AUTHORITY OF THE COMMISSIONER OF

INTERNAL REVENUE

Submitted by: Nasrifah Dari

 1. authority of the
commissioner of internal
revenue
 a. Authority of the

Commissioner

THE COMMISSIONER MAY -

(A) COMPROMISE THE PAYMENT OF ANY INTERNAL REVENUE TAX, WHEN:

(1) A REASONABLE DOUBT AS TO THE VALIDITY OF THE CLAIM AGAINST

THE TAXPAYER EXISTS; OR

(2) THE FINANCIAL POSITION OF THE TAXPAYER DEMONSTRATES A CLEAR

INABILITY TO PAY THE ASSESSED TAX.

(B) ABATE OR CANCEL A TAX LIABILITY, WHEN:

(1) THE TAX OR ANY PORTION THEREOF APPEARS TO BE UNJUSTLY OR

EXCESSIVELY ASSESSED; OR

(2) THE ADMINISTRATION AND COLLECTION COSTS INVOLVED DO NOT

JUSTIFY THE COLLECTION OF THE AMOUNT DUE.

(C) CREDIT OR REFUND:

(1) TAXES ERRONEOUSLY OR ILLEGALLY RECEIVED OR

(2) PENALTIES IMPOSED WITHOUT AUTHORITY,

(3) REFUND THE VALUE OF INTERNAL REVENUE STAMPS WHEN:

(A) THEY ARE RETURNED IN GOOD CONDITION BY THE PURCHASER, AND,

(B) IN HIS DISCRETION, REDEEM OR CHANGE UNUSED STAMPS THAT HAVE

BEEN RENDERED UNFIT FOR USE AND REFUND

THEIR VALUE UPON PROOF OF DESTRUCTION.

2. COMPROMISE SETTLEMENT OF ANY
INTERNAL REVENUE TAX
 a. COMPROMISE

SETTLEMENT ANY TAX

THE COMMISSIONER MAY COMPROMISE THE PAYMENT OF ANY INTERNAL

REVENUE TAX, WHEN:

(1) A REASONABLE DOUBT AS TO THE VALIDITY OF THE CLAIM AGAINST

THE TAXPAYER EXISTS; OR

(2) THE FINANCIAL POSITION OF THE TAXPAYER DEMONSTRATES A CLEAR

INABILITY TO PAY THE ASSESSED TAX.

THE COMPROMISE SETTLEMENT OF ANY TAX LIABILITY SHALL BE SUBJECT

TO THE FOLLOWING MINIMUM AMOUNTS:

(1) FOR CASES OF FINANCIAL INCAPACITY, A MINIMUM COMPROMISE RATE

EQUIVALENT TO TEN PERCENT (10%) OF THE

BASIC ASSESSED TAX; AND

(2) FOR OTHER CASES, A MINIMUM COMPROMISE RATE EQUIVALENT TO

FORTY PERCENT (40%) OF THE BASIC ASSESSED TAX.

THE COMPROMISE SHALL BE SUBJECT TO THE APPROVAL OF THE

EVALUATION BOARD WHICH SHALL BE COMPOSED OF THE

COMMISSIONER AND THE FOUR (4) DEPUTY COMMISSIONERS:

(1) WHERE THE BASIC TAX INVOLVED EXCEEDS ONE MILLION PESOS
(P1,000.000) OR

(2) WHERE THE SETTLEMENT OFFERED IS LESS THAN THE PRESCRIBED

MINIMUM RATES, COMMISSIONER AND THE FOUR

(4) DEPUTY COMMISSIONERS.

 B. CASES WHICH MAY BE

COMPROMISED

1) Delinquent accounts except those with duly approved schedule

of installment payments;
2) Cases under administrative protest after issuance of the
Final Notice of Assessment to the taxpayer which,
are still pending in the Regional Offices, Revenue District Offices,
Legal Service, Large Taxpayer Service,
Collection Service, Enforcement Service and other offices in the
National Office;
3) Civil tax cases being disputed before the courts;
4) Collection cases filed before the courts;
5) CRIMINAL VIOLATIONS, OTHER THAN THOSE
ALREADY FILED IN COURT OR THOSE INVOLVING
CRIMINAL TAX FRAUD
 c. Cases which may not

be compromised

1) Withholding tax cases, unless the applicant-taxpayer invokes provisions of law

that cast doubt on the

taxpayer’s obligation to withhold;

2) Estate tax cases where compromise is requested on the ground of financial

incapacity of the taxpayer;

3) Delinquent accounts with duly approved schedule of installment payments;

4) Criminal tax fraud cases confirmed as such by the Commissioner of Internal

Revenue or his duly authorized
representative;

5) Criminal violations already filed in court;

6) Cases where final reports of reinvestigation or reconsideration have been

issued resulting to reduction in the

original assessment and the taxpayer is agreeable to such decision by signing the
required agreement form

for the purpose;

7) CASES WHICH BECOME FINAL AND EXECUTORY AFTER FINAL

JUDGMENT OF A COURT, WHERE COMPROMISE IS REQUESTED ON

THE GROUND OF DOUBTFUL VALIDITY OF THE ASSESSMENT;

 D. OFFER TO COMPROMISE A

DELINQUENT ACCOUNT OR

DISPUTED ASSESSMENT ON

THE GROUND OF

REASONABLE DOUBT AS TO

THE VALIDITY OF THE

ASSESSMEN
The offer to compromise a delinquent account or disputed assessment on the ground of reasonable doubt as to

the validity of the assessment may be accepted when it is shown that:

1) The delinquent account or disputed assessment is one resulting from a jeopardy assessment; or

2) The assessment seems to be arbitrary in nature, appearing to be based on presumption and there is reason to

believe that it is lacking in legal and/or factual basis; or

3) The assessments were issued on or after January 1, 1998, where the demand notice allegedly failed to comply

with formalities prescribed in the Tax Code; or

4) Assessments made based on the “Best Evidence Obtainable Rule” and there is reason to believe that the same

can be disputed by sufficient and competent evidence; or

5) The assessment was issued within the prescriptive period for assessment as extended by the taxpayer’s

execution of Waiver of the Statute of Limitations the validity or authenticity of which is being questioned or at

issue and there is strong reason to believe and evidence to prove that it is not authentic; or

6) The assessment is based on an issue where a court of competent jurisdiction made an advance decision

against the Bureau, but for which the Supreme Court has not decided upon with finality; or

7) The taxpayer failed to file an administrative protest on account of the alleged failure to receive notice of

assessment and there is reason to believe that the assessment is lacking in legal and/or factual basis; or

8) The taxpayer failed to file a request for reinvestigation or reconsideration within 30 days from receipt of
final

assessment notice and there is reason to believe that the assessment is lacking in legal and/or factual basis;

or

9) The taxpayer failed to elevate to the Court of Tax Appeals (CTA) an adverse decision of the Commissioner of
Internal Revenue, or his duly authorized representative, in some cases, within 30 days from receipt of such

adverse decision and there is reason to believe that the assessment is lacking in legal and/or factual basis.
 e. Prescribed minimum

percentage of

compromise in case

of doubtful validity

1) 40% of the basic assessed tax;

2) Taxpayer may request in writing a compromise

rate lower than 40% subject to prior approval by
the National

Evaluation Board;

3) The compromise settlement of the internal

revenue tax liabilities of taxpayers is reckoned on a
per tax type

assessment basis.

 f. FINANCIAL INCAPACITY

MINIMUM PERCENTAGE OF

COMPROMISE

1) INDIVIDUAL WHOSE ONLY SOURCE IS FROM EMPLOYMENT AND WHOSE
BASIS FOR COMPROMISE
MONTHLY SALARY IS P10,500 OR LESS, IF SINGLE, OR

P21,000 OR LESS, IF MARRIED, AND HAS NO LEVIABLE/DISTRAINABLE

10% ASSETS OTHER THAN FAMILY HOME;

2) INDIVIDUAL WITHOUT ANY SOURCE OF INCOME;

3) TAXPAYER WITH ZERO NET WORTH;

4) TAXPAYER WITH NEGATIVE NET WORTH;

5) ALREADY NON-OPERATING COMPANIES FOR A PERIOD OF 3 YEARS OR

MORE AS OF DATE OF APPLICATION FOR COMPROMISE

SETTLEMENT

1) DISSOLVED CORPORATIONS;

2) ALREADY NON-OPERATING COMPANIES FOR A PERIOD OF
20% LESS THAN 3 YEARS;

3) DECLARED INSOLVENT, BANKRUPT UNLESS THE TAXPAYER

FALLS UNDER ANY OF THE CASES SUBJECT TO A DIFFERENT

PERCENTAGE.

40% TAXPAYER IS SUFFERING FROM SURPLUS OR EARNINGS DEFICIT

RESULTING TO IMPAIRMENT IN THE ORIGINAL CAPITAL BY AT LEAST
50%

MINIMUM PERCENTAGE OF

The above-prescribed minimum percentage shall likewise apply

COMPROMISE ALSO

in compromise settlement of assessments

APPLIES TO ASSESSMENT
consisting solely of increments, i.e., surcharges, interest, etc.
CONSISTING SOLELY OF
based on the total amount assessed.

INCREMENTS

The Commissioner shall not consider any offer for compromise settlement on
Situations where offer
the ground of financial incapacity

of compromise
under the following situations:

settlement on the
1) Taxpayer with Tax Credit Certificate (TCC) issued, on hand, or in transit;

2) Taxpayer with pending claim for tax refund or tax credit with the BIR,
ground of financial

Department of Finance One-Stop-Shop

incapacity shall not be

Tax Credit and Drawback Duty Center (Tax Revenue Group or Investment
considered
Incentive Group) and/or the court;

3) Taxpayer with existing finalized agreement or prospect of future
agreement with any party that resulted or

could result to an increase in the equity of the taxpayer at the time of the
offer for compromise or at a

definite future time;

4) Taxpayer does not waive in writing his privilege of the secrecy of bank
deposits
 g. APPROVAL OF OFFER TO COMPROMIS
APPROVAL OF OFFER TO EXCEPT FOR OFFERS OF COMPROMISE WHERE THE APPROVAL IS
DELEGATED TO THE REGIONAL EVALUATION BOARD (REB), ALL

COMPROMIMajority of all COMPROMISE SETTLEMENTS WITHIN THE JURISDICTION OF THE

members
NATIONAL OFFICE (NO) SHALL BE APPROVED BY THE MAJORITY OF

Of NEB required ALL MEMBERS OF THE NATIONAL EVALUATION BOARD (NEB)

COMPOSED OF THE COMMISSIONER AND THE FOUR (4) DEPUTY

COMMISSIONERS.

Decisions granting
ALL DECISIONS OF THE NEB, GRANTING THE REQUEST OF THE
request have
TAXPAYER OR FAVORABLE TO THE TAXPAYER, SHALL HAVE THE

concurrence of the
CONCURRENCE OF THE COMMISSIONER.
Commissioner

OFFERS OF COMPROMISE OF ASSESSMENT ISSUED BY THE REGIONAL

OFFICE INVOLVING BASIC DEFICIENCY TAXES OF P500,000

Offers of compromise
OR LESS AND FOR MINOR CRIMINAL VIOLATIONS DISCOVERED BY THE
involving basic REGIONAL AND DISTRICT OFFICES, SHALL BE

deficiency of P500,000 SUBJECT TO THE APPROVAL BY THE REB COMPRISED OF THE

FOLLOWING OFFICERS OF THE REGION:

or less CHAIRMAN – REGIONAL DIRECTOR

MEMBERS – ASSISTANT REGIONAL DIRECTOR, CHIEF OF LEGAL
DIVISION, CHIEF OF ASSESSMENT DIVISION, CHIEF OF

COLLECTION DIVISION, REVENUE DISTRICT OFFICER

 THE COMPROMISE OFFER SHALL BE PAID BY THE TAXPAYER UPON
FILING OF THE APPLICATION FOR COMPROMISE SETTLEMENT.

NO APPLICATION FOR COMPROMISE SETTLEMENT SHALL BE

Compromise offer to be
PROCESSED WITHOUT THE FULL SETTLEMENT OF THE OFFERED

paid by the taxpayer AMOUNT. IN CASE OF DISAPPROVAL OF THE APPLICATION FOR

COMPROMISE SETTLEMENT, THE AMOUNT PAID UPON FILING OF

SUCH APPLICATION SHALL BE DEDUCTED FROM THE TOTAL

OUTSTANDING TAX LIABILITIES. (RR NO. 9-2013)

i Compromise is less than IF THE OFFER OF COMPROMISE IS LESS THAN

the prescribed minimum
percentage of
compromise settlement
THE PRESCRIBED MINIMUM PERCENTAGE OF
COMPROMISE SETTLEMENT, THE SAME
SHALL ALWAYS BE SUBJECT TO THE APPROVAL
OF THE NEB.
3. CANCELLATION OR
ABATEMENT OF TAX
LIABILITY
 HE COMMISSIONER MAY ABATE OR CANCEL A TAX
a. Bases of abatement or
LIABILITY, WHEN:

cancellation (1) THE TAX OR ANY PORTION THEREOF APPEARS TO

BE UNJUSTLY OR EXCESSIVELY ASSESSED; OR

(2) THE ADMINISTRATION AND COLLECTION COSTS

INVOLVED DO NOT JUSTIFY THE COLLECTION OF THE
AMOUNT DUE.

1) WHEN THE FILING OF THE RETURN/PAYMENT IS MADE AT THE WRONG

B .Instances when VENUE;

2) WHEN THE FILING OF THE RETURN/PAYMENT OF HIS TAX IS DUE TO

penalties and/or ERRONEOUS WRITTEN OFFICIAL ADVICE OF A REVENUE

interest imposed may OFFICER;

3) WHEN THE TAXPAYER FAILS TO FILE A RETURN AND PAY THE TAX ON
be abated or cancelled TIME DUE SUBSTANTIAL LOSSES FROM

PROLONGED LABOR DISPUTE, FORCE MAJEURE OR LEGITIMATE BUSINESS

on the ground that the REVERSES

imposition is unjust and NOTE: IN NO. 3) ABOVE THE ABATEMENT SHALL ONLY COVER THE
SURCHARGE AND THE COMPROMISE PENALTY AND NOT

excessive THE INTEREST.

4) WHEN THE ASSESSMENT IS BROUGHT ABOUT OR THE RESULT OF THE

TAXPAYER’S NON-COMPLIANCE WITH THE LAW DUE TO

A DIFFICULT INTERPRETATION OF THE SAID LAW;

5) WHEN THE TAXPAYER FAILS TO FILE THE RETURN AND PAY THE
CORRECT TAX ON TIME DUE TO CIRCUMSTANCES BEYOND HIS

CONTROL, PROVIDED HOWEVER, THAT ABATEMENT SHALL COVER ONLY

THE SURCHARGE AND THE COMPROMISE PENALTY AND

NOT THE INTEREST;

6) LATE PAYMENT OF THE TAX UNDER MERITORIOUS CIRCUMSTANCES

 c. Instances of substantial
1) LABOR STRIKE FOR MORE THAN 6 MONTHS, WHICH HAS CAUSED THE TEMPORARY
losses from prolonged
SHUTDOWN OF BUSINESS;

2) PUBLIC TURMOIL;

labor dispute, force

3) NATURAL CALAMITY SUCH AS LIGHTNING, EARTHQUAKE, STORM, FLOOD AND THE

majeure or legitimate
LIKE;

4) ARMED CONFLICTS SUCH AS WAR OR INSURGENCY;

business reverses (no.

5) SUBSTANTIAL LOSSES SUSTAINED DUE TO FIRE, ROBBERY, THEFT, EMBEZZLEMENT;

6) CONTINUOUS HEAVY LOSSES INCURRED BY THE TAXPAYER FOR THE LAST TWO (2)
3 above) YEARS;

7) LIQUIDITY PROBLEM OF THE TAXPAYER FOR THE LAST THREE (3) YEARS;

8) SUCH OTHER INSTANCES WHICH THE COMMISSIONER MAY DEEM ANALOGOUS TO

THE ENUMERATION ABOVE;

1) ONE DAY LATE FILING AND REMITTANCE DUE TO FAILURE TO BEAT BANK CUT-OFF TIME (NO LONGER ALLOWED UNDER
RR 4-

2012 DATED MARCH 28, 2012);

2) LATE FILING OF RETURN DUE TO UNRESOLVED ISSUE ON CLASSIFICATION OR VALUATION OF REAL PROPERTY (FOR
CAPITAL

GAINS TAX CASES, ETC.);

d. Instances of meritorious

3) LATE REMITTANCE OF WITHHOLDING TAX ON COMPENSATION OF EXPATRIATES FOR SERVICES RENDERED IN THE
PHILIPPINES

circumstances
PENDING THE ISSUANCE BY THE SEC OF THE LICENSE TO THE PHILIPPINE BRANCH OFFICE OR SUBSIDIARY, PROVIDED,
HOWEVER,

(no. 6 above) THAT THE ABATEMENT SHALL ONLY COVER THE SURCHARGE AND THE COMPROMISE PENALTY AND NOT THE INTEREST;

4) USE OF WRONG TAX FORM BUT CORRECT AMOUNT OF TAX WAS REMITTED;

5) SURCHARGE ERRONEOUSLY IMPOSED;

6) WRONG USE OF TAX CREDIT CERTIFICATE (TCC) WHERE TAX DEBIT MEMO (TDM) WAS NOT PROPERLY

APPLIED FOR;

7) OFFSETTING OF TAXES OF THE SAME KIND, I.E., OVERPAYMENT IN ONE QUARTER OR MONTH IS OFFSET AGAINST
UNDERPAYMENT

IN ANOTHER QUARTER OR MONTH;

8) AUTOMATIC OFFSETTING OF OVERPAYMENT OF ONE KIND OF WITHHOLDING TAX AGAINST THE UNDERPAYMENT OF
ANOTHER

KIND;

9) FILING AN AMENDED RETURN UNDER MERITORIOUS CIRCUMSTANCES, PROVIDED, HOWEVER, THAT ABATEMENT SHALL
COVER

ONLY THE PENALTIES AND NOT THE INTEREST;

10) SUCH OTHER INSTANCES WHICH THE COMMISSIONER MAY DEEM ANALOGOUS TO THE ENUMERATION ABOVE
 1) WHEN THE TAXPAYER FAILS TO FILE A RETURN AND PAY THE TAX ON
TIME DUE SUBSTANTIAL LOSSES FROM

PROLONGED LABOR DISPUTE, FORCE MAJEURE OR LEGITIMATE BUSINESS

REVERSES;

2) WHEN THE TAXPAYER FAILS TO FILE THE RETURN AND PAY THE
e. Instances where
CORRECT TAX ON TIME DUE TO CIRCUMSTANCES BEYOND HIS

CONTROL;

interest is not abated 3) FILING AN AMENDED RETURN UNDER MERITORIOUS CIRCUMSTANCES;

4) LATE REMITTANCE OF WITHHOLDING TAX ON COMPENSATION OF

EXPATRIATES FOR SERVICES RENDERED IN THE PHILIPPINES

PENDING THE ISSUANCE BY THE SEC OF THE LICENSE TO THE PHILIPPINE

BRANCH OFFICE OR SUBSIDIARY.

1) ASSESSMENT CONFIRMED BY LOWER COURT BUT APPEALED BY THE
TAXPAYER TO A HIGHER COURT;

f. Instances when the tax

2) ASSESSMENT REDUCED AFTER REINVESTIGATION BUT TAXPAYER IS STILL

liabilities, penalties
CONTESTING REDUCED ASSESSMENT

and/or interest
3) WITHHOLDING TAX ASSESSMENT UNDER MERITORIOUS CIRCUMSTANCES;

imposed on taxpayer
4) DELAYED INSTALLMENT PAYMENT UNDER MERITORIOUS CIRCUMSTANCES;

may be abated or
5) SUCH OTHER INSTANCES WHICH THE COMMISSIONER MAY DEEM
cancelled on the ground
ANALOGOUS TO THE ENUMERATION ABOVE.

that the administration

NOTE: FOR CASES 1 TO 4 ABOVE, THE ABATEMENT OF THE SURCHARGE
AND THE COMPROMISE PENALTY SHALL BE ALLOWED

and collection costs are

ONLY UPON WRITTEN APPLICATION BY THE TAXPAYER SIGNIFYING HIS
more than the amount
WILLINGNESS TO PAY THE BASIC TAX AND INTEREST

sought to be collected OR BASIC TAX ONLY, WHICHEVER IS APPLICABLE UNDER THE PREVAILING
CIRCUMSTANCE.
 g. Commissioner has sole
THE COMMISSIONER HAS THE SOLE
authority to abate or
AUTHORITY TO ABATE OR CANCEL TAX,
cancel
PENALTIES AND/OR INTEREST.

1) THE APPLICATION FOR ABATEMENT OR
h. Processing for CANCELLATION OF TAX, PENALTIES AND/OR INTEREST
abatement or SHOULD BE ACTED UPON BY THE

PROCESSING OFFICE WITHIN 5 DAYS FROM RECEIPT BY

cancellation of tax
SAID OFFICE.

2) THE BIR NATIONAL OFFICE HAS 30 DAYS WITHIN
WHICH TO ACT ON THE CASE.

4. TAX CREDIT OR REFUND

 THE COMMISSIONER MAY CREDIT OR REFUND:

(1) TAXES ERRONEOUSLY OR ILLEGALLY RECEIVED OR

(2) PENALTIES IMPOSED WITHOUT AUTHORITY,

(3) REFUND THE VALUE OF INTERNAL REVENUE STAMPS

a. Instances of tax WHEN:

credit or
(A) THEY ARE RETURNED IN GOOD CONDITION BY THE
PURCHASER, AND,

refund (B) IN HIS DISCRETION, REDEEM OR CHANGE UNUSED

STAMPS THAT HAVE BEEN RENDERED UNFIT FOR USE
AND REFUND

THEIR VALUE UPON PROOF OF DESTRUCTION.

b. Filing claim for NO CREDIT OR REFUND OF THE TAXES OR PENALTIES SHALL BE

ALLOWED UNLESS THE TAXPAYER FILES IN WRITING WITH THE

credit or COMMISSIONER A CLAIM FOR CREDIT OR REFUND WITHIN TWO (2)

refund YEARS AFTER THE PAYMENT OF THE TAX OR PENALTY.

 A RETURN FILED SHOWING AN

C. RETURN SHOWING
OVERPAYMENT SHALL BE CONSIDERED
OVERPAYMENT AS A WRITTEN CLAIM FOR THE CREDIT
OR REFUND.

A TAX CREDIT CERTIFICATE VALIDLY ISSUED

D. TCC MAY BE APPLIED UNDER THE PROVISIONS OF THE TAX CODE MAY
AGAINST ANY INTERNAL BE APPLIED AGAINST ANY

INTERNAL REVENUE TAX, EXCLUDING

REVENUE TAX
WITHHOLDING TAXES, FOR WHICH THE
TAXPAYER IS DIRECTLY LIABLE.

Thankyou
so much!!