RR No. 07-2001: Further implements certain provisions of the Tax Code of 1997 relative to the compromise settlement of internal revenue tax liabilities

Key points

1. Cases that may be compromised. These are delinquent accounts, cases under administrative protest in BIR offices, and civil tax cases disputed before the courts. Also covered are collection cases filed in courts, criminal violations other than those already filed in court or involving criminal tax fraud, and pre-assessment notice cases where the taxpayer disagrees with the audit findings confirmed by the review office.
2. Cases that cannot be compromised. These are withholding tax cases, criminal tax fraud cases, criminal violations already filed in court, and delinquent accounts with a duly approved installment schedule. Also excluded are cases where final reports of reinvestigation or reconsideration reduced the original assessment, and cases final and executory after a court’s final judgement.
3. Grounds and minimum rates. Compromise is accepted on doubtful validity of the assessment or financial incapacity. The minimum rates, based on the basic assessed tax per tax type, are 10% for financial incapacity and 40% for doubtful validity.
4. 20% minimum rate. The minimum rate is 20% for dissolved corporations, non-operating companies for less than three (3) years, and those with surplus or earnings deficit impairing original capital by at least 50%.
5. Approval. The National Evaluation Board (NEB), made up of the Commissioner and the four Deputy Commissioners, approves compromises within National Office jurisdiction. The Regional Evaluation Board approves Regional Office offers involving basic deficiency taxes of P500,000 or less, including minor criminal violations. Offers below the rates in Sec. 4 of the Regulations always go to the NEB.

Who is affected

• Taxpayers with delinquent accounts, protested assessments, or tax cases in court
• Dissolved corporations and non-operating companies