Tax Compromises and Cancellations

There are instances where taxes can be compromised, or even canceled by the Commissioner of the BIR.

For a compromise to happen, the following things must be present:

1.) The tax assessment is doubtful

2.) The taxpayer can't pay because of his financial situation

Compromises may happen in the following instances:

1.) Delinquent accounts

2.) There is an ongoing administrative tax protest case

3.) A civil case in court involving taxes

4.) A court case involving tax collection

5.) A criminal violation that hasn't been filed in court,

6.) A criminal case where there is no tax fraud.

Taxes can't be compromised in the following instances:

1.) Withholding tax cases

2.) Criminal cases where there is tax fraud

3.) Criminal violations already in court

4.) Delinquent accounts with schedules approved by the BIR

Remember: A case isn't a case until it gets to court.

The BIR Commissioner may cancel a tax liability if assessment was excessive and the costs of collecting that particular tax are greater than the tax itself. So if you were given an assessment of Php 3 Million when you owe the government only Php 10,000, all the money you have is in a rural bank with no internet connections and located right in the middle of a warzone and there's a lot of gunfire between rebel and government forces there, you can ask the BIR for a cancellation.