I had previously written in this column an article articulating the remedies available to taxpayers in cases of disputes with the local tax authorities. With jurisprudence evolving and providing further clarity on these remedies, let me revisit the rules for proper guidance.
In the pursuit by the LGU’s local taxing power and in the compliance by taxpayers of their local tax obligations, disputes often arise. The common disputes involve disagreement on the extent of liability of the taxpayer, which usually results from an assessment or the overpayment or erroneous payment of the supposed taxes due.
Clearly, the remedy under Section 195 applies when there is an assessment, that is, notice of assessment. A notice of assessment, as commonly understood, is issued upon review or examination conducted by tax authorities after a taxpayer has paid or supposed to have paid his taxes. This is the instance where Section 195 applies. On the other hand, the remedy of refund is available when the taxpayer pays a tax and claims erroneous or overpayment.
To summarize, when the local tax authorities issue an assessment, the proper remedy is to protest the assessment if the taxpayer disputes the issues and/or amounts being assessed. When the taxpayer voluntarily pays the assessment or is compelled to pay the same, he may at the same time claim the return of the erroneous payment. When no assessment is involved, the only remedy is a refund.