Campaign contributions; remedy to BIR final decision
THE Bureau of Internal Revenue (BIR) issued Revenue Regulations No. 7-2011 providing for the policies in the tax treatment of campaign contributions and expenditures.
As a general rule, campaign contributions are not included in the taxable income of the candidate to whom they were given, the reason being that such contributions were given not for the personal expenditure/enrichment of the concerned candidate, but for the purpose of using such contributions for his/her campaign.
Thus, based on the regulations to be considered as exempt from income tax, these campaign contributions must have been utilized to cover a candidate’s expenditures for his/her electoral campaign.
Unutilized/excess campaign funds, this is, campaign contributions net of the candidate’s campaign expenditures, shall be considered as subject to income tax, and as such, must be included in the candidate’s taxable income as stated in his/her Income Tax Return for the subject taxable year.
Any candidate – winning or losing – who fails to file with the Comelec the appropriate Statement of Expenditures required under the Omnibus Election Code, shall be automatically precluded from claiming such expenditures as deductions from his/her campaign contributions.
As such, the entire amount of such campaign contributions shall be considered as directly subject to income tax.
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REMEDY TO BIR FINAL DECISION
Fishwealth Canning Corporation vs. CIR
CTA EB No. 223
Facts
Fishwealth Canning Corp. (Fishwealth) is engaged in the business of processing imported fresh frozen sardines and mackerel.
On Sept. 8, 2003, a Final Assessment Notice (“FAN”) was issued against Fishwealth in the amount of P67 Million for taxable year 1999.
The FAN was contested among others on the ground that the three-year period within which to assess has prescribed. The protest was, however, denied. A motion for reconsideration was thereafter filed by Fishwealth, which was again denied by the BIR.
After the filing of a Petition for Review by Fishwealth before the Court of Tax Appeals, the BIR argues that said petition was filed outside the 30-day reglementary period.
Issue
Whether or not a Motion for Reconsideration of the BIR’s final decision on the disputed assessment is allowed prior to the filing of an appeal with the Court of Tax Appeals
Ruling
A Motion for Reconsideration cannot be filed. The final decision or inaction of the Commissioner of Internal Revenue on a disputed assessment is appealable to the Court of Tax Appeals.
The decision of the BIR denying Fishwealth’s protest clearly stated that was final.
Moreover, the filing of a Motion for Reconsideration does not toll the 30-day period within which the taxpayer may appeal the case before the Court of Tax Appeals.
This being so, the Petition filed by Fishwealth was already filed out of time as it only did so after the denial of its Motion for Reconsideration.
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