Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 49-2008)
The Commissioner may compromise the payment of any internal revenue tax when a reasonable doubt exists as to the validity of the claim against the taxpayer or when the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.
For cases of financial incapacity, the minimum compromise rate is ten percent (10%) of the basic tax assessed; for other cases, the minimum compromise rate is forty percent (40%) of the basic assessed tax.
Approval from the Evaluation Board is required when the basic tax involved exceeds One million pesos (P1,000,000) or when the settlement offered is less than the prescribed minimum rates.
The NEB is composed of the Commissioner of Internal Revenue and the four (4) line Deputy Commissioners: Deputy Commissioner for Operations Group, Deputy Commissioner for Legal and Inspection Group, Deputy Commissioner for Information Systems Group, and Deputy Commissioner for Resource Management Group.
No, the staff Deputy Commissioners, namely the Deputy Commissioner for Tax Reform Administration Group and the Deputy Commissioner of Special Concerns Group, do not form part of the NEB.
According to Revenue Regulations No. 30-2002, as amended by RR No. 8-2004, REB and NEB are two different categories of evaluation boards implementing Section 204; the NEB is composed specifically of the Commissioner and four designated Deputy Commissioners, handling cases typically involving larger amounts or exceptions.
Executive Order No. 175, as amended, clarifies the composition of the National Evaluation Board as contemplated in Section 204 of the Tax Code.
The NEB reviews and approves compromise settlements when the basic tax involved exceeds P1,000,000 or when the proposed compromise is less than the minimum rates set by law.
These Revenue Regulations implement Section 204 of the Tax Code, outlining procedures for tax compromise settlements and defining the composition and functions of both the Regional and National Evaluation Boards.
Because the BIR administration has six Deputy Commissioners (four line and two staff), clarification was necessary to specify that only the four line Deputy Commissioners form part of the NEB for purposes of implementing Section 204 of the Tax Code.