Taxation, 2012 Bar — Question IX

QUESTION

On April 16, 2012, the corporation filed its annual corporate income tax return for 2011, showing an overpayment of income tax of P1 Million, which is to be carried over to the succeeding year(s). On May 15, 2012, the corporation sought advice from you and said that it contemplates to file an amended return for 2011, which shows that instead of carry over of the excess income tax payment, the same shall be considered as a claim for tax refund and the small box shown as "refund" in the return will be filled up. Within a year, the corporation will file the formal request for refund for the excess payment. a) Will you recommend to the corporation such a course of action and justify that the amended return is the latest official act of the corporation as to how it may treat such overpayment of tax or should you consider the option granted to taxpayers as irrevocable, once previously exercised by it? Explain your answer. (5%) b) Should the petition for review filed with the CTA on the basis of the amended tax return be denied by the BIR and the CTA? Could the corporation still carry over such excess payment of income tax in the succeeding years, considering that there is no prescriptive period provided for in the income tax law with respect to carry over of excess income tax payments? Explain your answer. (5%)

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