Compromise Settlement of Unremitted Taxes Withheld Prior to January 1, 1986

March 31, 1987 REVENUE MEMORANDUM ORDER NO. 07-87 SUBJECT : Compromise Settlement of Unremitted Taxes Withheld Prior to January 1, 1986 TO : All Internal Revenue Officers and Others Concerned PURPOSE : This Memorandum Order Seeks to Offer a Compromise Settlement to Withholding Agents Who Have Withheld Taxes on Income Payments Subject to Withholding Tax Under the Pertinent Provisions of the Tax Code and Republic Act 1051 But Who Have Not Remitted the Taxes Withheld, By Condoning the Statutory Addition (Surcharges and Interests) to the Basic Withholding Tax, Under and by Virtue of Section 246 of the NIRC, as Amended, Which Empowers the Commissioner of Internal Revenue to Compromise the Payment of Any Internal Revenue Tax 1.) COVERAGE This order shall apply to all taxes withheld but have not been remitted, for taxable years prior to January 1, 1986. casia 2.) WHO MAY AVAIL This compromise settlement may be availed of by all withholding agents, including officers and employees in charge of withholding tax requirements in every government bureau, agency or instrumentality, city, municipality or provincial government as well as government owned or controlled corporations, for taxable years prior to January 1, 1986, who did not remit taxes withheld on the following income payments. Income Statutory Basis Payments of Withholding a) Compensation - Section 81 to 86 of the NIRC as implemented by Revenue Regulations 6-82, as amended by Revenue Regulations 12-86. b) Amounts - Sections 51 & paid or payable 52, NIRC, as under the expanded implemented by withholding tax Revenue Regulations 6-85 system c) Income payments - Sections 51 & subject to final 52 as amended in relation to withholding taxes. Sections 21 & 24 of the NIRC. d) Government - Republic Act 1051, Money Payments as implemented by Revenue Regulations 4-83, as amended by Revenue Regulations 2086. 3.) HOW TO AVAIL OF THE COMPROMISE SETTLEMENT a) Filing of Return Form & Manner of Filing of Return The compromise settlement shall be made by paying the full amount of unremitted taxes withheld through the filing of the regular withholding tax returns as follows: BIR Form 1743-W for Taxes withheld on compensation, on amounts paid or payable under the expanded withholding tax and on income payments subject to final taxes except final taxes withheld on interest on deposits substitutes, trust funds and similar arrangements. BIR Form 1745 for taxes withheld on interest on deposits, deposits substitutes, trust funds and similar arrangements. BIR Form 750-A for taxes withheld on government money payments under Republic Act 1051. The return shall be filed for each of the month or quarter, as the case may be, for which no return had been filed . b) When and Where to file the returns - The return shall be filed in duplicate on or before June 30, 1987 directly with and acted upon by either of the following officers: 1. Revenue District Officer in which the withholding agent has his legal residence or place of business, or in case the withholding agent is a corporation, in which the principal office is located. 2. Chief, Withholding Tax Division, National Office. c) Payment of Tax - Payment shall be made upon filing the returns except in the following cases: cd 1) If the total tax to be remitted exceeds P50,000.00 but not more than P500,000.00 the tax may be paid in two equal installments the first installment shall be paid upon filing of the returns and the second installment on or before August 1, 1987. If the amount exceeds P500,000.00 the tax may be paid in three equal installments, to wit: 1). The first installment shall be paid upon filing of the return. 2). The second installment shall be paid on or before August 1, 1987. 3). The third installment shall be paid on or before October 1, 1987. 2) If any installment is not paid on the due date there shall be collected as part of the tax upon each unpaid amount a surcharge equivalent to 25% thereof. The total amount must be paid not later than one month from the date of such installment, otherwise the filer shall not be entitled to the compromise settlement. 4.) RECEIPT OF RETURNS - a) Stamping and signing of returns by authorized receiving officers. All copies of returns shall be stamped with the date of receipt signed by the authorized receiving officers and marked on the upper right hand corner as Compromise Settlement under Revenue Memorandum Order No. 7-87. cdt b) Returns received shall be processed and transmitted in the same manner as regular withholding tax returns under Revenue Memorandum Order No. 41-83, as amended by Revenue Memorandum Order No. 12-86. 5.) ACCEPTANCE OF PAYMENTS - a) Payment thru banks - In place where tax payments are made through accredited agent banks, the Payment Order (PO) shall be issued by the Bureau of Internal Revenue Personnel authorized to accept returns. The Payment Order No. shall be indicated on all copies of the returns filed. The distribution of the copies of the PO shall be in the same manner as payment for all other taxes. b) Payment in Places where there are no accredited agent banks - In places where there no accredited agent banks, the receiving officer shall prepare an Authority to Accept Payment (ATAP) in three copies. The original and duplicate are to be given to the taxpayer and the triplicate should be attached to the return filed. 6.) REPORTING REQUIREMENTS - The Regional Director and in case where the return is filed with the withholding Tax Division, the Chief of said division shall submit a weekly report of accomplishment to the Collection Office containing the name and address of the withholding agent, the withholding agents ID No., month/quarter/s covered, kind of withholding tax, basic withholding tax due; amount paid and balance of installments, if any, and their respective due dates. cdt 7.) EFFECTIVITY - This Order shall take effect immediately. (SGD.) BIENVENIDO A. TAN, JR. Commissioner