RMO No. 19-2007: Prescribes the Consolidated Revised Schedule of Compromise Penalties for violations of the National Internal Revenue Code

Summary

RMO No. 19-2007 prescribes the Consolidated Revised Schedule of Compromise Penalties for violations of the NIRC, attached as Annex A of the Order.

Key points

1. Amounts to follow. For criminal violations not involving fraud, compromise penalties must follow the Revised Schedule strictly. The amount may differ only if approved by the Commissioner or concerned Deputy Commissioner, or in proper cases by the Regional Directors. Acts often used for tax evasion that meet the definition of fraudulent acts are deleted from the Schedule.
2. How it is assessed. Compromise penalties are itemized, but they appear in a separate assessment notice or demand letter, apart from the notice showing deficiency basic tax, surcharge and interest. The amount is suggested in lieu of criminal prosecution. If paid, it is collected as internal revenue collection.
3. If the taxpayer refuses. A compromise penalty is only a suggested settlement of criminal liability and cannot be exacted. If the taxpayer refuses, the violation is referred to the appropriate office for criminal action. Fraud cases go to the Division with jurisdiction.
4. Higher or lower offers. The CIR or an authorized representative may accept more than the scheduled amount. An offer lower than the schedule may be accepted after approval by the CIR or the concerned Deputy Commissioner, Assistant Commissioner or Regional Director.

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.