The Revised Consolidated Schedule of Compromise Penalties for Violations of the National Internal Revenue Code

January 22, 2015 REVENUE MEMORANDUM ORDER NO. 007-15 SUBJECT : The Revised Consolidated Schedule of Compromise Penalties for Violations of the National Internal Revenue Code TO : All Internal Revenue Officers and Others Concerned I. Objectives: This Order is issued to adopt and implement a uniform application of the compromise penalties involving violations of the National Internal Revenue Code of 1997 (Tax Code), as amended, as well as to update the Schedule of Compromise Penalties specified under RMO No. 19-2007 and further deleting from the coverage thereof certain acts commonly resorted to by taxpayers as means of tax evasion. II. Policies: The applicable policies and guidelines prescribed under RMO No. 19-2007 shall remain for the strict compliance by all concerned, and are quoted as follows: 1. In all cases of criminal violations of the NIRC, not involving the commission of fraudulent act, it is directed that henceforth, compromise penalties to be imposed shall follow strictly the amounts in the attached "Revised Schedule of Compromise Penalties", marked as Annex "A" and made an integral part hereof. 2. Certain acts/violations which are commonly resorted to by taxpayers as means of tax evasion are deleted from the coverage thereof for having met the requirements of the definition of fraudulent acts. III. Guidelines and Instructions: 1. The internal revenue officers concerned shall apply the Revised Schedule of Compromise Penalties embodied in Annex "A" to ensure uniformity of action. 2. Cases involving fraud shall be referred to the concerned Division having jurisdiction over the case, for the institution of the corresponding criminal action. DSATCI 3. In no case shall the compromise penalty differ in amount from those specified in the aforementioned Schedule, except when duly approved by the Commissioner or concerned Deputy Commissioner, or in proper cases, by the Regional Directors. 4. Although all amounts of compromise penalties incident to violations shall be itemized in the assessment notice and/or demand letter, the same should not form part of assessment notice that reflects deficiency basic tax, surcharge and interest but should appear in a separate assessment notice/demand letter as the amount suggested to the taxpayer to pay in lieu of criminal prosecution. If paid, the compromise penalties shall be collected and accounted for under the usual procedures, as internal revenue collection. 5. Since compromise penalties are only amounts suggested in settlement of criminal liability, and may not therefore be imposed or exacted on the taxpayer, the violation shall be referred to the appropriate office for criminal action in the event that a taxpayer refuses to pay the suggested compromise penalty. 6. The schedule of compromise penalties herein prescribed shall not prevent the Commissioner or his duly authorized representative from accepting a compromise amount higher than what is provided hereof. A compromise offer lower than the prescribed amount may be accepted after approval by the Commissioner of Internal Revenue or the concerned Deputy Commissioner/Assistant Commissioner/Regional Director. IV. Repealing Clause: All other orders which are inconsistent herewith are hereby repealed or revoked accordingly. V. Effectivity: This Order shall take effect immediately. (SGD.) KIM S. JACINTO-HENARES Commissioner ANNEX A Revised Schedule of Compromise Penalty Code Nature of Violation Criminal Penalty Imposed Amount of Compromise Sec 90/275 Failure to have the Fine of not more than P1,000 or If the gross estate statement of assets of the imprisonment of not more than But Does Compromise decedent and the 6 months, or both. (Sec. 275, Exceeds Not Exceed is deductions from gross NIRC) P2,000,000 P5,000,000 P7,500 estate certified by an 5,000,000 10,000,000 10,000 independent CPA duly 10,000,000 25,000,000 20,000 accredited by the BIR 25,000,000 50,000,000 25,000 50,000,000 xxx 50,000 232/235 Failure to keep/preserve Fine of not more than P1,000 or If gross annual sales, earnings or receipts records required by law or imprisonment for not more than Exceeds But Does Compromise regulations (six) 6 months, or both. (Sec. Not Exceed is 275, NIRC) Pxxx P50,000 P1,000 50,000 100,000 3,000 100,000 500,000 5,000 500,000 5,000,000 10,000 5,000,000 10,000,000 15,000 10,000,000 20,000,000 20,000 20,000,000 50,000,000 30,000 50,000,000 xxx 50,000 232 Failure to have books of Fine of not more than P1,000 or If gross annual sales earnings or receipts accounts audited and have imprisonment of not more than 6 Exceeds But Does Compromise the financial statements months, or both. (Sec. 275, NIRC) Not Exceed is attached to the income tax P25,000 (for P200,000 P3,000 return certified by an any Quarter); (for the year); independent CPA duly accredited by the BIR 200,000 500,000 5,000 500,000 5,000,000 10,000 5,000,000 10,000,000 15,000 10,000,000 25,000,000 20,000 25,000,000 xxx 25,000 236/258 Failure to Register Fine of not less than P5,000 but If the subject establishment is located in not more than P20,000 and the following: imprisonment of not less than 6 a. Cities 20,000* months but not more than 2 b. 1st class municipalities 10,000* years c. 2nd class municipalities 5,000* d. 3rd class municipalities 2,000* * Penalties provided are inclusive of all other violations 258 Failure to pay annual Fine of not less than P30,000 but a. Cities 30,000 registration fee by a person not more than P50,000 and b. 1st class municipalities 20,000 engaged in the business of suffer imprisonment of not c. 2nd class municipalities 15,000 distilling, rectifying, less than 2 years but not more d. 3rd class municipalities 10,000 repacking, compounding or than 4 years manufacturing article subject to excise tax 236/275 Failure to Pay & Display the Fine of not more than 1,000 or P1,000 Annual Registration Fee imprisonment of not more than 6 (BIR Form 0605) months (Sec. 275, NIRC) 236/275 No Certificate of Fine of not more than 1,000 or P1,000 Registration displayed imprisonment of not more than 6 months (Sec. 275, NIRC) 236/275 Failure to display the Fine of not more than 1,000 or P1,000 poster "Ask for imprisonment of not more than 6 BIR Receipt" or "Notice to months, or both. the Public to demand (Sec. 275, NIRC) receipts/invoice" 236/275 Failure to attach or paste Fine of not more than 1,000 or P1,000 per unit authorized sticker/DECAL imprisonment of not more than 6 authorizing the use of months, or both. (Sec. 275, NIRC) CRM/POS/CAS Failure to present P1,000 application form (BIR Form 1900 and 1905) to use registered sales books/permit to use loose leaf sales books 238/275 Failure of the printer to Fine of not more than P1,000 or First Second submit the required imprisonment of not more than 6 Offense Offense quarterly report (Sec. 238, months or both P5,000 P10,000 NIRC) Subsequent offenses shall be considered as willful failure, and thus not subject to compromise. 250 Failure to make, file, or One Thousand Pesos (P1,000) for each failure submit the complete to make, file, or submit the said information quarterly Summary Lists of returns. Provided, however, that the Sales and Purchases-Local & aggregate amount to be imposed for such Imported (SLSP), the Annual failures during a calendar year shall not Alpha List of Payees and/or exceed Twenty-Five Thousand Pesos Employees subjected to (P25,000). withholding taxes, or supply correct and accurate For this purpose, failure to supply the information therein at the required information for each buyer or seller time or times required by of goods and services shall constitute a the Tax Code, as amended, single punishable act or omission or other existing pursuant to Revenue Memorandum Circular rules and regulations (RMC) No. 51-2009. Notwithstanding the foregoing, failure on the part of the taxpayer to make, file or submit the required complete Schedules of Sales/Purchases including Importations, if any, (SLS/P/I)/Annual Alpha Lists at the time or times required by the Tax Code, as amended, and other existing rules and regulations under the following circumstances shall be considered as willful failure/neglect tantamount to fraud and thus cannot be compromised: (a) failure to submit for at least: two (2) times in a taxable year, in the case of required complete SLS/P/I; two (2) consecutive years, in the case of Annual Alpha Lists of Payees from whom Taxes were Withheld; and (b) non-submission in the format prescribed. Complete Summary Lists refers to the set of Summary Lists of Sales (SLS) and Summary Lists of Purchases (SLP). In the case of those with importations, completeness shall include not only SLS and SLP but also the Summary Lists of Importations (SLI). Failure to submit the full/complete lists shall be counted as one violation. Thus, submission of incomplete lists, including the submission of erroneous lists, shall be considered as an act of non- submission. The submission of falsified information is an act of fraud and cannot be compromised. Non-compliance with a duly issued Subpoena Duces Tecum (SDT) is penalized under Sec. 266 of the Tax Code, as amended, and the prosecution thereof is provided under RMO No. 10-2013. 250 Failure to make, file or One Thousand Pesos (P1,000) for each submit information returns, information return, schedule, report, sworn schedules, reports, sworn statement, certification and other document statements, certifications not made, filed or submitted, or for each and other documents, record not maintained. Provided, however, (except quarterly SLS/P/I, that the aggregate amount to be imposed for and the Annual Alpha List of such failures during a calendar year shall not Payees and/or the Annual exceed Twenty Five Thousand Pesos Alpha List of Employees (P25,000). subjected to withholding taxes), or keep any record required by the Tax Code, as amended, or other existing rules and regulations 250 Failure to supply correct One Thousand Pesos (P1,000) for each and accurate information incorrect or erroneous information in the information returns, supplied in the information return, schedule, schedules, reports, sworn report, sworn statement, certification and statements, certifications other document. Provided, however, that the and other documents aggregate amount to be imposed for such (except quarterly SLS/P/I, failures during a calendar year shall not and the Annual Alpha List of exceed Twenty Five Thousand Pesos Payees and/or the Annual (P25,000). Alpha List of Employees subjected to withholding taxes) required by the Tax Code, as amended, or other existing rules and regulations 254 Willful attempt to evade or Fine of not less than P30,000 but This violation cannot be compromised defeat any tax imposed by not more than P100,000 and because it involves fraud. (Sec. 204, NIRC) the National Internal imprisonment of not less than Revenue Code or the two (2) years but not more than payment thereof. four (4) years 255 Failure to Fine of not less than P10,000 and If gross sales, earnings or receipts; or gross make/file/submit any imprisonment of not less than estate or gift (based on the subject return or supply correct one (1) year but not more than returns/information for filing/submission) information at the time or ten (10) years But does not Compromise times required by law or Exceeds exceed is regulation Pxxx P50,000 P1,000 50,000 100,000 3,000 100,000 500,000 5,000 500,000 5,000,000 10,000 5,000,000 10,000,000 15,000 10,000,000 25,000,000 20,000 25,000,000 xxx 25,000 255 Failure to withhold or Fine of not less than P10,000 and If the amount of tax not withheld or remit withheld taxes at the imprisonment of not less than remitted time or times required by one (1) year but not more than But Does Compromise law or regulations ten (10) years Exceeds Not Exceed is Pxxx P5,000 P1,000 5,000 15,000 3,000 15,000 20,000 5,000 20,000 50,000 10,000 50,000 500,000 15,000 500,000 1,000,000 20,000 1,000,000 xxx 25,000 255 Failure to refund excess Fine of not less than P10,000 and If the amount of excess withholding taxes taxes withheld on imprisonment of not less than not refunded compensation one (1) year but not more than Exceeds But does not Compromise ten (10) years Exceed is Pxxx P5,000 P1,000 5,000 15,000 3,000 15,000 20,000 5,000 20,000 50,000 10,000 50,000 500,000 15,000 500,000 1,000,000 20,000 1,000,000 xxx 25,000 255 Misrepresentation as to Fine of not less than P10,000 but This violation cannot be compromised actual filing of return or not more than P20,000 and because it involves fraud. (Sec. 204, NIRC) statement or withdrawal of imprisonment of not less than return or statement one (1) year but not more than already filed three (3) years 255 Failure to make, file or Fine of not less than Ten Willful failure implies fraud which cannot submit the required Thousand Pesos (P10,000) and be compromised. complete SLS/P/I, Annual imprisonment of not less than one Alpha List of Payees and (1) year but not more than ten Annual Alpha List of (10) years Employees in the prescribed format at the time or times required by the Tax Code, as amended, or other existing rules and regulations. Failure to make, file or submit for at least: two (2) times in a taxable year, in the case of complete SLS/P/I; and/or two (2) consecutive years, in the case of Annual Alpha List of Payees and/or Alpha List of Employees from whom Taxes were Withheld in the prescribed format at the time or times required by the Tax Code constitutes willful failure and cannot be compromised. 255 Failure to file and/or pay Fine of not less than P10,000 and If the amount of tax unpaid any internal imprisonment of not less than But Does Compromise revenue tax at the time or one (1) year but not more than Exceeds Not Exceed is times required by law or 10 years Pxxx P5,000 P1,000 regulation 5,000 10,000 3,000 10,000 20,000 5,000 20,000 50,000 10,000 50,000 100,000 15,000 100,000 500,000 20,000 500,000 1,000,000 30,000 1,000,000 5,000,000 40,000 5,000,000 xxx 50,000 256 Any act or omission by a Fine of not less than P50,000 but P10,000 for corporation, or the amount of corporation which is not more than P100,000 (in compromise penalty set forth in this penalized under the NIRC addition to penalty set forth or Schedule for particular act or omission, imposed on the responsible whichever is higher. corporate officer, partner or employee) P5,000 for responsible officer, partner or employee 257 a) Violations committed by Fine of not less than P50,000 but any financial officer or not more than P100,000 and an independent CPA, or imprisonment of not less than any person under his two (2) years but not more than direction as follows: six (6) years. (if the offender is a CPA, his certificate shall automatically be revoked or cancelled upon conviction.) 1) Willful falsification of This violation cannot be compromised any report or statement because it involves fraud. (Sec. 204, NIRC) on any examination or audit; rendering reports (including exhibits, statements, etc.) not verified by him personally or under his supervision or by a member of his firm or staff in accordance with sound auditing practices. 2) Certification of financial This violation cannot be compromised statement of a business because it involves fraud. (Sec. 204, NIRC) enterprise containing an essential misstatement of facts or omission as to transactions, taxable income, deduction and exemption of a client. b) Violations committed by Fine of not less than P50,000 but persons who are not not more than P100,000 and CPAs imprisonment of not less than 2 years but not more than 6 years. In case of foreigners, conviction under this Code shall result in his immediate deportation after serving sentence without further 1) Examination and audit proceedings for deportation. of books of accounts of P25,000 taxpayers; 2) Offering to sign and P25,000 certifying financial statements without audit; 3) Offers any taxpayer the P25,000 use of accounting or bookkeeping records for internal revenue purposes not in conformity with the requirements in the Code and regulations; 4) Knowingly making false This violation cannot be compromised entry or enters any false because it involves fraud. (Sec. 204, NIRC) or fictitious name in the books of accounts mentioned in the preceding paragraphs; 5) Keeping of two or more This violation cannot be compromised sets of such records or because it involves fraud. (Sec. 204, NIRC) books of accounts; 6) In any way commits an P1,000 or the compromise penalty set forth act or omission in in this Schedule for the particular act or violation of the omission, whichever is higher, or cannot be provisions of Sec. 257, compromised if it involves fraud. NIRC; or If gross sales, earnings or receipts 7) (i) Failure to keep books Exceeds But Does Compromise of accounts or records in Not Exceed is a native language, Pxxx 50,000 P1,000 English or Spanish or 50,000 100,000 3,000 make a true and 100,000 500,000 5,000 complete transaction 500,000 5,000,000 10,000 5,000,000 10,000,000 15,000 10,000,000 20,000,000 20,000 20,000,000 50,000,000 30,000 50,000,000 xxx 50,000 This violation cannot be compromised (ii) Where books kept in because it involves fraud. (Sec. 204, NIRC) a native language, English or Spanish are found to be at material variance with books kept in another language This violation cannot be compromised 8) Willful attempt to evade Fine of not less than P50,000 but because it involves fraud. (Sec. 204, NIRC) or defeat any tax not more than P100,000 and imposed under the Code suffer imprisonment of not less or knowingly uses fake than two (2) years but not less or falsified Revenue than six (6) years Official Receipts, Letters of Authority, Certificates Authorizing Registration, Tax Credit Certificates, Tax Debit Memoranda and other Accountable Forms 259 Illegal collection of foreign Fine of not less than P20,000 but P20,000 payments collection of not more than P50,000 and foreign payments under imprisonment of not less than 1 Sec. 67, NIRC without any year but not more than 2 years license or in violation of implementing regulations 260 Unlawful possession of Fine of not less than P20,000 but P 100,000, including forfeiture of unlawful cigarette paper in bobbins not more than P100,000 and articles/items; or rolls, cigarette tipping imprisonment of not less than 6 Subsequent violations shall not be subject to paper or cigarette filter tips years and 1 day but not more compromise. than 12 years 261 Unlawful use of denatured Fine of not less than P20,000 but P 100,000, including forfeiture of unlawful alcohol not more than P100,000 and articles/items; imprisonment of not less than 6 Subsequent violations shall not be subject to years and 1 day but not more compromise. than 12 years 261 Unlawful recovery or Fine of not less than P20,000 but P 100,000, including forfeiture of unlawful attempt to recover by not more than P100,000 and articles/items; distillation or other process imprisonment of not less than 6 Subsequent violations shall not be subject to any denatured alcohol or years and 1 day but not more compromise. who knowingly disposes than 12 years alcohol so recovered or redistilled 262 Shipment or removal of Fine of not less than P20,000 but P100,000, including forfeiture of unlawful liquor or tobacco products not more than P100,000 and articles/items; under false name or brand imprisonment of not less than 6 Subsequent violations shall not be subject to or as an imitation of any years and 1 day but not more compromise. existing name or brand than 12 years 263 a) Unlawful possession or If the appraised value of the Compromise allowable on a case removal of imported article under the Tariff and to case basis articles subject to excise Customs Code (TCC) tax without payment of tax Value Does Penalty Exceeds Not Exceed is xxx P1,000 Fine: P1,000-2,000 2,000* and imprisonment of not less than 60 days but not more than 100 days 1,000 50,000 Fine: P10,000-20,000 2,000* and imprisonment of not less than 2 years but not more than 4 years 50,000 150,000 Fine: P30,000-60,000 60,000* and imprisonment of 4 years but not more than 6 years 150,000 xxxx Fine: P50,000-100,000 100,000* and imprisonment of not less than 10 years but not more than 12 years * Plus forfeiture of the untaxed article (b) Unlawful possession of Fine of not less than 10 times the P100,000 plus forfeiture of the untaxed locally manufactured amount of excise tax due but not article articles subject to excise less than P500 and imprisonment Subsequent violations shall not be subject to tax without payment of of not less than two (2) years but compromise. the tax not more than four (4) years 263 (c) Unlawful removal of Fine of not less than 10 times the P100,000 plus forfeiture of the untaxed untaxed articles subject amount of excise tax due but not article to excise tax from the less than P1,000 and Subsequent violations shall not be subject to place of production imprisonment of not less than compromise. one (1) year but not more than two (2) years 264 a) Failure or refusal to Fine of not less than P1,000 but Specific First Second issue receipts or sales or not more than P50,000 and Violation Offense Offense commercial invoices; imprisonment of not less than a) For failure to P10,000 P20,000 issuing receipts invoices four (4) years issue receipts Subsequent violations not truly reflecting or sales or shall not be subject to and/or containing all sales or compromise. information required commercial therein or using invoices multiple or double receipts or invoices b) For refusal to P25,000 P50,000 issue receipts Subsequent violations or sales or shall not be subject to commercial compromise. invoices If the P20,000 P50,000 information Subsequent violations missing is the shall not be subject to correct amount compromise. of the transaction P5,000 P10,000 c) For issuance of Subsequent violations receipts that shall not be subject to do not truly compromise. reflect and/or contain all the information required to be shown therein P20,000 P50,000 If the duplicate Subsequent violations copy of the shall not be subject to invoice is blank compromise. but the original copy thereof is detached from the booklet and cannot be accounted for Not qualified for If the amount compromise of the transaction stated in the taxpayer's copy is understated versus the amount per copy of the invoice issue to the purchaser P20,000 P50,000 d) (i) For use of Subsequent violations unregistered shall not be subject to receipts or compromise. invoices P25,000/ P50,000/ unit unit (ii) Use of Subsequent violations unregistered shall not be subject to cash register compromise. machines in lieu of invoices or receipts Not qualified for e) For possession compromise or use of multiple or double receipts or invoices f) For printing or causing, aiding or abetting the printing of: P25,000 P50,000 1) Receipts Subsequent violations or invoices shall not be subject to without compromise. authority from the BIR Not qualified for 2) Double compromise or multiple sets of receipts or invoices P20,000 P50,000 3) Receipts Subsequent violations or invoices shall not be subject to bearing any of compromise. the following: a. Consecutive numbers b. Name of Taxpayer c. Business Style d. Business address of the person or entity to use the same e. TIN f. Name, address, date, authority no. of the printer and inclusive serial numbers of the batch or receipts printed 265 Offenses relating to internal revenue stamps 1) Making, importing, Fine of not less than P20,000 but P20,000, including forfeiture of unlawful selling, using or not more than P50,000 and articles/items; possessing without imprisonment for not less than 4 Subsequent violations shall not be subject to express authority from years but not more than 8 years compromise. the Commissioner any dye for printing or making stamps, label tags or playing cards 2) Erasing the Fine of not less than P20,000 but This violation cannot be compromised cancellation marks of not more than P50,000 and because it involves fraud. any stamps previously imprisonment for not less than 4 (Sec. 204, NIRC) used or altering the years but not more than 8 years written figures or letters, or cancelling marks on internal revenue stamps 3) Possession of false, Fine of not less than P20,000 but This violation cannot be compromised counterfeit, restored or not more than P50,000 and because it involves fraud. altered stamps, labels, imprisonment for not less than 4 (Sec. 204, NIRC) or tags, or causes the years but not more than 8 years commission of any such offense by another 4) Selling or offering for Fine of not less than P20,000 but This violation cannot be compromised sale any box or package not more than P50,000 and because it involves fraud. containing articles imprisonment for not less than 4 (Sec. 204, NIRC) subject to excise tax years but not more than 8 years with false, spurious or counterfeit stamps or labels or sells from any such fraudulent box, package or container as aforesaid 5) Giving away or Fine of not less than P20,000 but P50,000, including forfeiture of unlawful accepting from another not more than P50,000 and articles/items; or sells, buys, or uses imprisonment for not less than 4 Subsequent violations shall not be subject to containers on which years but not more than 8 years compromise. the stamps are not completely destroyed 266 Failure to obey summons; Fine of not less than P5,000 but First Offense: P10,000 to testify; or to appear and not more than P10,000 and produce books of accounts, imprisonment for not less than Second Offense: P20,000 records, etc. or to furnish one (1) year but not more than information required under two (2) years Subsequent violations shall not be subject to the NIRC compromise. 268 Misdeclaration or Summary cancellation or This violation cannot be compromised misrepresentation by withdrawal of permit to engage because it involves fraud. (Sec. 204, NIRC) manufacturers of articles in business as a manufacturer of subject to excise tax under articles subject to excise tax Title IV, NIRC, or any pertinent data or information required therein 272 Failure of government Fine of not less than P5,000 not If the amount of tax not withheld officer or employee more than P50,000 or or remitted charged with the duty to imprisonment of not less than 6 Exceed But Does Compromise deduct and withhold any months and 1 day but not more Not Exceed is internal revenue tax and than 2 years, or both Pxxx P5,000 P1,000 failure to remit the same in 5,000 15,000 3,000 accordance with the 15,000 20,000 5,000 provisions of the NIRC 20,000 50,000 10,000 50,000 500,000 15,000 500,000 1,000,000 20,000 1,000,000 xxx 25,000 275 Violation of any provision Fine of not more than P1,000 or P1,000 for each violation of the National Internal imprisonment of not more than 6 Revenue Code or any months or both regulation of the Department of Finance for which no specific penalty is provided by law 276 Sale, transfer, encumbrance Fine of not less than twice the 20% of the value of the property or any other disposition of value of the property sold, any property or part encumbered or disposed of, but thereof placed under not less than P5,000 or constructive distraint, imprisonment of not less than 2 without the knowledge and years and 1 day but not more consent of the than 4 years, or both Commissioner 277 Failure to surrender Violator is personally liable to P50,000 property placed under pay a sum equal to the value of distraint and levy the property or rights not surrendered (not exceeding the amount of taxes due including penalties and interest together with costs and interests). In addition, such violation shall be fined in a sum of not less than P5,000 or imprisonment for not less than 6 months and 1 day but not more than 2 years, or both 278 Procuring the unlawful Fine of not more than P2,000 or This violation shall not be compromised divulgence of any imprisonment of not less than 6 because it is against public policy to allow confidential information months nor more than 5 years, or divulgence of confidential information, regarding the business, both unless this is validly authorized under income or inheritance of existing law. any taxpayer; unlawfully publishing or printing the income, profits, losses or expenditures appearing in any income tax return