RMO No. 20-07

August 13, 2007
REVENUE MEMORANDUM ORDER NO. 20-07
SUBJECT : Simplified Processing of Application to Avail Taxpayer's

Remedies Under Section 204 (A), Compromise Settlement,
and Section 204 (B), Abatement, Both of the National
Internal Revenue Code of 1997
TO : All Internal Revenue Officers, Employees and Others

Concerned
I. Background
The National Internal Revenue Code of 1997 (Code) particularly, Sections

204 (A) and (B) , in relation to Section 7 , empowers the Commissioner of
Internal Revenue (CIR) to compromise or abate internal revenue tax liabilities as a
sort of taxpayer's remedy. These provisions have been implemented by several
Revenue Regulations (RR), particularly RR Nos. 6-2000 , 7-2001 and
30-2002 , for compromise settlement, and RR No. 13-2001 , for abatement.
These RRs provided for the guidelines and procedures in the processing of the
application for compromise settlement and abatement, including the offices which
are tasked to process and approve the applications.
Based on the aforesaid RRs, receiving, processing and evaluation of the

application, including the initial recommendation for the approval/disapproval
thereof, were lodged in the Revenue Regional Offices thru the Revenue District
Offices, for regional office cases and to the ACIR/HREA of the Large Taxpayers
Service thru its investigating Offices being the offices which have jurisdiction over
the taxpayers. Technical Working Groups (TWG) were created, both in the
National Office and the Regional Offices, to review applications and make the
final recommendation to the approving authority, after the said application has
been processed, analyzed and recommended for approval/disapproval. However, it
has come to the attention of the National Office that applications for abatement
and/or compromise settlement have been forwarded by the investigating offices to
the TWGs without any evaluation and recommendation as to whether the
application can be approved or not and leave the initial analysis of the case to the
Copyright 2017 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia Third Release 2017 1
latter which is supposed to be the reviewing office.
Inasmuch as the responsibilities/functions of the concerned offices were

ready spelled-out in the existing issuances, this Order is thus issued to mandate the
concerned offices to be mindful of their responsibilities with regards to the
processing of application for compromise settlement and abatement cases for a
simplified processing of application for availing taxpayer's remedies.
II. Policies
(a) Abatement
Under existing rules, the BIR process applications for

the abatement of only the surcharges, interest and compromise
penalties. Any application for the abatement of the basic tax
assessed or any portion thereof, if any, are not covered by any
existing regulations and therefore shall not be processed.
The RDO investigation offices of the LTS having

jurisdiction over the taxpayer-applicant shall, upon receipt of
the application for the abatement together with required
supporting documents, process the application, make the
necessary evaluation and prepare a report containing its
recommendation to the duly constituted Technical Working
Committee (TWC). The report shall likewise state the basis of
the recommendation as provided under Section 204 (B) of the
Code and RR No. 13-2001.
The TWC shall review the report and recommendation

of the investigation offices and thereafter prepare the final
recommendation for the approval of the Commissioner.
In all instances, no application for abatement shall be

initially processed/evaluated by the investigating office
without the payment of 100% of the basic tax.
(b) Compromise Settlement
Pursuant to Section 204 (A), in relation to Section 7, of

the Code, as implemented by RR Nos. 6-2000, 7-2001 and
30-2002, recommendation/final report on the application for
compromise shall be signed/approved as herein stated: EHSTcC
1) Concerned Regional Evaluation Board (REB)

• Regional office cases involving basic tax
assessment amounting to Five hundred thousand
pesos (P500,000) or less, and minor criminal
violations discovered by regional and district
officials which were already delegated to the
REB.
2) CIR
• Other cases which were not delegated
• Cases which, by law, have been entrusted to the

CIR
3) National Evaluation Board (NEB)
• Cases where the basic tax exceeds One million

pesos (P1,000,000) or where the settlement
offered is less than the prescribed minimum
amount (10% for cases of financial incapacity;
40% for cases of doubtful validity of the
assessment) which, by law, have been entrusted
to the NEB
Prior to its approval/disapproval, application for

compromise settlement shall likewise be processed, evaluated
and recommended by the investigating offices having
jurisdiction over the taxpayer-applicant. Processing and
evaluation of regional office cases shall be undertaken by the
respective district offices while LTS cases shall be processed
and evaluated by the LTS investigating offices before
submitting the recommendation thereon to the respective
TWGs. The concerned TWG shall review the submitted report
and recommendation and prepare its final recommendation for
the approval of the CIR/REB/NEB.
In all instances, application for compromise settlement

shall not be forwarded to the TWGs without being processed,
evaluated and provided with recommendation by the
originating office.
The concerned RDO/head of the LTS investigating office is hereby directed

to require all applicants to pay the basic tax assessed, for abatement cases, and the
offers of compromise, for compromise settlement, upon filing of the application
for abatement/compromise settlement before the application can be initially
processed. In case of ultimate disapproval of the application by the approving
authority, payments already made pursuant to these applications shall be treated as
partial or installment payments of the assessments.
III. Effectivity
This Order takes effect immediately.
(SGD.) LILIAN B. HEFTI

OIC-Commissioner of Internal Revenue

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August 13, 2007

REVENUE MEMORANDUM ORDER NO. 20-07

SUBJECT : Simplified Processing of Application to Avail Taxpayer's

TO : All Internal Revenue Officers, Employees and Others

The National Internal Revenue Code of 1997 (Code) particularly, Sections

Based on the aforesaid RRs, receiving, processing and evaluation of the

Inasmuch as the responsibilities/functions of the concerned offices were

Under existing rules, the BIR process applications for

The RDO investigation offices of the LTS having

The TWC shall review the report and recommendation

In all instances, no application for abatement shall be

(b) Compromise Settlement

Pursuant to Section 204 (A), in relation to Section 7, of

1) Concerned Regional Evaluation Board (REB)

• Other cases which were not delegated

• Cases which, by law, have been entrusted to the

3) National Evaluation Board (NEB)

• Cases where the basic tax exceeds One million

Prior to its approval/disapproval, application for

In all instances, application for compromise settlement

The concerned RDO/head of the LTS investigating office is hereby directed

This Order takes effect immediately.

(SGD.) LILIAN B. HEFTI

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