers, singly or collectively, to the Bureau of Internal Revenue (BIR), Bureau of Customs (BOC), Local Government Units (LGUS), and other tax collecting agencies;

C) Revenue Officers refer to the officers, employees, and agents of the Revenue Authorities; d) Summary Collection refers to the civil remedy of the government for the collection of accounts receivable or delinquent accounts by garnishment or distraint of personal property, or levy of real property; e) Taxes refer to all exactions for revenue-raising purposes imposed under the National Internal Revenue Code (NIRC) of 1997, as amended, the Customs Modernization and Tariff Act (CMTA), the Local Government Code of 1991, as amended, and all other tax laws; f) Taxpayer refers to any person, whether natural or juridical, subject to the tax imposed by the national and local government; and g) Tax Audit refers to the examination into a taxpayer's obligation, and compliance with tax laws, rules and regulations by the respective Revenue Authorities.

Sec. 4. Taxpayer's Bill of Rights and Obligations. - Without prejudice to the

others rights and remedies of the taxpayer provided for in the National Internal Revenue Code (NIRC) of 1997, as amended; Customs Modernization and Tariff Act 18 (CMTA); Republic Act (R.A.) No. 1125, creating the Court of Tax Appeals (CTA), as amended; Book Il of the Local Government Code of 1991, as amended; and all other laws, rules and regulations, issuances, and circulars in support thereof, the taxpayer is hereto granted basic taxpayer rights, whether at the administrative level or at the judicial level: Provided, That nothing in this Act shall amend, modify, or repeal the provisions of the abovementioned laws: Provided, further, That the taxpayer is expected to observe and comply with tax obligations enumerated in this Act and in other relevant laws, rules and regulations that are implemented by Revenue Authorities.

Sec. 5. Taxpayer's Basic Rights. - The following are taxpayer's basic rights:

a) Right to be Informed. - The taxpayer shall have the right to know in a simplified manner how one can comply with laws, rules and regulations implemented by Revenue Authorities. The taxpayer is entitled to clear, complete, accurate, and simplified explanation of tax laws, rules, regulations, procedures, and other issuances, as well as be apprised of

taxpayer's rights and obligations in all tax forms, publications, notices, correspondences, assessments, rulings and decisions. In case of any deficiency tax findings, alleged violations or any decisions or rulings rendered by the Revenue Authorities, the taxpayer shall be informed in the written decision or ruling, clearly and sufficiently of the facts and laws thereon, including any supporting computation and documentation upon which they are based. The taxpayer shall have the right to be informed of any institution by Revenue Authorities of a summary collection action, which requires sale or seizure of property or the freezing of assets. The service of the notices and decisions to the taxpayers shall be made in accordance with laws, rules, and regulations; b) Right to Fair, Uniform, and Faithful Application of Laws. - The taxpayer shall have the right to a fair, uniform and faithful application of laws, rules, regulations, and other issuances of Revenue Authorities in all proceedings involving the taxpayer; c) Right to Challenge the Position of and be Heard by Revenue Authorities. - The taxpayer shall have the right to challenge and raise objections against the findings, assessments, rulings, or decisions of the Revenue Authorities. The taxpayer shall have the right to be heard and that the evidence presented by the taxpayer be duly considered by the Revenue Authorities in deciding any matter involving the taxpayer; d) Right to Fair and Impartial Proceedings Before the Revenue Authorities. - The taxpayer shall at all times be entitled to fair and impartial dispositions of the assessment cases, deficiency findings, requests for rulings, decisions, and other dispositions made by the Revenue Authorities concerning the taxpayer; e) Right to Present Evidence and Witnesses. - The taxpayer shall have the right to be given ample and adequate opportunity to present evidence in the possession of the taxpayer or any third party, and call on witnesses to testify, as the case may be, that would assist the taxpayer in the pursuit of any assessment or matter involving it;

f) Right to be Assisted or Represented by a Qualified Professional. - The taxpayer shall have the right to be assisted or represented by a competent and independent qualified professional, such as a legal counsel, accountant or customs broker, of the taxpayer's own choice, in all administrative, civil, or criminal tax proceedings: Provided, That any communication, correspondence and/or documents submitted or exchanged between the taxpayer and the qualified professional that they engage shall be considered strictly confidential, except as otherwise provided under existing laws, rules, and regulations. In case the taxpayer experiences financial difficulty in engaging the services of a private counsel or qualified professional, the Office of the National Taxpayer Advocate (ONTA) shall provide free and effective representation to the taxpayer, upon the latter's request; g) Right to Timely and Expeditious Completion and Finality of Tax Audits. - The taxpayer shall have the right to have Revenue Authorities begin and complete tax audits and to address the requests and other matters pending before the Revenue Authorities in a timely and expeditious manner. The taxpayer shall have the right to know when the Revenue Authorities have completed an audit or examination of the taxpayer. h) Right Against Baseless Assessment. - The tax authorities are prohibited from issuing assessments against taxpayers without the benefit of a proper audit conducted by authorized Revenue Authorities against taxpayers. Otherwise, such assessments shall be void; i) Right to be Given an Opportunity for Amicable Settlement. - Unless contrary to laws, the taxpayer shall have the opportunity to amicably settle the taxpayer's deficiencies and delinquencies, at any stage of the proceedings: Provided, That said settlement must be in writing and duly signed by the parties or their agent; j) Right to Avail of Installment Payment. - In so far as may be permitted by law, the taxpayer shall have the right to settle tax liabilities through installment payments;

k) Right to Pay No More Than the Correct Amount of Tax. - The taxpayer shall have the right to pay only the amount of tax legally due, including interests, surcharges, fines; and penalties; 1) Right to Relief from Paying Interests, Surcharges and Penalties. - The taxpayer shall be entitled to a reduction of interests, surcharges and penalties levied on their tax liabilities in case of any excessive assessment or undue delay caused by the Revenue Authorities, including instances of loss of records, personnel transfers, extended illness or leaves of absence, and personnel training, resignation, retirement, or termination from service of the concerned personnel; m) Right to Recover Actual Costs and Actual Damages Arising from Judicial Actions. - The taxpayer shall have the right to recover actual costs and actual damages, including attorney's fees and expenses of litigation, arising from judicial actions, as may be determined by a court of competent jurisdiction; n) Right to Quality Service and Assistance. - The taxpayer shall have the right to receive prompt, courteous and professional assistance in their dealings with the Revenue Authorities, to be spoken to in a way the taxpayer can easily understand, to receive clear and easily understandable communications from the Revenue Authorities and to be provided with a mechanism to address inadequate service; 0) Right to Privacy. - The taxpayer shall have the right to expect that any inquiry, examination or enforcement action by the government authorities shall comply with the law and be no more intrusive than necessary, and will respect all due process rights; and P) Right to Confidentiality. - The taxpayer shall have the right to privacy of communication and correspondence, as guaranteed by the Constitution and the Data Privacy Act of 2012. The taxpayer shall have the right that any information provided to revenue authorities shall not be disclosed and shall be kept confidential, unless disclosure is expressly authorized by law or by the taxpayer.

Sec. 6. Taxpayer's Basic Obligations. - Complementary to the above taxpayer's

rights are the following duties and responsibilities of the taxpayer: a) Obligation to Comply with Tax Laws. - The taxpayer shall observe and comply with the tax laws, rules, and regulations with reasonable care and diligence; b) Obligation to Truthfully and Timely Disclose Information. - The taxpayer shall truthfully and timely disclose complete and accurate information as required by tax laws, rules and regulations, including but not limited to, registered address, official email address, registered activities, tax type details, and accounting period; c) Obligation to Lodge and Submit Required Documents Completely and on Time. - The taxpayer shall lodge and submit, either personally or through electronic means, in a timely manner all relevant information, books of accounts, reports, records, returns, and other documents to Revenue Authorities on or before the dates set by tax laws, rules, and regulations; d) Obligation to Keep and Make Tax Records Available for Examination. - The taxpayer shall keep accurate records of the required books of accounts and other tax information for the duration required by law, rules, and regulations, and make them available for examination by revenue officers following proper procedures; e) Obligation to Cooperate with Revenue Authorities in Tax Audit. - The taxpayer shall cooperate with Revenue Authorities in the latter's conduct of tax audits in accordance with laws, rules, and regulations; and f) Obligation to Timely Pay Taxes. - The taxpayer shall timely pay the taxes due to the government through any available payment channels.

Sec. 7. Creation of the Office of the National Taxpayer Advocate (ONTA), - In

order to protect the rights of the taxpayers, both substantive and procedural, the ONTA is hereby created to promote tax compliance and assist taxpayers. The ONTA shall be an independent and autonomous office attached to the Department of Justice (DO]) for purposes of policy and program coordination. The ONTA shall have the power to provide for the structural organization and staff of its offices, create divisions and units, including regional or provincial offices,

1 as may be necessary, and designate and appoint officers and employees of the Office, 2 subject to the approval of the Department of Budget and Management (DBM) and in accordance with civil service laws, rules, and regulations.

Sec. 8. Powers, Functions and Responsibilities of the Office of the National

Taxpayer Advocate. - The ONTA shall have the following functions, powers and responsibilities: a) Assist the public in their queries and concerns relative to taxes by providing legal and procedural advice, including guidance on remedial measures that can be availed of, which may be in writing upon request of the taxpayer; b) Represent low-income taxpayers, and assist, initiate, and intervene, as may be applicable, in tax cases, complaints, and proceedings, after due evaluation: Provided, That the ONTA shall have the power to set qualifications of taxpayers who shall be given priority in the ONTA'S representation services pursuant to Section 5(f) of this Act. The ONTA may collaborate with qualified professionals to assist in the representation of low- income taxpayers who have a dispute with Revenue Authorities and to provide education and outreach program to low-income taxpayers; c) Engage in regular information, education and communication programs for all taxpayers on tax laws, rules, regulations, circulars, including those that implement Supreme Court decisions, and other issuances that affect them, including their rights and remedies under the law; d) Recommend remedial administrative measures to Revenue Authorities by way of continuing policy review, and to the Anti-Red Tape Authority (ARTA) for purposes of reducing regulatory burden to taxpayers; e) Monitor tax issuances of Revenue Authorities, and propose recommendations, when necessary, at the administrative level, to ensure that taxpayers' rights as provided in this Act are upheld; f) Develop capacity building programs, and conduct the necessary trainings for the officials and employees of ONTA; and g) Perform such other powers and functions as may be necessary to enhance the ONTA's performance of its powers, functions, and responsibilities, as enumerated in this Act.

Sec. 9. Qualifications, Appointment, Term, and Rank of the National Taxpayer

2 Advocate and Deputy National Taxpayer Advocate. - The ONTA shall be headed by 3 the National Taxpayer Advocate, who shall have the primary authority and responsibility for the effective exercise of its mandate and the discharge of its powers 5 and functions and to be assisted by four (4) Deputy National Taxpayer Advocates from 6 the National Capital Region, Luzon, Visayas, and Mindanao, at least two (2) of whom are women. The National Taxpayer Advocate and Deputy National Taxpayer Advocates shall 9 be Filipino citizens, members of the Philippine Bar in good standing or Certified Public 10 Accountants in the case of the Deputy National Taxpayer Advocates, with at least ten 11 (10) years of practice in the field of taxation, and with proven integrity and 12 competence. The National Taxpayer Advocate and Deputy National Taxpayer Advocates shall be appointed by the President and shall serve for a term of three (3) years with one 15 (1) re-appointment. In case of vacancy arising from retirement, resignation, removal, permanent 17 incapacity, or death of the National Taxpayer Advocate or Deputy National Taxpayer 18 Advocate, the President shall appoint a successor to serve a fresh term of three (3) 19 years with one (1) re-appointment. The appointment and re-appointment of the National Taxpayer Advocate and Deputy National Taxpayer Advocates shall be subject to the mandatory retirement age provided under the Civil Service Commission (CSC) rules. The National Taxpayer Advocate and Deputy National Taxpayer Advocates shall have the equivalent rank, salaries, allowances, and retirement benefits as an Undersecretary and Assistant Secretary, respectively.

Sec. 10. Disqualification. - An individual cannot be appointed as the National

Taxpayer Advocate or Deputy National Taxpayer Advocate if such individual has been an employee or officer of, or has rendered service as consultant or in any other capacity to any of the Revenue Authorities for two (2) years prior to such appointment, 30 or has been convicted of any crime involving moral turpitude or a violation of any tax 31 law.

Sec. 11. Submission of Annual Reports. - The Congressional Oversight

2 Committee on the Comprehensive Tax Reform Program (COCCTRP) shall exercise 3 oversight powers over the implementation of this Act. To this end, the ONTA shall submit a detailed report on its activities and 5 identified problem areas, either personally or through electronic means, to the 6 COCCTRP on or before December 31 of every year, copy furnished the Secretaries of 7 Justice and Finance, particularly on identified areas in which taxpayers have problems 8 in dealing with revenue authorities. Afterwards, on or before June 1 of every year, the Secretaries of Justice and 10 Finance shall submit their comments in relation to the ONTA's report, either personally 11 or through electronic means, to the COCCTRP and shall include appropriate remedial 12 action, if any, or proposed legislation, and other recommendations on the proper 13 implementation of this Act.

Sec. 12. Penalties for the Violation of the Bill of Rights of Taxpayers. -

15 Notwithstanding the administrative remedies provided in the NIRC of 1997, as 16 amended; the Customs Modernization and Tariff Act (CMTA); R.A. No. 1125 creating the Court of Tax Appeals (CTA), as amended; and Book II of the Local Government Code of 1991, as amended, any person or revenue officer who is found to have 19 violated Section 5 of this Act, except Section 5(n), shall be punished with imprisonment 20 of not less than six (6) months nor more than six (6) years, or a fine of not less than 21 One hundred thousand pesos (P100,000.00) but not more than One million five 22 hundred thousand pesos (P1,500,000.00), or both. The violation of Section 5(n) shall 23 be penalized under the provisions of R.A. No. 6713, otherwise known as the "Code of Conduct and Ethical Standards for Public Officials and Employees." Violations penalized by this Act shall prescribe after twelve (12) years. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not known as the time, from the discovery thereof and the institution of judicial proceeding for its investigation and punishment: Provided, That the prescription shall be interrupted when proceedings are instituted against the guilty person, and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.

Sec. 13. Accessibility of the Taxpayer's Bill of Rights and Obligations. - The

Taxpayer's Bill of Rights and Obligations shall be made available in all offices of 3 Revenue Authorities, free of charge, whether printed, digital or otherwise, and shall 4 be posted in their respective websites in English and Filipino languages.

Sec. 14. Integration of Taxpayer's Bill of Rights and Obligations in Higher

6 Education Curriculum. - All public and private higher education institutions shall 7 integrate the Taxpayer's Bill of Rights and Obligations as part of the curriculum. The 8 Commission on Higher Education (CHED), pursuant to its mandate under R.A. No. 9 7722, otherwise known as the "Higher Education Act of 1994", shall develop the 10 program to execute and implement this section.

Sec. 15. Appropriations. - The amount necessary for the implementation of this

12 Act, including the funding for the establishment, yearly operations and maintenance of the ONTA, shall be included in the annual General Appropriations Act.

Sec. 16. Implementing Rules and Regulations. - Within sixty (60) calendar days

from the effectivity of this Act, the DOJ, in consultation with the DOF, DBM, Department of the Interior and Local Government (DILG), BIR, BOC, Bureau of Local 17 Government Finance (BLGF), CSC, CHED, and ARTA, shall promulgate the necessary 18 rules and regulations, for the effective implementation of this Act.

Sec. 17. Separability Clause. - If any provision of this Act is declared invalid or

20 unconstitutional, other provisions hereof which are not affected thereby shall remain in full force and effect.

Sec. 18. Repealing Clause. - All laws, orders, decrees, rules and regulations,

and other parts thereof inconsistent with the provisions of this Act are hereby repealed, amended or modified accordingly.

Sec. 19. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in at least two (2) newspapers of general circulation. Approved,