Settlement of Back-to-Back Loans Tax Cases

The BIR facilitates collection by accepting "offer to pay" settlements for deficiency income taxes in these cases.
Conditions for acceptance:
1. Payment and offer must be made by March 31, 1993.
2. Minimum payment equals the difference between tax on disallowed interest expense and final withholding tax already paid on interest income.
3. Interest of 20% per annum is added to deficiency tax calculated from the due date of the income tax return until payment date.
No offers accepted after deadline.

Offers must be submitted in duplicate by the taxpayer's President or Authorized Officer.
Offer details required:
- Taxpayer's name and address.
- Taxable year.
- Tax Identification Number (TIN).
- Assessment notice number (if applicable).
- Amount of disallowed interest expense claimed.
- Interest earned.
- Amount of final withholding tax on interest earned.
Offers shall be stamped and verified against audit reports and certificates of withholding tax.
Offers forwarded to Deputy Commissioner Eufracio D. Santos for approval and issuance of Authority to Accept Payment (ATAP).
Upon payment, submission of pink copy of ATAP is required to complete the docket.
Voluntary settlements before audit also documented with ATAP and Offer copies.

Disallowance of interest expense deduction when it is paid or accrued on non-business or non-trade indebtedness per Sec. 29(b), NIRC.
Final withholding tax on interest income being a fixed 20%.
Interest penalty at 20% per annum imposed on deficiency tax from filing deadline to payment.
Administrative authority vested in Deputy Commissioner for approvals.

Use of a prescribed Offer to Settle form in duplicate.
Attachment of Certificate of Creditable Withholding Tax from withholding agent required.
Signatures of taxpayer's authorized representative mandatory.
Official stamps and verification procedures to ensure accuracy and compliance before acceptance.