NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES )

First Reguilar Session )
HOUSE OF REPRESENTATIVES
House Bill No. 2823

Introduced by Representative Ralph G. Recto

AN ACT
ORDAINING A BILL OF RIGHTS FOR TAXPAYERS

EXPLANATORY NOTE

Itis a legal truism that taxes are the lifeblood of the Government. Thus, to
generate income, the Bureau of Internal Revenue (BIR) and the Bureau of Customs
(BOC), are mandated to collect national taxes, tariffs and duties, under the National
Internal Revenue Code (NIRC) of 1997, as amended, and the Customs Modernization
and Tariff Act (CMTA), respectively, to finance Government projects, programs and its
Personnel.

In the arena of tax collection, there are always two sides, the Government and
the taxpayer. Reading the provisions of the NIRC and CMTA on remedies, the
Government is amply protected,

On the other hand, while under the NIRC and CMTA, there are legal rights and
remedies available to the taxpayers, however, reports persist that certain individuals
have been subjected to harassment by some officials and employees of the BIR and
BOC. These include the filing of undue and baseless complaints resulting to
embarrassment and humiliation on the part of the taxpayers.

Protecting taxpayers is a balancing act that challenges the Government vis-4-
vis its mandate to collect the necessary revenues for the Government.



‘Thus, this bill seeks to ordain a bill of rights for the taxpayers which are divided
into three main pillars: a) taxpayers’ basic rights, b) taxpayers’ rights in civil cases,
and c) taxpayers’ rights in criminal cases. The enumerated rights are in addition to
the legal rights and remedies provided under the NIRC and CMTA.

In order to protect the taxpayers’ rights, this measure also seeks to establish
the Office of the Taxpayers Advocate with, among others, the following functions:

a. assist taxpayers in resolving problems with the BIR and BOC;

b. identify areas in which taxpayers have problems in transactions with the
BIR and BOC;

. to the extent possible, propose reforms in the administrative practices of
the BIR and BOC to mitigate problems identified under the preceding
Paragraph;

d. identify potential legislative amendments which may be appropriate to
mitigate such problems; and

e. issue taxpayer assistance orders.

Clearly, there is a need to enact this bill into law in order to protect the rights
of the taxpayers. Mandating due observance of standards and proper procedures on
the part of BIR and BOC in dealing with various concems of taxpayers would not only
promote efficiency, but may likewise eliminate red tape and corruption.

In view of the foregoing, the approval of this bill is earnestly sought.

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NINETEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES)
First Regular Session )

HOUSE OF REPRESENTATIVES

House Bill No. 2 8 2 3

Introduced by Representative Ralph G. Recto

AN ACT
ORDAINING A BILL OF RIGHTS FOR TAXPAYERS

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

Sec. 1. Title, ~ This Act shall be known as “The Taxpayer Bill of Rights Act”.

Sec. 2. Declaration of Principles. — It is hereby declared the policy of the State
to provide increased protection of taxpayers’ rights in complying with the National
Internal Revenue Code of 1997, as amended, the Customs Modernization and Tariff
Act, and all other rules and regulations, to the end that abuses committed against
taxpayers are mitigated, if not completely avoided, and taxes are collected
responsibly, with due regard for taxpayers’ rights.

Sec. 3. Taxpayer's Bill of Rights. ~ In addition to the rights and remedies of the
taxpayers as provided for in the National Internal Revenue Code (NIRC) of 1997, as
amended; Customs Modernization and Tariff Act (CMTA); Republic Act No. 1125, as
amended, creating the Court of Tax Appeals (CTA); and all other laws, rules and
tequlations, issuances and circulars in support thereof, the taxpayers are hereto
granted the following: a) taxpayers’ basic rights; b) taxpayers’ rights in civil cases;
and c) taxpayers’ rights in criminal cases, whether at the administrative level or at the
Judicial level, concerning tax assessments, collection and refund, and prosecution for
criminal cases.

Sec. 4. Taxpayers’ Basic Rights. ~ The following are the taxpayers’ basic rights:



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2 The right to be informed of any pending assessment, investigation for
criminal tax cases, collection or any other cases filed against the taxpayer or that the
taxpayer is a subject of any request for third-party information or any lifestyle check
for purposes of tax compliance. The right to available information and prompt,
accurate responses to questions and requests for tax assistance shall always be
ensured. In this regard, all revenue officers and agents shall undergo regular training
and evaluation on a variety of job standards including customer relations. This
standard requires agents to ensure that they fully explain to taxpayers their rights
under the law;

b. 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. These rights include, but are not limited to,
the rights pursuant to this Taxpayers’ Bill of Rights and the right to be provided with
@ narrative description which explains the basis of audit changes, proposed
assessments, assessments and denials of refunds; identifies any amount of tax,
interest, or penalty due; and states the consequences of the taxpayer's failure to
comply with the notice;

c. The right to have @ speedy and impartial disposition of cases, the right to
due process and the observance of rules regarding assessments, refunds of any other
proceedings including requests for advisory rulings, clearances, termination letters and
lifting of seizure, garnishment and forfeiture orders, whether it be against the taxpayer
or against the officials and staff of the Bureau of Internal Revenue (BIR), the Bureau
of Customs (BOC) and other government agencies including government-owned and
-controlled corporations (GOCCs), government financial institutions (GFIs), and local
government units (LGUs) tasked with the enforcement of revenue or banking and
financial laws, whether of local or national application;

d. The right to privacy as guaranteed by the Constitution, and the right to
have any case or proceeding, including those involving third-party information
requests against or involving the taxpayer, to be devoid of publicity, whether through
radio, television, newspaper or any alternative media, while said case or proceeding

is pending;



©. The right to seek assistance from the National Taxpayer Advocate who shall
be responsible for facilitating the resolution of taxpayer complaints and problems not
resolved through the normal administrative channels within the BIR or BOC, including
any taxpayer complaints regarding unsatisfactory treatment by BIR or BOC employees
The taxpayers’ rights advocate may issue a stay order if a taxpayer has suffered or is
about to suffer irreparable loss as @ result of an unjust action by the said Bureaus;

f, The right to have the taxpayer's tax information kept confidential unless
otherwise authorized by law;

9. The right to participate in free education activities that help the taxpayer
successfully comply with the revenue laws of the State;

h. The right to fair and consistent application of the tax laws of the State by
the BIR and 80C;

i, 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.
Such audit shall be conducted only once per year unless otherwise provided by law;

J. The right to request for installment payment of tax liabilities under any
compromise settlement or any assessed tax liabilities pursuant to Taxpayer Assistance
Order;

k. The right to recover attomey’s fees and litigation costs for tax assessments
made without substantial justification, and for claims for tax 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 CTA if it appears that such
denial was unjustified. The award of attorney's fees and costs of litigation shall be
included in the order upholding the taxpayer's claim;

|. The right to have interests and penalties abated in case of any unjustifiable
error or delay caused by the tax authorities or their agents, including ministerial acts
such as loss of records, personnel transfers, extended illness or leaves of absence,
and personnel training; anc,

m. The right to have the assistance of counsel in criminal proceedings, shoutd
the taxpayer request for it.

Sec, 5. Taxpayers’ Rights in Civil Cases. — The following are the taxpayers’

rights in civil cases:



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a. The right to have the opportunity to have the case against the taxpayer
amicably settled, as the case may warrant: Provided, That in every stage of the
Proceeding, whether in the administrative or judicial level, the parties shail always be
given the chance to exhaust all and every remedy available for the speedy settlement
of the case: Provided, further, That nothing in this Act shall deprive the court of
competent jurisdiction of its judicial prerogatives;

b, The right to be informed of impending collection action which requires sale
or seizure of property or freezing of assets, except jeopardy assessments, and the
ty or seek further

right to have at least thirty (30) days within vihich to pay the lial
review;

¢. The right to have all other collection actions attempted before a jeopardy
assessment suspended, unless delay will endanger collection and, after a jeopardy
assessment, the right to have an immediate review of the jeopardy assessment. As
used herein, jeopardy assessment is a tax assessment made by an authorized revenue
officer (RO) without the benefit of a complete or partial audit, considering the RO’s
Judgment that the assessment and collection of a deficiency tax will be jeopardized by
Gelay caused by the taxpayer's failure to: (1) comply with audit and investigation
requirements to present his books of accounts and/or pertinent records; or (2)
substantiate all or any of the deductions, exemptions or credits claimed in his return;

d. The right to seek review, through formal or informal proceedings, of any
adverse decisions relating to determinations in the audit or collection processes and
the right to seek a reasonable administrative stay enforcement action while the

taxpayer pursues other administrative remedies available under the law;

c. The right to be informed of the procedures for conditional termination of
tax obligations through installment payment agreements which recognize both the
taxpayer's financial condition and the best interests of the State: Provided, That the
taxpayer gives accurate and current information and meets all other tax obligations
on schedule;

f The right to be informed of the procedures for requesting cancellation,
release, or modification of liens filed by the BIR and the BOC and for requesting that
any lien which is filed in error be so noted on the tien cancellation filed by the BIR and

the BOC, with public notice to any credit agency at the taxpayer's request



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9. The right of the taxpayer in a judicial or administrative action brought or
maintained without the support of justiciable issues of fact or law, to recover all costs
Of the administrative or judicial action, including reasonable attorney's fees; and

h. The right to waiver of interest that accrues as the result of errors or detays
caused by a BIR/BOC employee: Provided, That the provisions of Rule 63 of the Rules
of Civil Procedures (Declaratory Relief and Similar Remedies) shall likewise be
applicable to the aggrieved taxpayer.

Sec. 6. Taxpayers’ Rights In Criminal Tax Cases, ~ The following are the

taxpayers’ rights in criminal tax cases:

a, The right to be knowledgeably and intelligently informed of the charges as
contained in any properly and timely prepared audit report, assessment notice,
correspondence, document, letter and the like, as implemented by rules and
regulations, as the case may be, coming from the BIR or BOC or any government
agency tasked to enforce the revenue laws and banking and financial laws, in
appropriate cases;

b. The right to be given ample and adequate opportunity, as the situation may
warrant, to present evidence at the taxpayer's or anybody else's possession that would
assist the taxpayer in the pursuit of the case;

©. The right to seek the assistance of competent and willing counsel of the
taxpayer's own choice, to help and assist the taxpayer in the preparation or defense
of the case;

d. The right to be served with all the necessary documents and papers
appurtenant thereto, relative to the charges against the taxpayer, in a manner that
would assist and expeditiousty present the taxpaycr’s side pursuant to the charges
against the taxpayer;

¢. The right to present the taxpayer's own witnesses: and

f. The right to be represented or advised by counsel or other qualified
representatives at any time in administrative interactions with the BIR and the BOC;
the right to procedurai safeguards with respect to recording of interviews during tax
determination or collection processes conducted by the BIR and the BOC; the right to
be treated in a professional manner by the BIR and the BOC personnel; and the right



to have audits, inspections of records, and interviews conducted at a reasonable time
and place except in criminal and internal investigations.

Sec. 7. Creation of the Office of the National Taxpayer Advocate. ~ In order
to protect the rights of taxpayers and in recognition of the complexity of tax laws,
both substantive and procedural, there is hereby created the Office of the National

Taxpayer Advocate to promote tax compliance and assist taxpayers, individual or
Juridical. The Office of the National Taxpayer Advocate shall be under the
administration and supervision of an official to be known as the National Taxpayer
Advocate and shail be attached to the Office of the President for administrative
Purposes only. The National Taxpayer Advocate shall have the rank of Undersecretary
and shail be appointed by the President of the Philippines,

The National Taxpayer Advocate shail be a Filipino citizen, at least forty (40)
years of age, a member of the Philippine Bar in good standing, with at least ten (10)
years of practice in the field of taxalion, with proven integrity and competence, and
must not have been convicted of any crime involving moral turpitude.

An individual cannot be appointed as the National Taxpayer Advocate if such
individual has been an employce or officer of, or has rendered service as consultant
or in any other capacity to, the BIR or the BOC or any of its agencies or has been a
local treasurer for two (2) years prior to such appointment. A National Taxpayer
Advocate cannot serve as officer or employee or consultant of, or be appointed to or
act in whatever capacity in, the BIR or the BOC or as local treasurer, within five (5)
years following his/her tenure as a National Taxpayer Advocate, For purposes of this
Act, a local treasurer includes a municipal, city or provincial treasurer.

Sec. 8. Functions of Office of the Taxpayers Advocate, ~ It shall be the
function of the Office of the Taxpayers Advocate to:

a. Assist taxpayers in resolving thelr problems with the BIR and BOC;
b. Identify areas in which taxpayers have problems in dealings with the BIR
and BOC;
c. Propose changes, to the extent possible, in the administrative practices of
the BIR and BOC with the end in view of mitigating problems identified under the

preceding paragraph;



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d. Identify potential legistative changes which may be appropriate to mitigate
such problems;

®. Issue taxpayer assisiance orders upon application filed by a taxpayer with
the Office of the National Taxpayer Advocate. The latter may i

ue a Taxpayer
Assistance Order when: (i) itis determined that the taxpayer is suffering or about to
suffer a significant hardship as a result of the manner in which the internal revenue

laws are being administered by the BIR, BOC or the local treasurer; or (ii) the

taxpayer meets such other requirements as are set forth in the implementing rules
and regulations of this Act. For purposes of this paragraph, a significant hardship
shall includ th
Violate the right to privacy of a taxpayer; (li) a delay of more than thirty (30) days

ite threat of adverse action; (ji) any action thal

(i) an immedia

in resolving taxpayer account problems; (jv) the taxpayer will incur significant and
unnecessary costs, including fees for professional representation, if relief is not
granted; or (v) irreparable injury to, or a long-term adverse impact on, the taxpayer
if relief is not granted. Nothing herein shalt prevent the National Taxpayer Advocate
from taking any action in the absence of an application mentioned herein;

f. In cases where any tax authority employee is not following the laws, rules

and regulations or any applicable published administrative guidance, the Nation
Taxpayer Advocate shall construe the factors taken into account in determining
whether to issue a Taxpayer Assistance Order in the manner most favorable to the
taxpayer;

Q. Any Taxpayer Assistance Order issued by the National Taxpayer Advocate
under this section may be modified or rescinded by the National Taxpayer Advocate,
only if a valid written explanation was submitted by the Commissioner of Interna!
Revenue or the Commissioner of Customs, as the case may be, and that the reasons
for the modification or rescission are specifically stated by the National Taxpayer
Advocate in the rescission or modification order; and

h. ‘The duration of any period of limitation with respect to any action for which

@ Taxpayer Assistance Order has been issued shalt be suspended for the period
beginning on the date of the taxpayer's application under subsection (e) and ending

on the date of the National Taxpayer Advocate’s decision with respect to such



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application and any period specified by the National Taxpayer Advocate in a Taxpayer
Assistance Order issued pursuant to such application.

Sec. 9, Submission of Annual Reports by the Office of the National Taxpayer
Advocate. ~ Not later than December 31 of each calendar year, the Office of the
National Taxpayer Advocate shall submit a report to the Chairpersons of the
Committee on Ways and Means of the Senate of the Philippines and House of
Representatives on its activities during the fiscal year ending during such calendar
year. Any such report shall contain full and substantive analysis, in addition to

statistical information, and shai

a. Identify the initiatives that the Office of the National Taxpayer Advocate has
undertaken aimed at improving taxpayer services and the tax authorities’
responsiveness;

b. Contain recommendations received from taxpayers by the Office of National
‘Taxpayer Advocate;

¢. Contain a summary of the most serious problems encountered by taxpayers,
including a description of the nature of such problems;

d. Contain an inventory of the items described in subsections (a), (b), and (c)
Of this Section for which action has been taken and the result of such action;

€. Contain an inventory of the items described in subsections (a), (b), and (c)
Of this Section for which action remains to be completed and the period during wiich
each item has remained on such inventory;

f. Contain an inventory of the items described in subsections (a), (b), and (c)
of this Section for which no action has been taken, the period during which each item
has remained on such inventory, the reasons for the inaction, and identify any BIR
and BOC official or employee who is responsible for such inaction;

9. Identify any Taxpayer Assistance Office orders/recommendations which was
not honored by the BIR and the BOC in a timely manner;

h. Contain recommendations for such administrative and legislative action as
may be appropriate to resolve problems encountered by taxpayers;

i. Identify areas of the tax law that impose significant compliance burdens on

taxpayers, the BIR, the BOC, and local treasurers including specific recommendations

for remedying these problems;



j. Identify the most litigated issues for each categ

ry of taxpayers, including

recommendations for mitigating such disputes: and

&. Include stich other infornvation as the National Taxpayer Advocate may

deem relevant.

ich report required under this subparagraph shall be provided directly to the
Committee on Ways and Means of the Senate of the Philippines and the House of
Representatives without any prior review or comment from the respective
Commissioner of BIR or BOC or any other officer or employee of the said Bureaus.
The National Taxpayer Advacate shail furnish copies of said report to the Secretary of
Finance, and to the respective Commissioners of the BIR and BOC.

‘The Commissioners of the BIR and BOC shall establish procedures requiring a
formal response to all recommendations submitted to them by the National Taxpayer
Advocate within three (3) months from the date of submission.

Sec. 10. Other Responsibilities oF the National Taxpayer Advocate, — The
National Taxpayer Advocate shall

a. Monitor the coverage and geographic deployment of local offices of
taxpayer advocates;

b. Develop guidelines to be distributed to all BIR and BOC officers and

employees and the local treasurers outlining the criteria for referral of taxpayer

inquiries to local offices of taxpayer advocates;

Ensure that the local telephone number for each local office of the taxpayer

advocate is published and available to taxpayers served by the office; and
d. Develop career paths for iocal taxpayer advocates in the Office of the
National Taxpayer Advocate.
Set. 11. Personnel Actions of the National Taxpayer Advocate. ~ The National

‘Taxpayer Advocate shali have the responsibility and authority to:

a. Appoint local taxpayer advo nake available at least one (1) such

advocate for each province; and

b. Evaluate and take perscnnel actions including dismissal with respect to any

empioyee of any local office of the National Taxpayer Advacate described in subsection

(a) of this Section,



1 The National Taxpayer Advocate may consult with the appropriate supervisory
2 personnel of the BIR and BOC in carrying out the National Taxpayer Advocate’s
3 responsibilities and qualifications under this Section.

a Sec. 12. Remedies. ~ Any violation of the provisions of this Act committed by
5 any official or employee of the BIR or the BOC, other than the Commissioner of

6 Internal Revenue and Commissioner of Customs, shall be filed with the office of the

7 — Commissioner of Interna! Revenue or the Commissioner of Customs, as the case may
warrant, with the assistance of the National Taxpayer Advocate. The Commissioner of
9 Internal Revenue or the Commissioner of Customs shall decide the controversy
10 expeditiously, which shall not in any case be more than sixty (60) days from the time
41 the complaint or case is filed with their respective offices, Decisions of the
32 Commissioner of Internal Revenue or the Commissioner of Customs concerning any
13. complaint or case for violation of the provisions of this Act, may be brought for review
14 by the aggrieved party or the latter's authorized representative, to the Secretary of
15 Finance. In case the Commissioner of Internal Revenue or Commissioner of Customs
26 fail to act on such complaint or case within the time herein prescribed, the aggrieved

17 _ party or the latter's authorized representative may file the complaint or case directiy

h the Secretary of Finance.

29 Complaints against the Commissioner of Internal Revenue or the Commissioner
20 of Customs for violation of this Act shall be filed directly with the Secretary of Finance
21 who shall decide the case within sixty (60) days from the date the complaint was filed.
22 Decisions of the Secretary of Finance may be appealed before the Office of the
23 President.

Py Any complaint or case filed pursuant to this Section shall be without prejudice
25 to any other action that may be instituted against the employee or official of the BIR
26 or the BOC under existing laws, rules and regulations.

27 Evidence against the taxpayers obtained in relation to this Act shall be
28 inadmissible in any court or proceeding if found to have been obtained in violation of
29 any of the above-enumerated taxpayer's rights.

30 Sec. 13. Penalties for the Violation of the Bill of Rights of Taxpayers. ~ Any

31 person or public official who is found to have violated the Bill of Taxpayers Rights shall

of not Jess than six (6) years nor more than twelve

32 be punished with imprisonmer

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(12) years and a fine of not fess than one hundred thousand pesos (Php100,000.00)
but not more than five hundred thousand pesos (Php500,000.00).

Sec. 14. Report of the Secretary of Department of Finance. ~ On or before
June J of each calendar year, the Secretary of the Department of Finance (DOF) shall
submit and present to both the Chairpersons of the Senate and House of
Representatives Ways and Means Committee a report on: (a) All categories of
incidents involving the misconduct of the officers and employees of the BIR and BOC
during the preceding calendar year; and (b) Action on and disposition of any such
instances.

Sec. 15. Implementing Rules and Regulations. — Within thirty (30) days from
the effectivity of this Act, the following shall promulgate the necessary rules and
regulations for its effective implementation

a. A representative from the DOF;

b. A representative from the BIR;

c. A representative from the BOC;

¢. A representative from the Secretariat of the Congressional Oversight
Committee on Comprehensive Tax Reform Program;

€. Representatives from the Committee on Ways and Means of both Houses
of Congress; and

f. A representative each from a business association and the Philippine
Institute of Certified Public Accountants (PICPA).

Sec. 16. Separability Clause. ~ If any provision or part hereof is declared
unconstitutional, the remainder of this Act or any provision not affected thereby shall
remain in full force and effect.

Sec. 17. Repealing Clause. - All laws, acts, decrees, executive orders,
issuances, and rules and regulations or parts thereof which are contrary to and
inconsistent with this Act are hereby repealed, amended or modified accordingly.

Sec. 18. Effectivity. - This Act shall take effect fifteen (15) days after its
compiete publication in the Officia/ Gazette or in at least two (2) newspapers of general
circulation.

Approved,

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