Delegation of Authority to Sign Termination Letter, Letter of Denial, Notice of Disqualification for Abatement and Compromise

August 10, 2007 REVENUE DELEGATION AUTHORITY ORDER NO. 06-07 SUBJECT : Delegation of Authority to Sign Termination Letter or Letter of Denial/Notice of Disqualification for Abatement and Compromise Settlement Cases After Approval or Disapproval of the Action on the Application for Abatement and Compromise by the Proper Authority Pursuant to Section 204 in Relation to Section 7 of the National Internal Revenue Code of 1997 TO : All Internal Revenue Officers, Employees and Others Concerned I. Authority of the Commissioner to Compromise or Abate Taxes . Section 204 of the National Internal Revenue Code of 1997 (Code) provides for the authority of the Commissioner of Internal Revenue (CIR) to compromise or abate the payment of any internal revenue taxes subject to certain conditions. Section 7 of the same Code, however, which provides for the power of the CIR to delegate some of his functions, prohibits the delegation of his power to compromise or abate any tax liability under certain instances to wit EScHDA "Sec. 7. Authority of the Commissioner to Delegate Power . The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any of such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner: Provided, however , That the following powers of the Commissioner shall not be delegated: xxx xxx xxx (c) The power to compromise or abate, under Sec. 204(A) and (B) of this Code, any tax liability: Provided, however , That the assessments issued by the regional offices involving basic deficiency taxes of Five hundred thousand pesos (P500,000) or less, and minor criminal violations, as may be determined by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner, discovered by regional and district officials, may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman, the Assistant Regional Director, the heads of the Legal, Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer, as members: xxx xxx xxx." Based on the above-mentioned provisions, the approval or denial of the application for Abatement cannot be delegated to any other Bureau official. Such being the case, the signing and approval/disapproval of the recommendation/final report of tax cases which is the subject of application for Abatement shall be the sole authority of the CIR. The term "abatement" as implemented by the Bureau of Internal Revenue (BIR) pursuant to existing laws and regulations applies to cancellation of surcharge, interest and other penalties imposed on the taxpayer and not to cancellation of any portion of the basic tax assessed. For Compromise Settlement, approval of the application for Compromise on deficiency taxes assessed by the regional offices amounting to Five hundred thousand pesos (P500,000) or less, may be delegated to the Regional Evaluation Board. However, for all other cases, the approval of the application for Compromise shall be the sole authority of the CIR and is covered by the general prohibition on non-delegation of the power of the CIR to compromise tax liability. Provided, however, that where the basic tax exceeds One million pesos (P1,000,000) or where the settlement offered is less than the prescribed minimum rates (10% for cases of financial incapacity; 40% for cases of doubtful validity of the assessment), the compromise shall be subject to the approval of the National Evaluation Board (NEB), composed of the CIR and the Deputy Commissioners of the BIR. II. Delegated Authority The signing/approval of the CIR on the recommendation/final report on the application for Abatement being the final act of approving/disapproving such application shall still be the sole authority of the CIR. However, any succeeding certification to document/prove the approval or disapproval of the same can be properly delegated. IDESTH In order, therefore, to expedite the disposition of tax cases which are the subject of application for Abatement, the signing of the Termination Letter or Letter of Denial/Notice of Disqualification, as the case may be, notwithstanding the provisions of Revenue Memorandum Order No. 23-2006 and other issuances to the contrary, is hereby delegated to the following officials: Regional Office cases ACIR, Collection Service Large Taxpayers' cases ACIR/concerned HREA, Large Taxpayers Service For Compromise Settlement cases, recommendation/final report on the application shall be signed/approved as herein-stated: Regional office cases involving basic tax concerned assessment amounting to Five hundred Regional thousand pesos (P500,000) or less, and Evaluation minor criminal violations discovered by Board (REB) regional and district officials which were already delegated to the Regional Evaluation Board Other cases which were not delegated CIR Cases which, by law, have been entrusted to CIR the CIR Cases which, by law, have been entrusted NEB to the National Evaluation Board HDAaIc As there was no prohibition on the delegation of the signing of the certification documenting/proving the approval/disapproval of the application, the signing of the Termination Letter or the Letter of Denial/Notice of Disqualification is hereby delegated to the following: Regional Office cases amounting to concerned Regional P500,000 or less and minor criminal Director violations discovered by the regional and district officials Other cases which were not delegated ACIR, Collection Service for regional cases/ACIR or HREA-LTS for LTS cases Cases which, by law, have been entrusted ACIR, Collection to the CIR Service for regional cases/ACIR or HREA-LTS for LTS cases Cases entrusted to the NEB ACIR, Collection Service for regional cases/ACIR or HREA-LTS for LTS cases The aforesaid Termination Letter or Letter of Denial/Notice of Disqualification shall only be signed by the delegate after the recommendation/final report has been signed/approved by the concerned REB/CIR/NEB, as the case may be. cAaTED III. Effectivity Clause This Revenue Delegation Authority Order shall take effect immediately. (SGD.) LILIAN B. HEFTI OIC-Commissioner of Internal Revenue