RMO No. 07-2015: Prescribes and implements the revised consolidated Schedule of Compromise Penalties for Violations of the National Internal Revenue Code

Key points

1. Use of the schedule. Internal revenue officers apply the revised Schedule in Annex A for uniform action. Fraud cases are referred to the Division with jurisdiction for criminal action.
2. Amounts and deviations. The compromise penalty may differ from the scheduled amount only with approval of the Commissioner or the concerned Deputy Commissioner, or in proper cases the Regional Directors. A higher compromise amount may be accepted, and a lower offer needs approval of the Commissioner, Deputy Commissioner, Assistant Commissioner or Regional Director concerned.
3. How penalties are shown. Compromise penalties are itemized in the assessment notice or demand letter. They do not form part of the notice showing deficiency basic tax, surcharge and interest, and appear in a separate notice or letter as the amount suggested in lieu of criminal prosecution.
4. Payment and refusal. Paid compromise penalties are collected and accounted for as internal revenue collection under the usual procedures. They are only suggested amounts and cannot be imposed, so if the taxpayer refuses to pay, the violation is referred to the appropriate office for criminal action.

Who is affected

• Internal revenue officers
• Taxpayers with violations of the NIRC