1. May the Bureau of Internal Revenue issue assessments against a taxpayer based on third-party information?
Yes, provided that such third-party information is verified or confirmed with the relevant customers or suppliers. In Commissioner of Internal Revenue v. Mercury Group of Companies, Inc. (CTA EB No. 2215 (CTA Case No. 9531), June 30, 2021), the Court of Tax Appeals En Banc (CTA En Banc) ruled that “[w] ithout conducting such confirmation or verification, the data gathered from the computerized/third party matching are left unsubstantiated, and the resulting assessment is void for lack of factual and legal basis.”
In this case, the Bureau of Internal Revenue (BIR) issued deficiency tax assessments (corresponding to alleged undeclared service income, undeclared purchases and unaccounted source of cash) based only on discrepancies arising from a comparison between taxpayer’s Summary List of Sales (SLS) and Summary List of Purchases (SLP) vis-a-vis third-party SLS and SLP. The CTA En Banc noted that the BIR failed to verify the amounts reflected in the third-party SLS and SLP with the relevant customers and suppliers, and this “casts doubt as to the reliability and correctness of the findings of deficiency taxes assessed by [it].”
The CTA En Banc ruled that “[i]n order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption of the correctness of an assessment, being a mere presumption, cannot be made to rest on another presumption.”
2. May a taxpayer avail of the provisional remedies of a Suspension Order and a Writ of Preliminary Injunction/Temporary Restraining Order at the same time in the same case?
Yes. In Commissioner of Internal Revenue v. Court of Tax Appeals and Pilipinas Shell Petroleum Corporation (G.R. No. 210501, March 15, 2021), the Supreme Court clarified that “the subject matters of these two remedies are separate and distinct; hence, the issuance of one does not necessarily result into or preclude the other.”
If the taxpayer appeals a tax assessment, decision, ruling, or inaction mandating the payment of taxes, it may file a Motion for a Suspension Order to suspend the collection of the specific amount of taxes stated in such assessment or demand for the collection of taxes. On the other hand, if, in appealing the tax assessment, decision, ruling or inaction, the taxpayer questions the constitutionality or validity of a tax statute or issuance, it may also seek (in the same petition) a Temporary Restraining Order (TRO) or a Writ of Preliminary Injunction (WPI) to restrain the immediate implementation of the statute or issuance.