Effect of Availment of Compromise Under Executive Order No. 44 by Paying 30% of Basic Self-assessed Tax per Return

May 13, 1987 REVENUE MEMORANDUM CIRCULAR NO. 20-87 SUBJECT : Effect of Availment of Compromise Under Executive Order No. 44 by Paying 30% of Basic Self-assessed Tax per Return TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, there is published hereunder an excerpt of the memorandum of the Chief, Law Division dated April 7, 1987 duly approved by the Commissioner of Internal Revenue to the effect that proper availment of Executive Order No. 44 by the estates will entitle them to certain benefits such as, immunity from further investigations/examinations and relief from further estate tax liability for the period covered by the availment. acd "April 7, 1987 "MEMORANDUM FOR: The Commissioner xxx xxx xxx "Briefly, the above mentioned tax cases involve the transmissions of property occasioned by death for which estate tax returns were filed only after the promulgation of Executive Order No. 44 or beyond the period prescribed by law; and that said estates availed of the benefits of Executive Order No. 44 by paying 30% of their basic self-assessed tax per return. "The rationale behind the promulgation of Executive Order No. 44 is indicated in the "whereas clause" thereof stating: "Whereas, there is a need to clear this backlog of pending cases of disputed assessments and delinquent accounts. "Whereas, there is a further need to raise revenues." "Pursuant to Executive Order No. 44, the Commissioner of Internal Revenue or his duly authorized representatives shall accept compromise payments by the taxpayers with outstanding delinquent accounts and disputed assessments pending as of December 31, 1985. (Underscoring supplied) cdt "It is significant to note that the phrase "delinquent accounts" has been given a specific meaning under Revenue Regulations No. 17-86 as embracing taxpayers who failed to pay their taxes on or before December 31, 1985 arising from a self-assessed tax, whether or not a tax return was filed. It is our opinion that the adverted estate tax cases of the late Amador Casas, et al., fall within the purview of the said definition; therefore, their availment of the compromise under Executive Order No. 44 is legal and proper. Where the compromise conforms with the requirements of the law; it closes the case pursuant to RMO No. 39-86 and as a consequence thereof, the taxpayer is relieved from further investigation, examinations or assessments . Such relief is not only implicit, it is inherent from the nature of the compromise agreement which is an arrangement for settling a dispute upon what appears to be equitable terms. In the compromise settlement of taxes, the Government stoops down to the level of the individual and in return for the payment and/or administrative convenience gained, it waives further examination, investigation or assessment. It acquires the character of a contract between the Government and the taxpayer which is protected by the guarantee of the non-impairment clause of the constitution (Art. III, Sec. 10, 1987 Constitution of the Philippines)". Respectfully Submitted: (SGD.) ALICIA P. CLEMENO Chief, Law Division CONCUR. (SGD.) JAIME M. MAZA Revenue Service Chief (Legal Office) APPROVED: (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue The foregoing benefits apply not only to estate taxes but also to other internal revenue taxes, which are the subject of availment of Executive Order No. 44 by paying 30% of the basic self-assessed tax per return filed with this Office. casia It is desired that this Circular be given as wide a publicity as possible. (SGD.) EUFRACIO D. SANTOS Deputy Commissioner