(1)

January 25, 2016

REVENUE MEMORANDUM ORDER NO. 004-16

SUBJECT : Amending the Pertinent Provisions of Revenue

Memorandum Order No. 20-2007 on the Simplified
Processing of Applications for Compromise Settlement and
Abatement Cases by Concerned Regional Offices

TO : All Internal Revenue Officials, Employees and Others

Concerned

I. Objectives

This Order is hereby issued in order to further facilitate and expedite the
processing of this Bureau, more particularly on applications for compromise
settlement, as well as abatement or cancellation of internal revenue tax liabilities
filed by all concerned taxpayers under the provisions of Revenue Regulations (RR)
No. 30-2002 , and RR No. 13-2001 , as amended by RR No. 4-2012 ,
respectively, that have been recommended the denial by the concerned revenue
offices under the Revenue Regions and Large Taxpayers Service (LTS) before the
same are transmitted for further evaluation and recommendation by the Technical
Working Group (TWG)/Technical Working Committee (TWC) in the National
Office, and subsequent approval by the National Evaluation Board (NEB) or the
Commissioner of Internal Revenue (CIR), as the case may be.

II. Amendatory Provisions

1. All applications for compromise settlement, abatement or cancellation

of internal revenue tax liabilities filed by all concerned taxpayers under the
respective jurisdiction of the Revenue Regions and Large Taxpayers Service,
regardless of the amount of the threshold prescribed under the provisions of
Section 204 (A) for compromise settlement, that have been evaluated by the
Regional Evaluation Board (REB), or, as the case may be, by the LTS sub-TWC,
for abatement cases or the LTS Evaluation Board (LTSEB), for compromise
settlement cases, resulting to a recommendation for denial of the application, shall
be considered FINAL and the outstanding tax liabilities and/or penalties shall be

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 immediately collected from the concerned taxpayer-applicant.

2. The corresponding Notice of Denial (Annex "A") shall be prepared

with the initials of the authorized members of the LTS-sub-TWC/EB and REB
duly affixed thereto. The duly accomplished Notice of Denial, together with the
entire docket of the application, shall be transmitted to the Chief, Accounts
Receivable Monitoring Division (ARMD), for recording and monitoring purposes,
within ten (10) days immediately after the denial by the concerned LTS
sub-TWC/EB or regional TWG/REB, as the case may be. Subsequently, the Chief,
ARMD shall, within five (5) days from receipt thereof, directly submit the said
Notice, together with the entire docket of the application, to the Commissioner of
Internal Revenue for signature, without the need of any further review or
evaluation of the substantive aspect of the LTSEB/REB by the NO-TWG/TWC.
After the approval of the said notice by the Commissioner, the approved notice and
the entire docket of the application shall be returned to the Chief, ARMD for
recording purposes and the same shall be immediately transmitted to the
originating revenue office for the appropriate service of the Notice to the taxpayer
and the immediate collection enforcement of the outstanding tax liabilities. A
monthly consolidated report on all denied applications for compromise
settlement/abatement cases shall be prepared and submitted by the Chief, ARMD
to the Assistant Commissioner (ACIR), Collection Service, copy furnished the
offices of the Deputy Commissioner for Operations and the CIR, within ten (10)
days immediately after the end of each month. ITAaHc

3. The herein prescribed Notice shall be prepared by the Office of the

Regional Director, for regional cases or Office of the LTS, for LTS cases, as the
case may be.

The serial number (SN) in the Notice of Denial shall be prepared by the said
offices in the following order:

a. Nature of the application, "C", for compromise settlement or,

"A", for abatement;

b. Regional or national office name (i.e., LTS, EAS, RR01, RR02

and so on), as the case may be;

c. Year of issuance of the notice; and

d. Control number.

Example:

An application for compromise settlement of the 2008 income tax liability

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 of a large taxpayer was denied by the LTSEB. The Office of the LTS shall prepare
the Notice of Denial and assign the serial number and indicate thereon as:
"C-LTS-2016-001".

For each year thereafter, the control number shall restart to number one (1)
for the first Notice of Denial to be issued for the calendar year. The Chief, ARMD
shall ensure that all notices of denial shall be indicated with serial numbers
prepared properly and sequentially (e.g., absence of serial/control numbers,
repetition of serial numbers, skipping/break in series, etc.) by the concerned
revenue offices. In case of any discrepancy, a written notice shall be sent the
concerned revenue office for purposes of correction/revision of the duly
accomplished of the Notice of Denial.

4. In case the recommendations of the REB/LTS-EB was/were approve

the taxpayer's application, the pertinent procedural requirements set forth under RR
No. 30-2002, and RR No. 13-2001, as amended by RR No. 4-2012, Revenue
Memorandum Order (RMO) No. 20-2007, and other relevant revenue issuances for
the filing of the said applications at the concerned regional, LTS or National
offices up to the approval thereof by the concerned TWG/NEB/TWC/CIR at the
National Office shall still be observed. However, in the evaluation thereof, all
concerned respective members of the LTS-sub-TWC/EB, and REBs/Regional
TWGs, as the case may be, shall ensure that each and every application for
compromise settlement or abatement of the internal revenue tax liabilities of the
taxpayer are strictly processed and evaluated in accordance to these revenue
issuances. In case any application shall be recommended for approval by the
LTS-sub-TWC/EB or REB, with the deliberate intention of simply passing the
resolution of any factual/legal issue on the application to, but the same has been
clearly found to be contrary by, the NEB/TWG/TWC/CIR, the same shall be
considered as a demerit from the individual performance of every member of the
said recommending TWC/TWG/Boards/revenue officials, without prejudice of
holding him/her administratively liable thereto.

5. The LTS sub-TWC/EB and all regional TWGs/REBs shall evaluate

and release their respective board's decision within fifteen (15) calendar days from
receipt of any application for compromise settlement or abatement.

6. The prescribed reports (i.e., Annexes "A" to "G") for applications for
compromise settlement/abatement penalties under Operations Memorandum No.
13-01-003 issued by the Deputy Commissioner for Operations Group of this
Bureau shall be strictly observed by all concerned revenue offices.

III. Transitory Provisions

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 The rules herein prescribed shall not apply to all applications for
compromise settlement and abatement of penalties that are transmitted to and
pending with the TWG/NEB/TWC in the National Office as of January 29, 2016,
but the pertinent procedural requirements set forth under RR No. 30-2002, and RR
No. 13-2001, as amended by RR No. 4-2012, RMO No. 20-2007, and other
relevant revenue issuances shall apply instead.

IV. Repealing Clause

The pertinent provisions of RMO No. 20-2007 which are inconsistent

herewith are hereby repealed, modified or amended accordingly.

V. Effectivity

This Order shall take effect immediately. CHTAIc

(SGD.) KIM S. JACINTO-HENARES

Commissioner of Internal Revenue

ANNEX A

SN _________

Notice of Denial

Application for _________________________________________

(Indicate whether compromise settlement or abatement)

_____________
(Date)

______________________________
(Name of Taxpayer)
______________________________
(Address of Taxpayer)
______________________________
(TIN of Taxpayer)

Gentlemen/Sir/Madam :

This refers to the application/offer for ______________________________

(indicate whether compromise settlement or abatement of penalties) of your
_____________________ (year covered) and type of tax(es) liabilities involving the total

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 amount of Php_____________ on the ground of __________________ pursuant to the
provisions of Section 204 of the National Internal Revenue Code of 1997, as amended, as
implemented under Revenue Regulations No. __________.

Please be informed that after careful review and evaluation of your application,
the same has been disapproved by the _______________________ (state the concerned
approving board) of this Bureau.

In view thereof, you are hereby requested to pay the amount of

Php______________, net of Php_____________ which was previously paid, plus all the
increments incident to delinquency with any authorized agent banks within fifteen (15)
days from receipt hereof. Should you fail to do so, we will be constrained, much to our
regret, to enforce the collection thereof thru the administrative summary remedies
provided by law without any further notice.

For your information and guidance.

Very truly yours,

Commissioner of Internal Revenue

August 13, 2007

REVENUE MEMORANDUM ORDER NO. 20-07

SUBJECT : Simplified Processing of Application to Avail Taxpayer's

Remedies Under Section 204 (A), Compromise Settlement,
and Section 204 (B), Abatement, Both of the National
Internal Revenue Code of 1997

TO : All Internal Revenue Officers, Employees and Others

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 Concerned

I. Background

The National Internal Revenue Code of 1997 (Code) particularly, Sections

204 (A) and (B) , in relation to Section 7 , empowers the Commissioner of
Internal Revenue (CIR) to compromise or abate internal revenue tax liabilities as a
sort of taxpayer's remedy. These provisions have been implemented by several
Revenue Regulations (RR), particularly RR Nos. 6-2000 , 7-2001 and
30-2002 , for compromise settlement, and RR No. 13-2001 , for abatement.
These RRs provided for the guidelines and procedures in the processing of the
application for compromise settlement and abatement, including the offices which
are tasked to process and approve the applications.

Based on the aforesaid RRs, receiving, processing and evaluation of the

application, including the initial recommendation for the approval/disapproval
thereof, were lodged in the Revenue Regional Offices thru the Revenue District
Offices, for regional office cases and to the ACIR/HREA of the Large Taxpayers
Service thru its investigating Offices being the offices which have jurisdiction over
the taxpayers. Technical Working Groups (TWG) were created, both in the
National Office and the Regional Offices, to review applications and make the
final recommendation to the approving authority, after the said application has
been processed, analyzed and recommended for approval/disapproval. However, it
has come to the attention of the National Office that applications for abatement
and/or compromise settlement have been forwarded by the investigating offices to
the TWGs without any evaluation and recommendation as to whether the
application can be approved or not and leave the initial analysis of the case to the
latter which is supposed to be the reviewing office.

Inasmuch as the responsibilities/functions of the concerned offices were

ready spelled-out in the existing issuances, this Order is thus issued to mandate the
concerned offices to be mindful of their responsibilities with regards to the
processing of application for compromise settlement and abatement cases for a
simplified processing of application for availing taxpayer's remedies.

II. Policies

(a) Abatement

Under existing rules, the BIR process applications for

the abatement of only the surcharges, interest and compromise
penalties. Any application for the abatement of the basic tax
assessed or any portion thereof, if any, are not covered by any

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 existing regulations and therefore shall not be processed.

The RDO investigation offices of the LTS having

jurisdiction over the taxpayer-applicant shall, upon receipt of
the application for the abatement together with required
supporting documents, process the application, make the
necessary evaluation and prepare a report containing its
recommendation to the duly constituted Technical Working
Committee (TWC). The report shall likewise state the basis of
the recommendation as provided under Section 204 (B) of the
Code and RR No. 13-2001.

The TWC shall review the report and recommendation

of the investigation offices and thereafter prepare the final
recommendation for the approval of the Commissioner.

In all instances, no application for abatement shall be

initially processed/evaluated by the investigating office
without the payment of 100% of the basic tax.

(b) Compromise Settlement

Pursuant to Section 204 (A), in relation to Section 7, of

the Code, as implemented by RR Nos. 6-2000, 7-2001 and
30-2002, recommendation/final report on the application for
compromise shall be signed/approved as herein stated: EHSTcC

1) Concerned Regional Evaluation Board (REB)

• Regional office cases involving basic tax

assessment amounting to Five hundred thousand
pesos (P500,000) or less, and minor criminal
violations discovered by regional and district
officials which were already delegated to the
REB.

2) CIR

• Other cases which were not delegated

• Cases which, by law, have been entrusted to the

CIR

3) National Evaluation Board (NEB)

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 • Cases where the basic tax exceeds One million
pesos (P1,000,000) or where the settlement
offered is less than the prescribed minimum
amount (10% for cases of financial incapacity;
40% for cases of doubtful validity of the
assessment) which, by law, have been entrusted
to the NEB

Prior to its approval/disapproval, application for

compromise settlement shall likewise be processed, evaluated
and recommended by the investigating offices having
jurisdiction over the taxpayer-applicant. Processing and
evaluation of regional office cases shall be undertaken by the
respective district offices while LTS cases shall be processed
and evaluated by the LTS investigating offices before
submitting the recommendation thereon to the respective
TWGs. The concerned TWG shall review the submitted report
and recommendation and prepare its final recommendation for
the approval of the CIR/REB/NEB.

In all instances, application for compromise settlement

shall not be forwarded to the TWGs without being processed,
evaluated and provided with recommendation by the
originating office.

The concerned RDO/head of the LTS investigating office is hereby directed

to require all applicants to pay the basic tax assessed, for abatement cases, and the
offers of compromise, for compromise settlement, upon filing of the application
for abatement/compromise settlement before the application can be initially
processed. In case of ultimate disapproval of the application by the approving
authority, payments already made pursuant to these applications shall be treated as
partial or installment payments of the assessments.

III. Effectivity

This Order takes effect immediately.

(SGD.) LILIAN B. HEFTI

OIC-Commissioner of Internal Revenue

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Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 9
 Endnotes

1 (Popup - Popup)
Annex A

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