RMC No. 3-2022 — Clarifies the preparation of assessment notices for compromise penalty Digest | Full Text | Annex A | Annex B1 | Annex B2 | Annex C

REPUBLIC OF THE PHILIPPINES BUREAU OF TNTERNAL REVE DEPARTMENT OF FINANCE RECORDS h'GT. DIVISION BUREAU OF INTERNAL RTVENUE Quezon City December 1,2021 REVENUE MEMoRANDUM cTRCULAR No. b-aa$l SUBJECT : Clariflcation on the Preparation of Assessment Notices for TO Compromise Penalty All Internal Revenue Officials, Employees and Others Concerned This Circular is hereby issued to clarify the proper procedure in the preparation of assessment notices for compromise penalty(ies) pursuant to the provisions under Revenue Memorandum Order No. 7-2015 with regards to compromise penalties and Revenue Regulations No. l2-99, as amended by RR No. l8-2013, in the issuance of a defi ciency tax assessment. Cornpromise penalties are amounts collected in lieu of criminal prosecution for violation committed by the taxpayer, where payment is based on a compromise agreement validty entered into between the taxpayer and the Commissioner of Internal Revenue. Item No. III.4 of the aforesaid RMO laid down that : "Although all qmounts of compromise penalties incident to violations shall be itemi:ed in the qssessment notice and/or demand letter, the same should not form part of assessment notice thst reflects deficiencv bssic tax, surchsrge and interest but sltould aopear in a seDarote ossessment nolice/demand letter as the smount suggested to the ltroaver to oav in lieu of criminal orosecution." (emphasis supplied) Notwithstanding the foregoing, it has been observed that there are times when the assessment notice for deficiency basic tax(es) and civil penalties also includes the compromise penalty(ies). Hence, for uniformity in the preparation of assessment notices, the prescribed formats under RR No. l8-2013 such as Preliminary Assessment Notice (PAN) and Formal Letter of Demand shal I now be composed of Part I and Part I I, where Parl I shal I pertain to deficiency basic tax(es) and civil penalties, while Part Il shall pertain to the assessed compromise penalty(ies) relative to violations uncovered during the conduct of audit. Part II of the applicable notices are hereby prescribed hereof as Annexes A and B, with sample item of violations to the Tax Code, as amended: Annex A - Preliminary Assessment Notice (Part II) 1,VtT

F Annex B.l - Formal Letter of Demand (Parr II) Annex 8.2 - Final Assessment Notice - Likewise, preparation of the BIR Form No. 0605 Payment Form for the settlement/payment of the deficiency basic tax and civil penalties in "Part I" of the assessment notices and BIR Form No. 0605 for compromise penalty(ies) in Part II (Annexes C) shall be done separately. All internal revenue officials and employees are hereby enjoined to be guided accordingly and give this Circular as wide a publicity as possible. This Circular shall take effect immediately' /481-1o,^.4\t-v CAESAR R. DULAY I-l i'i Commissioner of Internal Revenue 018 7 6 o UE