November 28, 1989 November 28, 1989

REVENUE MEMORANDUM ORDER NO. 1-90

Subject : Amendments to the provisions of a “Revised Schedule of
Compromise Penalties” for internal revenue violations as prescribed in
RMO 26-86.
To : All Internal Revenue Officers and Others Concerned

I. Objectives:
This Order is issued:
A. To update the Schedule of Compromise Penalties with a view to increase the compromise
penalties and delete from the coverage thereof certain acts commonly resorted to by taxpayers
as a means of tax evasion;
B. To reflect the changes in the Schedule which includes the Code Section, Nature of Violation,
Criminal Penalty Imposed and Amount of Compromise Penalty which are prescribed on
Chapter II, Title X of the revised NIRC;
C. To adopt and implement a uniform application of the various compromise penalties for
criminal violations of the Tax Code; and casia
D. To provide supplemental guidelines on compromise penalties for resident taxfilers and non-
residents as well.

II. Policies:
In order to attain these objectives, the following are hereby prescribed for the information and
strict compliance by all concerned:
1. In all cases of criminal violations of the National Internal Revenue Code (NIRC), the
penalties for which are prescribed in Chapter II, Title X of the revised NIRC, it is directed
that henceforth, compromise penalties be governed strictly in accordance with 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 resident taxpayers as a means of
tax evasion are deleted from the coverage thereof because they involve fraud. These
violations include, among others the possession, printing and use of double or multiple sets of
invoices.
3. Certain acts/violations which are commonly resorted to and applicable to non-resident
taxpayers are imposed the same amount of compromise penalty as the resident taxpayers.

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 Legal Branch having jurisdiction over the case,
or the Prosecution Division as the case may be, for the institution of the corresponding
criminal action.
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, in a proper
case, 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 along with the other administrative penalties like
 surcharge and interest, the same should not form part of the total amount assessed/demanded
but should appear separately as a suggestion 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.
5. Since compromise penalties are only amounts suggested in settlement of criminal liability,
and may not therefore be imposed or exacted on the taxpayer in the event that a taxpayer
refuses to pay the suggested compromise penalty, the violation shall be referred for criminal
action as heretofore mentioned.
6. Non-resident filers who commit any of the violations stated in the schedule shall pay the
equivalent amount of compromise penalty in pesos or its equivalent in U.S. dollars.

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.) JOSE U. ONG
Commissioner of Internal Revenue
REVISED SCHEDULE OF COMPROMISE PENALTIES
(Based on Chapter II, Title X of the revised National Internal Revenue Code)

CODE SEC. NATURE OF CRIMINAL PENALTY AMOUNT OF COMPROMISE

VIOLATION IMPOSED PENALTY

253 Willful attempt to evadeFine of not more than This violation cannot be
of defeat any tax imposed P10,000 or imprisonment compromised
because it
for the National Internal not more than 2 years, or involves fraud - Sec.
204
Revenue Code or the both. NIRC.
payment thereof.

254 Willful failure to pay Fine of not less than There is no specific amount
any internal revenue tax P5,000 nor more than of compromise penalty
at the time or times P50,000 or imprisonment prescribed but the same
may
required by law or for not less than 6 months be compromised at the
regulation. and 1 day but not more discretion of the
than 5 years, or both. Commissioner on a case
to case basis. cd

Failure to pay any internal Fine of not more than If the amount of tax
unpaid
revenue tax at the time or P1,000 or imprisonment
times required by law orof not more than 6
regulation. months, or both. But Does Compromise
(Sec. 274, NIRC) Exceeds Not Exceed is
P xxx P 500 P 200
500 1,000 400
 1,000 2,000 700
2,000 5,000 1,000
5,000 7,500 1,500
7,500 10,000 2,000
10,000 15,000 3,000
15,000 20,000 4,000
20,000 30,000 6,000
30,000 50,000 8,500
50,000 100,00012,000
100,000500,00016,000
500,0001,000,000 20,000
1,000,000 x x x 25,000

254 Willful failure to make/file Fine of not more than There is no specific
amount of
any return, keep records P5,000 nor more than compromised penalty
pres-
or supply information at P50,000 or imprisonment cribed, but the
same may be
the time or times required for not less than 6 months compromised at
the discretion
by law or regulations. and 1 day but not more of the Commissioner on a
than 5 years, or both. case to case basis.

Failure to make/file any Fine of not more than If gross annual sales, earnings
return or supply infor- P1,000 or imprisonment or receipts; or gross estate
mation at the time or for not more than 6 or gift
times required by law ormonths, or both.
regulations. (Sec. 274, NIRC) But Does Compromise
Exceeds Not Exceed is
P x x x P 10,000 P 200
10,000 20,000 400
20,000 30,000 600
30,000 50,000 1,000
50,000 75,000 1,500
75,000 100,0002,000
100,000300,0003,000
300,000500,0005,000
500,0001,000,000 7,500
1,000,000 5,000,000 10,000
5,000,000 10,000,000 15,000
10,000,000 25,000,000 20,000
25,000,000 x x x 25,000

232 Failure to keep/preserve Fine of not more than If gross annual sales, earnings
235 records required by law P1,000 or imprisonment or receipts
or regulations for not more than
6 months, or both. But Does Compromise
(Sec. 274, NIRC) Exceeds Not Exceed is
P x x x P 10,000 P 200
10,000 20,000 400
 20,000 30,000 600
30,000 50,000 1,000
50,000 75,000 1,500
75,000 100,0002,000
100,000250,0003,000
250,000500,0005,000
500,0001,000,000 7,500
1,000,000 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 x x x 50,000

254 Willful failure to withhold Fine of not less than There is

no specific amount of
or remit withheld taxes at P5,000 nor more than compromised penalty
pres-
the time or times required P50,000 or imprisonment cribed, but the
same may be
by law or regulations. for 6 months and 1 day compromised at the discretion
but not more than 5 of the Commissioner on a
years, or both. case to case basis.

Failure to withhold or Fine of not more than If the amount of tax not
remit withheld taxes at P1,000 or imprisonment withheld or remitted -
the time or times for not more than 6
required by law or months, or both.
regulations. (Sec. 274, NIRC) But Does Compromise
Exceeds Not Exceed is
P x x x P 500 P 200
500 1,000 400
1,000 2,000 700
2,000 5,000 1,000
5,000 7,500 1,500
7,500 10,000 2,000
10,000 15,000 3,000
15,000 20,000 4,000
20,000 30,000 6,500
30,000 50,000 9,000
50,000 100,00012,000
100,000500,00016,000
500,0001,000,000 20,000
1,000,000 x x x 25,000

254 Misrepresentation as to Fine not less than This violation cannot be

actual filing of return or P3,000 or imprisonment compromised because it
statement or withdrawal of not exceeding 1 year involves fraud.
of return or statement or both. (Sec. 204, NIRC)
already filed.
255 Any act or omission by a Fine of not less than P4,000 for
corporation, or
corporation which is P10,000 but not exceeding the amount of
compromise
penalized by the NIRC. P100,000 (in addition to penalty set forth in this
the liability of responsible Schedule for the particular
corporate officer, partner act or omission, whichever is
or employee). higher.
P2,000 for responsible officer,
partner or employee. cdt

256 a) Violations committed Fine of not less than

by an independent CPA, P10,000 but not exceeding
by any person under his P50,000 or imprisonment of
direction as follows: not less than 4 years and
a day to 6 years or both.

1) Willful falsification This violation cannot be

of any report or statement compromised because it
on any examination involves fraud.
or audit; rendering (Sec. 204, NIRC)
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 This violation cannot be

financial statement compromised because it
of a business enterprise involves fraud.
containing an essential (Sec. 204, NIRC)
misstatement of facts
or omission as to
transactions, taxable
income, deduction
and exemption of a
client.

b) Violations committedFine of not less than

by persons who are not P10,000 but not exceeding
CPAs - P50,000 or imprisonment of
not less than 4 years and
1 day to 6 years or both.
1) Examination and P5,000
audit P5,000 of books
of accounts of
taxpayers;

2) Offering to sign P5,000

and P5,000 certify
financial statements
without audit;

3) Offers any taxpayer P4,000

the use of accounting
or bookkeeping
records for internal
revenue purposes
not in conformity
with the requirements
in the Code and
regulations;

4) Knowingly making This violation cannot be

false entry or enters compromised
any false or fictitious because it involves fraud.
name in the books of (Sec. 204, NIRC)
accounts mentioned in
the preceding paragraphs;

5) Keeping of two or more This violation cannot be

sets of such records or compromised because it
books of accounts; involves fraud.
(Sec. 204, NIRC)

6) In any way commits P1,000 or the compromise

an act or omission in penalty set forth in this
violation of the provisions Schedule for the particular act
of Sec. 256, NIRC; or or omission, whichever
is higher; or, cannot be
compromised if it involves
fraud.

7) (i) Failure to keep If gross annual sales earnings

books of accounts or or receipts
records in a native
language, English or
Spanish or make a true But Does Compromise
translation; Exceeds Not Exceed is
P x x x P 10,000 P 200
10,000 20,000 400
20,000 30,000 600
30,000 50,000 1,000
 50,000 75,000 1,500
75,000 100,0002,000
100,000250,0003,000
250,000500,000 5,000
500,0001,000,000 7,500
1,000,000 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 x x x 50,000
(ii) Where books kept This violation cannot be compromised
in a native language, because it involves fraud.
English or Spanish are (Sec. 204, NIRC)
found to be at material
variance with books
kept in another
language.

232 Failure to have books of Fine of not more than If the gross sales,
earnings
accounts audited and P1,000 or imprisonment or receipts
have the financial state- of not more than 6
ments attached to the months, or both.
income tax return (Sec. 274, NIRC) But Does
Compromise
certified by an Exceeds Not Exceed is
independent CPA. P 25,000 P 200,000 P 2,000
for any for the
one quarter year
200,000500,0004,000
500,0001,000,000 6,000
1,000,000 5,000,000 10,000
5,000,000 10,000,000 15,000
10,000,000 25,000,000 20,000
25,000,000 x x x 25,000

83 Failure to have the Fine of not more than If the gross estate
statement of assets P1,000 or imprisonment
of the decedent and of not more than 6
the deductions from months, or both.
gross estate certified (Sec. 274, NIRC) But Does
Compromise
by an independent Exceeds Not Exceed is
CPA. P 50,000 P 200,000 P 1,000
200,000500,0001,500
500,0001,000,000 2,000
1,000,000 5,000,000 4,000
5,000,000 10,000,000 7,500
10,000,000 25,000,000 10,000
25,000,000 50,000,000 15,000
50,000,000 x x x 20,000
 258 Illegal collection of Fine of not less than P4,000
foreign payments - P5,000 nor more than
collection of foreign P25,000 or imprison-
payments under Sec. ment of not less than
60, NIRC without any 6 months, but not
license or in violation exceeding 3 years, or
of implementing both.
regulations.

259 Unlawful possession Fine of not less than P20,000

of cigarette paper in P20,000 but not more
bobbins or rolls, ciga- than P100,000 and impri-
rette tipping paper or sonment of not less than
cigarette filter tips. 6 years and 1 day but
not more than 12 years.

260 Unlawful use of Fine of not less than P20,000

denatured alcohol. P20,000 but not more
than P100,000 and
imprisonment of not less
than 6 years and 1 day
but not more than 12 years.

261 Shipment or removal of Fine of not less than Compromise allowable on a

liquor or tobacco products P20,000 but not more than case to case
basis. acd
under false name or brand P100,000 and imprisonment
or as an imitation of anyof not less than 6 years
existing name or brand. and 1 day but not more
than 12 years.

262 Unlawful possession or If the appraised value of Compromise allowable

on a
removal of imported the article under the case to case basis.
articles subject to Tariff and Customs Code
excise tax without (TCC) -
payment of tax.

But Does Penalty

Exceeds Not Exceed is

xxx P 500 Fine:

P100-500

(Imprisonment: 15-30 days)

P500 50,000 Fine:

P1,000-P5,000

(Imprisonment: 6 mos. &

 1 day - 4 years)

50,000 150,000Fine:
P25,000

(Imprisonment: 4 years &

1 day - 8 years)

150,000x x x Fine:
P20,000-P50,000

(Imprisonment: 10 years
& 1 day - 14 years)

b) Unlawful possession Fine of not less than P1,000

of locally manufactured 10 times the amount of
articles subject to excise tax due but not
excise tax. less than P500 nor more
than P10,000 and
imprisonment of 6 months
and 1 day to 4 years.

c) Unlawful removal of Fine of not less than 10 Compromise allowable on a

case
untaxed articles subject times the amount of to case basis.
to excise tax from the excise tax due but not
place of production. less than P1,000 nor
more than P100,000 and
imprisonment of not less
than 6 months and 1 day
but not more than 6 years.

263 a) Failure or refusal to Fine of not less than First Second

issue receipts or sales P1,000 nor more than Offense Offense
or commercial invoices; P50,000 or imprison-
issuing receipts or ment of not less than 6
invoices not truly months and 1 day a) For failure to
reflecting and/or but not more than 2 issue receipts
containing all infor- years or both. or sales or
mation required therein commercial
or using multiple or invoices P2,000 P5,000
double receipts or
invoices. a/ b) For refusal
to issue receipts
or sales or
commercial
invoices 3,000 6,000
c) For issuance of
receipts that do
not truly reflect
and/or contain all
the information
required to be
shown therein 1,000 2,500

If the information
missing is the
correct amount of
the transaction 2,000 5,000

d) (i) For pos-

session or use
of unregistered
receipts or
invoices; P5,000 P10,000

(ii) Use of
unregistered cash
register machines
in lieu of invoices
or receipts 7,500 15,000

e) For possession
or use of multiple or Not subject
double receipts or to
invoices Compromise

f) For printing or
causing, aiding or
abeting the printing of:

1) Receipts or invoices without authority from

the BIR 5,000 10,000

2) Double or Not subject

multiple sets of to
receipts or Compromise
invoices

3) Receipts or invoices not bearing any of

the following: P5,000 P10,000
a. Consecutive
numbers
b. Name of Taxpayer
c. Business Style
d. Business address
of the person or
entity to use
the same

e. Taxpayer Account No.

f. Name, address, date,
authority no. of the
printer and inclusive
serial numbers of the
batch or receipts
printed

g. VAT No., if taxpayer

is VAT-registered
h. For failure of the
printer to submit
the required quarterly
report under
Sec. 239 of the
Tax Code as
amended. P1,000 P3,000

264 Offenses relating to

internal revenue stamps -

1) Making, importing, Fine of not more than P10,000

selling, using or P10,000 or imprisonment
possessing without for not more than 5 years
express authority from or both.
the Commissioner any
dye for printing or
making stamps, label
tags or playing cards.

2) Erasing the cancel- Fine of not more than This violation cannot be
lation marks of any P10,000 or imprisonment compromised because
stamps previously used for not more than 5 it involves fraud.
or altering the written years or both. (Sec. 204, NIRC) casia
figures or letters, or
cancelling marks on
internal revenue stamps.

3) Possession of false, Fine of not more than This violation cannot be

counterfeit, restored or P10,000 or imprisonment compromised because it
altered stamps, labels, for nor more than 5 years involves fraud.
or tags, or causes the or both. (Sec. 204, NIRC)
commission of any such
 offense by another.

4) Selling or offering Fine of not more than This violation cannot be

for sale any box or P10,000 or imprisonment compromised because it
package containing for not more than 5 years involves fraud.
articles subject to or both. (Sec. 240, NIRC)
excise tax 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 more than P500

accepting from another P10,000 or imprisonment
or sells, buys, or uses for not more than 5 years
containers on which the or both.
stamps are not completely
destroyed.

265 Failure to obey summons; Fine of not less than This violation should not be
to testify; or to appear P1,000 or imprisonment compromised because if
and produce books of not more than 1 year or compromised, it will nullify the
accounts, records, etc. both. coercive power of the CIR
or to furnish information under Sec. 7(b), NIRC to
required under the NIRC. obtain information or facts
necessary for investigation of
tax liabilities.

267 Misdeclaration or Summary cancellation or This violation cannot be

misrepresentation by withdrawal of permit to compromised because it
manufacturers of articles engage in business as a involves fraud.
subject to excise tax manufacturer of articles (Sec. 204, NIRC)
under Title IV, NIRC, subject to excise tax.
or any pertinent data
or information required
therein.

271 Failure of government Fine of not less than If the amount of tax not
officer or employee P5,000 nor more than P50,000 withheld or remitted -
charged with the duty to or imprisonment for 6 months
deduct and withhold any and 1 day but not more than
internal revenue tax and 2 years, or both. But Does
Compromise
failure to remit the same Exceeds Not Exceed is
accordance with the P x x x P 500 P 200
provisions of the NIRC. 500 1,000 400
1,000 2,000 700
2,000 5,000 1,000
5,000 10,000 2,000
10,000 15,000 3,000
 15,000 20,000 4,000
20,000 30,000 6,000
30,000 50,000 9,000
50,000 100,00012,000
100,000500,00016,000
500,0001,000,000 20,000
1,000,000 x x x 25,000

274 Violation of any provision Fine of not more than P1,000

of the National Internal P1,000 or imprisonment
Revenue Code or any of not more than 6
regulation of the months or both.
Department of Finance
for which no specific
penalty is provided
by law.

275 Sale, transfer, encum- Fine of not less than 20% of value of property
brance or any other twice the value of the
disposition of any property sold, encumbered
property or part or disposed of, but not
thereof placed under less than P5,000 or
constructive distraint, imprisonment of not less
without the knowledge than 2 years and 1 day
and consent of the but not more than 4 years,
Commissioner. or both.

276 Failure to surrender Violator is personally P3,000

property placed under liable to pay a sum equal
distraint and levy. to the value of the property
or rights not surrendered
(not exceeding the amount
of taxes due including
penalties and interest).
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.

277 Procuring the unlawful Fine of not more than This violation should not be
divulgence of any P2,000 or imprisonment compromised because it
is
confidential informationof not less than 6 months against public policy to
allow
regarding the business, nor more than 5 years, divulgence of confidential
income or inheritance of or both. information, unless this is
any taxpayer; unlawfully validly authorized under
publishing or printing the existing law. cd i
 income, profits, losses or
expenditures appearing in
any income tax return.

NOTE: For Non-resident filers:

Certain acts/violations which may be resorted to and applicable to non-resident taxpayers are
imposed the same amount of compromise penalty as resident taxpayers and may be paid in pesos
or its equivalent in U.S. dollars.)
a/ The amount of the compromise penalty shall be doubled if the transaction/violator is subject to
value-added tax or to any percentage tax of 4% or more.
C o p y r i g h t 2 0 0 2 C D T e c h n o l o g i e s A s i a, I n c.