CHAPTER 2

1. Broadly defined, this informs the taxpayer that he or she has tax liabilities.
a. Assessment
b. Investigation
c. Letter of authority
d. Litigation
2. Statement 1: An Assessment can be orally made; Statement 2: An Assessment should contain the law and facts on which the
assessment is based.
a. Only Statement 1 is true
b. Only Statement 2 is true
c. Both statements are true
d. Both statements are not true
3. Statement 1: Assessment are presumed to be correct; Statement 2: Assessments are discretionary on the part of the
Commissioner.
a. Only statement 1 is true
b. Only Statement 2 is true
c. Both statements are true
d. Both statements are not true
4. This occurs when self-assesses tax per return filed by the taxpayer on the prescribed date was not paid at all or only partially
paid.
a. Deficiency tax
b. Delinquency tax
c. Deficit tax
d. Delayed tax
5. Which of the following can be the subject of a collection suit immediately, without the need of a prior assessment?
a. Delinquency tax
b. Deficiency tax
c. Both a and b
d. Neither a nor b
6. It is defined as a delinquency tax assessment made without the benefit of a complete or partial investigation by an authorized
revenue officer.
a. Hasty assessment
b. Jeopardy assessment
c. Delinquency assessment
d. Impartial assessment
7. It is an official document that empowers a Revenue Officer (RO) to examine and scrutinize a taxpayer’s books of accounts
and other accounting records, in order to determine the taxpayer’s correct internal revenue tax liabilities.
a. Preliminary Assessment Notice (PAN)
b. Warrant of Inspection (WOI)
c. Letter of Authority (LA)
d. Arrest Warrant (AW)
8. Statement 1: A Preliminary Assessment Notice (PAN) need to be in writing; Statement 2: If voluntary payments are made
prior to the issuance of PAN, then Pan need not be issued.
a. Only Statement 1 is true
b. Only Statement 2 is true
c. Both statements are true
d. Both statements are not true
9. In which of the following cases will a Pan not be required?
a. There is deficiency income tax due.
b. There is a mathematical error in the computation of taxes
c. In cases involving documentary stamp tax
d. When there is discrepancy between tax payable and tax due
10. Within how many days should a taxpayer reply to the PAN?
a. Ten days
b. Fifteen days
c. Twenty days
d. Thirty days
11. A Final Assessment Notice (FAN) shall be issued within ___ after the expiration of the period to file the reply to the PAN or
after receipt of the reply to the PAN.
a. Ten days
b. Fifteen days
c. Twenty days
d. Thirty days
12. Mommy Divine Company received a preliminary assessment Notice on August 1, 2020, As Mommy Divine was preparing
her reply, Mommy Divine already received a Final Assessment Notice on August 11, 20220. Rule on the validity of the Final
Assessment Notice.
a. The FAN is void. BIR should have wait for her reply to the PAN.
b. The FAN is void. The right to due process of Mommy Divine has been violated.
c. The FAN is valid. Mommy Divine’s period to file her reply expired on August 6, 2020.
d. The FAN is valid. Reply to the PAN is not mandatory in minute.
13. Within how many days should a taxpayer protest to the FAN?
a. Ten days
b. Fifteen days
c. Twenty days
d. Thirty days
14. Which kind of protest requires the submission of additional supporting documents?
a. Request for reconsideration
b. Request for reinvestigation
c. Request for reconveyance
d. Request for recognition
15. Within how many days mut be additional supporting documents be submitted?
a. Fifteen days from filing of a request for reinvestigation
b. Thirty days from filing of a request for reinvestigation.
c. Sixty days from the filing of a request for reinvestigation.
d. Ninety days from filing a request for reinvestigation.
16. Upon receipt of the protest in a request for reconsideration, within how many days must the duly authorized representative or
the Commissioner of internal revenue Code.
a. 90 days
b. 120 days
c. 150 days
d. 180 days
17. It is the decision of the Commissioner of Internal Revenue on the protest of the taxpayer against an assessment.
a. Final Decision on Disputed Assessment
b. Final Decision on Contested Assessment
c. Final Decision on Protested Assessment
d. Final Decision on Questioned Assessment
18. It is defined as the contract between the government and the taxpayer to settle the liability at a lower amount.
a. Abatement
b. Compromise
c. Settlement
d. Remission
19. Which of the following is a ground for compromise?
a. Tax return of the taxpayer has been lost
b. The prescriptive period to assess taxes has already expired.
c. A reasonable doubt as to the validity of the claim against the taxpayer exists.
d. The taxpayer is out of the country and cannot be served with summons by the government.
20. What is the minimum compromise rate if the ground for compromise is financial incapacity?
a. 10% of the basic assessed tax.
b. 20% of the basic assessed tax
c. 30% of the basic assessed tex.
d. 40% of the basic assessed tax.
21. In criminal tax cases, compromise should be made:
a. Before institution of criminal action
b. Before arraignment
 c. Before conviction of a violation of tax laws
d. Before imprisonment
22. Statement 1: Civil case already files before the courts may no longer be the subject of compromise.; statemen2: Criminal tax
fraud cases cannot be the subject of compromise.
a. Only statement 1 is true
b. Only Statement 2 is true
c. Both statements are true
d. Both statements are not true.
23. When the administration and collection costs involved do not justify the collection of the amount due, the tax due may be:
a. Compromised
b. Abated
c. Surcharged
d. Cancelled
24. What is the prescriptive period for assessing taxes?
a. Three years from due date
b. Three years from actual filing
c. There years from due date or actual filing, whichever is earlier
d. Three years from due date or actual filing, whichever is later
25. What is the prescriptive in cases of fraudulent thing filing?
a. Ten years from due date or actual filing, whichever is earlier.
b. Ten years from due date or actual filing, whichever is later.
c. Ten years from discovery of fraud
d. Ten years from commission of fraud.
26. Mimiyuuuh Company filed its annual income tax return for the calendar year 2020 on April 12, 2021. The BIR assessed
Mimiyuuuh of deficiency taxes on April 14, 2024, without alleging fraud. Mimiyuuuh, in its protest, contended that the
period for BIR to assess has already prescribed. Is Mimiyuuuh correct?
a. Yes, the right of BIR to assess has prescribed on April 12, 2023.
b. Yes, the right of BIR to assess has prescribed on April 12, 2024.
c. No, the right of BIR to assess will only prescribe on April 15, 2024.
d. No, the right of BIR to assess will only prescribe on April 15, 2024.
27. Harry Potter Company filed its donor’s tax return for donation made on March 1, 2020, on March 20,2020. On April 13,
2020, Harry Potter Company filed an amended donor’s tax return declaring a gross gift which is greater than previously
declared gross gift. When is the last day for BIR to assess Harry Potter Company for deficiency donor’s tax assuming there is
no fraud?
a. March 1, 2023
b. March 20, 2023
c. March 31, 2023
d. April 13, 2023
28. When is an amendment of a return considered substantial?
a. When there is under declaration exceeding 20%
b. When there is under declaration exceeding 25%
c. When there is under declaration exceeding 30%
d. When there is under declaration exceeding 40%

29. Statement 1- If the taxpayer cannot be located in the address given to him in his return, the period of prescription is tolled.
Statement 2 – If the taxpayer is out of the Philippines, the period of prescription is tolled.
a. Only statement 1 is true
b. Only statement 2 is true
c. Both statements are true
d. Both statements are not true.
30. A final decision on disputed assessment (FDDA) may be the subject of a petition for review within:
a. 30 days from the issuance of decision
b. 30 days from receipt of the taxpayer of the FDDA
c. 60 days from the issuance of decision
d. 60 days from receipt of the taxpayer of the FDDA.
31. Statement 1 – A void assessment renders the FDDA void. Statement 2 – A void FDDA renders the assessment void.
 a. Only Statement 1 is true
b. Only Statement 2 is true
c. Both statements are true
d. Both statements are not true.
32. A petition for review against a FDDA shall be filed with:
a. A division of the Court of Appeals
b. Court of Appeals en banc
c. A division of the Court of Tax Appeals
d. Court of tax Appeals en banc
33. The court of Tax Appeals is composed of a Presiding Justice and ___ associate Justices.
a. Seven
b. Eight
c. Nine
d. Ten
34. Upon notice of an adverse decision by the Court of Tax Appeals Division, the taxpayer must be file:
a. A petition for review within 15 days to the court of tax appelas en banc
b. A petition for review within 30 days to the Court of Tax appeals en banc
c. A motion for reconsideration or motion for new trial within 15 days to the court of tax appeals division.
d. A motion for reconsideration or motion for new trial within 30 days to the court of Tax appeals Division.
35. If the decision of the court of tax appeals en banc is an adverse to the taxpayer, the taxpayer may lodge an appeal with:
a. Court of Appeals
b. Supreme Court
c. International Criminal Court
d. Court of Heaven
36. Fearless Corporation received an assessment notice from the bureau of internal revenue on 9 April 2021, assessing the
corporation deficiency income taxes for taxable year 2017. Fearless Corporation follows the calendar year, and Fearless
Corporation files its annual income tax return for the year 2017 0n 7 April 2018. The Bureau of Internal Revenue has sent the
assessment notice on 5 April 2021 but was only received by the taxpayer 9 April 2021. Has the assessment prescribed?
a. Yes, the assessment has prescribed on 7 April 2021, and the taxpayer was only able to receive the assessment notice on 9
April 2021.
b. No. The assessment is set to prescribe on 7 April 2021, and the BIR was able to send the assessment notice on 5 April
2021.
c. No. The assessment is set to prescribe on 15 April 2021, and the taxpayer was able to receive the assessment notice on 9
April 2021.
d. No. The assessment is set to prescribe on 15 April 2021, and the BIR was able to send the assessment notice on 5 April
2021.
37. The rate of interest for late payment of taxes is set by the law at:
a. The legal interest rate
b. Twelve percent
c. Six percent
d. Twenty percent
38. What are the two kinds of interest under the Tax code?
a. Deficiency and deficit interest
b. Deficiency and delinquency interest
c. Delinquency and demerit interest
d. Delinquency and deficit interest
39. The computation of deficiency interest is reckoned from:
a. Deadline for the payment of the tax due
b. Receipt of assessment notice
c. Finality of the assessment
d. Receipt of the FDDA
40. All of the following would necessitate the imposition of the 50% surcharge, except:
a. Willful neglect to file the return within the period prescribed.
b. False return is willfully made
c. Fraudulent return id willfully made
d. Failure to file with the proper internal revenue officer.
41. When will tax surcharge amounting to 50% of tax due be imposed?
 a. In case of false or fraudulent return is willfully made
b. In case of failure to pay the full or part of the amount tax shown on any return required to be filed, or before the date
prescribed for payment.
c. Filing a return with an internal revenue officer other than those to whom the return is required to be filed.
d. Failure to file any return and pay the tax due thereon.
42. What is the prescriptive period of assessment of tax in case of false or fraudulent return?
a. Within 3 years from the last date of filing required by law or actual filing of return whichever is later.
b. Within 5 years from the discovery of falsity or fraud.
c. Within 3 years from the discovery of falsity or fraud.
d. Within 10 years from the discovery of falsity or fraud.
43. What is the jurisdictional amount for filing civil action for collection of taxes to Court of Tax appeals?
a. If the principal amount of taxes is P300,000 or less exclusive of charges and penalties
b. If the principal amount of taxes is P400,000 or less exclusive of charges and penalties.
c. If the principal amount of taxes is at least P1,000,000 exclusive of charges and penalties.
d. If the principal amount of taxes is at least P500,000 exclusive of charges and penalties/
44. Which of the following is not an administrative remedy of BIR Commissioner to collect tax?
a. Distraint of personal property
b. Civil Case to collect a sum of money
c. Garnishment of bank deposit
d. Levy of real property
45. It refers to the pleading files by the taxpayer in response to the Preliminary assessment notice issued by BIR Commissioner.
a. Request for reconsideration
b. Request for reinvestigation
c. Formal post
d. Reply
46. Which of the following tax cases may be the subject matter of compromise agreement?
a. Estate tax case on ground of financial incapacity
b. Withholding tax case
c. Criminal tax case involving fraud
d. Criminal tax case not yet filed in court
47. In which scenario is previous issuance of preliminary assessment notice mandatory for the validity of the issued final
assessment notice with formal letter of demand?
a. When the tax is due to mathematical error
b. When the amount of tax withheld is higher than the amount of tax remitted to BIR
c. When the tax deficiency pertains to value added tax
d. When the amount of tax refunded is still claimed as tax credit
48. Which of the following documents issued by BIR Commissioner must be duly protested by the taxpayer to prevent the
finality of assessment?
a. Final assessment notice with formal letter of demand
b. Preliminary assessment notice
c. Both A and B
d. Neither A nor B.
49. Which type of formal protest filed by a taxpayer before BIR Commissioner requires the taxpayer to submit documentary
evidence to BIR Commissioner?
a. Request for reconsideration
b. Request for reinvestigation
c. Both A and B
d. Neither A or B
50. What is the prescriptive period for filing claim for tax refund of national internal revenue taxes?
a. Within 5 years from the date of payment of tax
b. Within 3 years from the date of payment of tax
c. Within 10 years from the date of payment of tax
d. Within 2 years from the date of payment of tax
51. Which of the following is ground for abatement of tax?
a.