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expressly authorized to do so. In the absence of proof that the compromise offer was
approved and accepted by officers who are authorized by the Commissioner, the same
can be disregarded [Security Bank Corp. vs. Commissioner of Internal Revenue (G.R.
No. 130838, promulgated Aug. 22, 2006)].
The same, however, is not the case for abatement of a tax liability. Revenue Regulations
No. 13-2001 expressly provide that the Commissioner of Internal Revenue has the sole
authority to abate taxes, penalties, or interest. Unlike compromise offers, such authority
has not been delegated by pertinent regulations. This authority is generally applicable to
surcharge and compromise penalties only. However, in meritorious instances, the
Commissioner may likewise abate the interest as well as basic tax assessed.
Based on these regulations, it goes without saying that the approval of any compromise
and abatement is within the judgment and discretion of the Commissioner of Internal
Revenue, or any other authorized officer, as the case may be. In fact, the CTA held in the
case of Licomcen, Inc. vs. Guillermo T. Parayno, et al. [CTA EB Case No. 424,
promulgated April 24, 2009] that a taxpayer cannot anticipate that its application for
abatement will be approved by its mere filing as the authority of the Commissioner of
Internal Revenue to abate tax liability involves the exercise of discretion, and therefore,
its outcome would depend entirely on the Commissioners own judgment.
While these remedies are available to taxpayers who may seem to be already caught in a
bind with respect to their tax liabilities, the burden clearly is on the taxpayer to convince
the Commissioner that a compromise or abatement is in order. For instance, as one of the
grounds for compromise is the existence of reasonable doubt on the validity of the
assessment, the taxpayer must be able to propound evidence and strong legal arguments
to cast reasonable doubt on the correctness of the assessment. This is particularly true in
light of the principle that tax assessments are presumed to have been valid when issued.
Indeed, Section 204 of the Tax Code, and its related implementing regulations and
issuances, does not confer a right to be entitled to said remedies. And as the BIR
expectedly has to act upon these offers of compromise and abatement with extreme
caution, approvals are seldom heard of. For one, this can be attributed to the fact that the
grounds for compromise or abatement are very specific, and failure to qualify under any
of those cases would automatically warrant a denial of the application.
While the Tax Code provides for such last ditch remedies, it must be kept in mind that
this is subject to the underlying rule that the concerned taxpayer must be able to prove
sufficiently that the compromise or abatement recourse meets the qualifications and
complies with the stringent requirements under applicable laws and regulations. Failure
to do so will leave the taxpayer with no choice but to fulfill his or her tax obligations.
Betheena C. Dizon is a tax associate director of SGV & Co.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views
and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.