BIR Ruling [UN-092-95]

March 7, 1995 BIR RULING [UN-092-95] Mr. Leonardo de Leon (Administrator) Estate of Patrocinio S. de Leon 4-A Alfredo Equia Street Cubao, Quezon City S i r : This refers to your undated letter stating that you have applied for a compromise settlement under Revenue Memorandum Order No. 45-93 of the deficiency estate tax and penalties of the Estate of Patrocinio S. de Leon for the year 1989 involving the amount of P1,516,905.04 under Notice of Assessment No. FAN-2-89-91-001510 dated April 11, 1991, and paid the amount of P489,000.20 representing the balance of the total amount of P758,452.32 or 50% of the total amount being assessed (the amount of P269,452.32 has been previously withheld); that prior to your said application, you consulted the Collection Enforcement Division of this Office in the person of Miss P. Pamplona who gave the go signal; that you secured the necessary funds for this purpose; that subsequently, you requested for clearance and Certification from Regional Director, Mr. Antonio L. Ortega, who denied verbally the issuance of the said clearance and Certification based on RMO Circa 1980's; that the reason for the denial is nowhere to be found in RMO No. 45-93 and defeats the purpose of the said RMO No. 45-93 which is to accelerate the collection of taxes through compromise and abatement; that you are of the opinion that the Commissioner of Internal Revenue, thru RMO No. 54-93, did not exceed her authority by not making the said RMO, Circa 1980's a disqualifying factor in the compromise settlement which you have availed of; and that you are likewise of the opinion that you are qualified to avail of the said compromise settlement pursuant to paragraph (2)(b) of RMO No. 54-93. cdtech Based on the foregoing representations, you now request a ruling to the effect that your availment of the compromise settlement under RMO Nos. 45-93 and 54-93 is valid and therefore the Estate is entitled to the benefits provided therein. In reply, please be informed that paragraph II of RMO No. 54-93 prescribing additional guidelines for the implementation of RMO 45-93 dated September 29, 1993 including the use of BIR Form No. 189-A (Application of Compromise Settlement/Abatement of Penalties under RMO 45-93) and BIR Form No. 189 (Action on Application of Compromise Settlement/Abatement of Penalties) and the procedures for processing the same, provide, viz: "GUIDELINES: "A. Coverage "1. For Compromise Settlement "a. There is a reasonable doubt as to the validity of the assessment against the taxpayer; or "b. The financial position of the taxpayer demonstrates a clear inability to pay the assessed tax. "All internal revenue taxes under the Tax Code for which formal deficiency assessment for any and/or all taxable years up to 1992 have been issued may be the subject of the compromise settlement under RMONo.45-93. Formal deficiency assessments include assessments arrived at during conference after audit; assessment covered by post reporting notices, preliminary notices, and final notices, whether or not protested by taxpayer. Assessments involving criminal violations under the Tax Code may be the subject of compromise with the exception of those already filed in court, and those involving fraud. 2. . . . a. . . . b. . . . c. . . . "B. Exclusions to Compromise Settlement/Abatement of penalties under RMO45-93. "1. Compromise Settlement "a. All criminal violations under the Tax Code which are already filed in court and those involving fraud. "b. Withholding tax assessments." Such being the case, and since a formal assessment for deficiency estate tax for the year 1989 involving the amount of P1,516,905.04 has been issued by this Office against the Estate of Patrocinio S. de Leon under Notice of Assessment No. FAN-2-89-91-001510 dated April 11, 1991, which you applied for compromise settlement under RMO No. 45-93 on the ground that there is a reasonable doubt as to the validity of the said assessment and paid the amount of P489,000.20 or 50% of the total amount being assessed (the amount of P269,452.32 has been previously withheld) coupled with the fact that the said deficiency estate tax is not among those excluded to avail of the compromise settlement under paragraph II (B)(1)(a) and (b) of RMO No. 54-93, this Office is of the opinion as it hereby holds that your availment of the compromise settlement under RMO Nos. 45-93 and 54-93 is legal and proper and therefore the Estate of Patrocinio S. de Leon is entitled to the benefits provided thereunder. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue