The government's power to assess and collect taxes is not unlimited in time; the Tax Code provides prescriptive periods that protect taxpayers from indefinite exposure. As a general rule, internal revenue taxes must be assessed within three years from the last day prescribed by law for the filing of the return, or from the day the return was actually filed if filed late. However, this period is extended to ten years in cases of a false or fraudulent return with intent to evade tax, or a failure to file a return; in such cases, the tax may be assessed, or a proceeding for collection may begin without assessment, within ten years after the discovery of the falsity, fraud, or omission. Once a tax has been assessed, the BIR generally has a further period (five years from the assessment) to collect it by distraint, levy, or court proceeding. The running of these periods may be suspended in certain situations (such as when the taxpayer requests a reinvestigation that is granted, or the taxpayer cannot be located). If the BIR assesses or collects beyond the prescriptive period, the assessment or collection is barred, and the taxpayer may raise prescription as a defense. So even a valid tax liability can become unenforceable through prescription.
Limited Time to Assess
Taxes must generally be assessed within three years from the deadline for filing the return (or the actual filing date if late).
The Ten-Year Period
This extends to ten years for a false or fraudulent return with intent to evade, or a failure to file — counted from the discovery of the falsity, fraud, or omission.
Period to Collect
Once assessed, the BIR generally has a further five years to collect. The periods may be suspended in certain cases (e.g., a granted reinvestigation, or the taxpayer cannot be located).
Practical Takeaways
- The BIR generally has three years to assess (ten for fraud or non-filing);
- It has about five years to collect after assessment;
- Beyond these periods, the tax is barred by prescription — a defense the taxpayer may raise.
Frequently Asked Questions
How long does the BIR have to assess a tax? Generally three years from the last day for filing the return, or from the actual filing date if filed late.
When is the period ten years? In cases of a false or fraudulent return with intent to evade tax, or a failure to file a return. The ten years is counted from the discovery of the falsity, fraud, or omission.
How long does the BIR have to collect an assessed tax? Generally five years from the assessment, by distraint, levy, or court proceeding, though the period may be suspended in certain situations.
What happens if the BIR is late? If the BIR assesses or collects beyond the prescriptive period, the assessment or collection is barred, and the taxpayer may raise prescription as a defense, making even a valid liability unenforceable.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
If you have questions about your rights or options under Philippine law, our firm is available to assist. You may reach us via Viber or WhatsApp, call us at 0995 433 5550, or send an email to vivasnobles@gmail.com. We look forward to hearing from you.