MODULE 2

Compliance Requirements for Income Tax on Individuals

Introduction

The module, Compliance Requirements for Income Tax on Individuals, contains discussion materials
and practice problems related to the nature and concept of income tax. This Module contains also a
discussion as to the persons required to file individual income tax returns. Discussed also are the
deadlines and manner of filing with regards to various individual income tax returns. Provided also
in this module are the various BIR forms to be filled-out in filing individual income tax returns. Lastly,
provided herein are the penalty provisions as set in the tax code with regards to the non-compliance
with individual income tax return filings and payments.

In this module you are required and expected to accomplish sets of practice problems in order to
complete each learning outcomes/objectives. In each learning outcomes/objectives are Task/Activity
Sheets. Follow and perform the activities on your own. If you have questions, do not hesitate to ask
for assistance from your professor. You are required to submit and compile these activities (Student
Portfolio).

Learning Objectives
After studying this module, you should be able to
1. Determine the individual taxpayers required to file quarterly and annual income tax
returns.
2. Know the quarterly and annual deadlines for individual income tax returns.
3. Know the manner and place of filing of individual income tax returns.
4. Determine the BIR forms to be used in filing individual income tax returns.
5. Know how to fill-up the applicable BIR Forms
6. Determine the applicable penalties for non-compliance with regards individual income tax
returns.

Learning Contents
1. Who shall file Income Tax Return?
2. Deadlines for Income Tax Return of Individual Taxpayers
3. Manner and Place of Filing of Income Tax Return of Individual Taxpayers
4. BIR Forms
5. Penalties for Non-Compliance
 ISABELA STATE UNIVERSITY- CBAPA 2
MODULE 2: Compliance Requirements for Income Tax on Individuals

Income Tax Description

Income Tax is a tax on a person's income, emoluments, profits arising from property, practice
of profession, conduct of trade or business or on the pertinent items of gross income specified in the
Tax Code of 1997 (Tax Code), as amended, less the deductions if any, authorized for such types of
income, by the Tax Code, as amended, or other special laws.
Who are Required to File Income Tax Returns?
Individuals
• Resident citizens receiving income from sources within or outside the Philippines
o Employees deriving purely compensation income from two or more employers,
concurrently or successively at any time during the taxable year
o Employees deriving purely compensation income regardless of the amount, whether
from a single or several employers during the calendar year, the income tax of which
has not been withheld correctly (i.e. tax due is not equal to the tax withheld) resulting
to collectible or refundable return
o Self-employed individuals receiving income from the conduct of trade or business
and/or practice of profession
o Individuals deriving mixed income, i.e., compensation income and income from the
conduct of trade or business and/or practice of profession
o Individuals deriving other non-business, non-professional related income in addition
to compensation income not otherwise subject to a final tax
o Individuals receiving purely compensation income from a single employer, although
the income of which has been correctly withheld, but whose spouse is not entitled to
substituted filing
• Non-resident citizens receiving income from sources within the Philippines
• Aliens, whether resident or not, receiving income from sources within the Philippines
Non-Individuals
• Corporations including partnerships, no matter how created or organized.
• Domestic corporations receiving income from sources within and outside the Philippines
• Foreign corporations receiving income from sources within the Philippines
• Estates and trusts engaged in trade or business

PERSONS NOT REQUIRED TO FILE INCOME TAX RETURN

1. An individual earning purely compensation income whose taxable income does not exceed
P250,000.
 ISABELA STATE UNIVERSITY- CBAPA 3
MODULE 2: Compliance Requirements for Income Tax on Individuals

2. An individual whose sole income has been subjected to final income tax
3. Minimum Wage Earners
4. Individual taxpayers qualified for substituted filing. An individual taxpayer is qualified for
substituted filing if all the requirements were met:
a. Employee receives purely compensation income (regardless of amount) during the
taxable year;
b. Employee receives income from a single employer in the Philippines during the
taxable year;
c. The amount of tax due from the employee at the end of the year equals the amount of
tax withheld by the employer;
d. If married, the employee’s spouse also complies with all three aforementioned
conditions, or otherwise receives no income;
e. The employer files BIR Form 1604CF; and
f. Employee has BIR Form 2316 or Certificate of Final Tax Withheld at Source (BIR
Form 2306) issued by his employer.

Annual Income Tax For Individuals Earning Purely Compensation Income (Including Non-
Business/Non-Profession Related Income)
BIR Form 1700 - Annual Income Tax For Individuals Earning Purely Compensation Income
(Including Non-Business/Non-Profession Related Income)
Documentary Requirements
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316)
2. Duly approved Tax Debit Memo, if applicable
3. Proofs of Foreign Tax Credits, if applicable
4. Income Tax Return previously filed and proof of payment, if filing an amended return for the
same taxable year.
Procedures
1. For Electronic Filing and Payment System (eFPS) Filer
a. Fill-up applicable fields in the BIR Form No. 1700
b. Pay electronically by clicking the "Proceed to Payment" button and fill-up the required
fields in the "eFPS Payment Form" click "Submit" button.
 ISABELA STATE UNIVERSITY- CBAPA 4
MODULE 2: Compliance Requirements for Income Tax on Individuals

c. Receive payment confirmation from eFPS-AABs for successful e-filing and e-

payment.
2. For Non-eFPS Filer
a. Fill-up applicable fields in the BIR Form No. 1700 in the downloaded Electronic
Bureau of Internal Revenue Form (eBIRForm) Package
b. Print the duly accomplished BIR Form No. 1700
c. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office where you are registered and present the duly accomplished
BIR Form 1700, together with the required attachments and your payment.
d. In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office
where you are registered and present the duly accomplished BIR Form 1700, together
with the required attachments and your payment.
e. Receive your copy of the duly stamped and validated form from the teller of
the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1700 in triplicate copies.
b. Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form 1700,
together with the required attachments.
c. Receive your copy of the duly stamped and validated form from the RDO/Tax Filing
Center representative.
Deadline
On or before the 15th day of April of each year covering taxable income for calendar year 2018 and
thereafter

Annual Income Tax For Individuals, Estates, and Trusts

BIR Form 1701 - Annual Income Tax Return Individuals, Estates and Trusts
Documentary Requirements
1. Certificate of Income Tax Withheld on Compensation (BIR Form 2316), if applicable
2. Certificate of Income Payments Not Subjected to Withholding Tax (BIR Form 2304), if
applicable
3. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
4. Duly approved Tax Debit Memo, if applicable
 ISABELA STATE UNIVERSITY- CBAPA 5
MODULE 2: Compliance Requirements for Income Tax on Individuals

5. Proof of Foreign Tax Credits, if applicable

6. Income Tax Return previously filed and proof of payment, if filing an amended return for
the same year
7. Account Information Form (AIF) or the Certificate of the independent Certified Public
Accountant (CPA) with Audited Financial Statements if the gross annual sales, earnings,
receipts or output exceed three million pesos (P3,000,000.00)
8. Account Information Form or Financial Statements not necessarily audited by an independent
CPA if the gross annual sales, earnings, receipts or output do not exceed P3,000,000.00 and
is subject to graduated income tax rates under Section 24(A)(2)(a)
9. Proof of prior year’s excess tax credits, if applicable
Procedures
1. For eFPS Filer
a. Fill-up applicable fields in the BIR Form No. 1701
b. Pay electronically by clicking the “Proceed to Payment” button and fill-up the required
fields in the “eFPS Payment Form” then click “Submit” button.
c. Receive payment confirmation from eFPS-AABs for successful e-filing and e-
payment.
2. For Non-eFPS Filer
a. Fill-up fields in the BIR Form No. 1701 in the downloaded Electronic Bureau of
Internal Revenue Form (eBIRForm) Package
b. Print the duly accomplished BIR Form No. 1701
c. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office where you are registered and present the duly
accomplished BIR Form 1701, together with the required attachments and your
payment.
d. In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office
where you are registered and present the duly accomplished BIR Form 1701, together
with the required attachments and your payment.
e. Receive your copy of the duly stamped and validated form from the teller of
the AABs/Revenue Collection Officer/duly Authorized City or Municipal Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1701 in triplicate copies.
 ISABELA STATE UNIVERSITY- CBAPA 6
MODULE 2: Compliance Requirements for Income Tax on Individuals

b. Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form 1701,
together with the required attachments.
c. Receive your copy of the duly stamped and validated form from the RDO/Tax Filing
Center representative.
Deadline
Final Adjustment Return or Annual Income Tax Return - On or before the 15th day of April of each
year covering income for calendar year 2018 and thereafter

Account Information Form For Self-Employed Individuals, Estates And Trusts (Including
Those With Mixed Income, i.e., Compensation Income and Income from Business and/or
Practice of Profession)
BIR Form 1701 AIF - Account Information Form for Self-Employed Individuals, Estates and Trusts
(Including those with Mixed Income, i.e., Compensation Income and Income from Business and/or
Practice of Profession) and Estates and Trusts (Engaged in Trade or Business)
NOTE: Pursuant to Sec. 71 of RA 10963, otherwise known as Tax Reform Acceleration and Inclusion
Act, amending Sec. 232 of the Tax Code, as amended, in relation to Revenue Memorandum Circular
No. 6 – 2001, corporations, companies or persons whose gross annual sales, earnings, receipts or
output exceed P3,000,000 may not accomplish this form. In lieu thereof, they may file their annual
income tax returns accompanied by balance sheets, profit and loss statement, schedules listing
income-producing properties and the corresponding income therefrom, and other relevant statements
duly certified by an independent CPA.
Documentary Requirements
None
Procedures
1. Accomplish BIR Form 1701 AIF in triplicate.
2. Attach the same to BIR Form 1701.
Deadline
Same deadline as BIR Form 1701 - On or before the 15th day of April of each year covering taxable
income for calendar year 2018 and thereafter

Quarterly Income Tax For Individuals, Estates And Trusts Including Those With Mixed
Income, i.e., Compensation Income and Income from Business and/or Practice of Profession
BIR Form 1701Q - Quarterly Income Tax Return For Individuals, Estates and Trusts
 ISABELA STATE UNIVERSITY- CBAPA 7
MODULE 2: Compliance Requirements for Income Tax on Individuals

Documentary Requirements
1. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
2. Duly approved Tax Debit Memo, if applicable
3. Proof of other payment/s made, if applicable
4. Summary Alphalist of Withholding Agents of Income Payments Subjected to Withholding
Tax at Source (SAWT), if applicable
Procedures
1. For eFPS Filer
a. Fill-up applicable fields in the BIR Form No. 1701Q
b. Pay electronically by clicking the “Proceed to Payment” button and fill-up the required
fields in the “eFPS Payment Form” then click “Submit” button.
c. Receive payment confirmation from eFPS-AABs for successful e-filing and e-
payment.
2. For Non-eFPS Filer
a. Fill-up applicable fields in the BIR Form No. 1701Q in the downloaded Electronic
Bureau of Internal Revenue Form (eBIRForm) Package
b. Print the duly accomplished BIR Form No. 1701Q
c. Proceed to the nearest Authorized Agent Bank (AAB) under the jurisdiction of the
Revenue District Office where you are registered and present the duly
accomplished BIR Form 1701Q, together with the required attachments and your
payment.
d. In places where there are no AABs, proceed to the Revenue Collection Officer or duly
Authorized City or Municipal Treasurer located within the Revenue District Office
where you are registered and present the duly accomplished BIR Form 1701Q,
together with the required attachments and your payment.
e. Receive your copy of the duly stamped and validated tax return and BIR prescribed
deposit slip from the teller of the AABs or Electronic Revenue Official Receipt
(eROR) from the Revenue Collection Officer/duly Authorized City or Municipal
Treasurer.
3. For Manual Filer
a. Fill-up the BIR Form No. 1701Q in triplicate copies (Compensation Income need not
be reported in the Quarterly Income Tax Return and is to be declared only on the
Annual Income Tax Return).
 ISABELA STATE UNIVERSITY- CBAPA 8
MODULE 2: Compliance Requirements for Income Tax on Individuals

b. Proceed to the Revenue District Office where you are registered or to any Tax Filing
Center established by the BIR and present the duly accomplished BIR Form 1701Q,
together with the required attachments.
c. Receive your copy of the duly stamped and validated form from the RDO.
Deadlines
• May 15 of the current taxable year– for the first quarter
• August 15 of the current taxable year – for the second quarter
• November 15 of the current taxable year – for the third quarter

INCOME TAX RETURN BIR FORMS

BIR Form
No. Description Persons required to File
Annual Income Tax Return for
Resident Citizen deriving compensation income
Individuals Earning Purely
from all sources, or resident alien and non-resident
1700 Compensation Income (Including
citizen with respect to compensation income from
Non-Business/Non-Profession
within the Philippines
Related Income)
A resident citizen engaged in trade, business, or
practice of profession within and without the
Annual Income Tax Return for Philippines. A resident alien, non-resident citizen
Individuals (including MIXED or non-resident alien individual engaged in trade,
1701
Income Earner), Estates and business or practice of profession within the
Trusts Philippines. An individual engaged in trade or
business or in the exercise of their profession and
receiving compensation income as well.
Annual Income Tax Return for
Those under the graduated income tax rates with
Individuals Earning Income
1701A OSD as mode of deduction OR those who opted to
PURELY from
avail of the 8% flat income tax rate
Business/Profession

A resident citizen engaged in trade, business, or

practice of profession within and without the
Quarterly Income Tax Return for Philippines. A resident alien, non-resident citizen or
1701Q
Individuals, Estates and Trusts non-resident alien individual engaged in trade,
business or practice of profession within the
Philippines.
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MODULE 2: Compliance Requirements for Income Tax on Individuals

PENALTY PROVISIONS
There shall be imposed and collected as part of the tax:
1. A surcharge of twenty five percent (25%) for each of the following violations:
a. Failure to file any return and pay the amount of tax or installment due on or before the
due dates;
b. Filing a return with a person or office other than those with whom it is required to be
filed;
c. Failure to pay the full or part of the amount of tax shown on the return, or the full
amount of tax due for which no return is required to be filed, on or before the due date;
d. Failure to pay the deficiency tax within the time prescribed for its payment in the notice
of Assessment (Delinquency Surcharge).
2. A surcharge of fifty percent (50%) of the tax or of the deficiency tax, in case any payment has
been made on the basis of such return before the discovery of the falsity or fraud, for each of
the following violations:
a. Willful neglect to file the return within the period prescribed by the Code or by rules
and regulations; or
b. In case a false or fraudulent return is willfully made.
3. Interest at the rate of twenty percent (20%) per annum, or such higher rate as may be prescribed
by rules and regulations, on any unpaid amount of tax, from the date prescribed for the
payment until it is fully paid.

4. Compromise penalty.
END
 Annex "A"

REVISED SCHEDULE OF COMPROMISE PENALTY

CODE NATURE OF VIOLATION CRIMINAL PENALTY IMPOSED AMOUNT OF COMPROMISE

SEC

90/275 Failure to have the Fine of not more than P1,000 or If the gross estate
statement of assets of the imprisonment of not more than But Does Compromise
decedent and the 6 months, or both. (Sec. 275, Exceeds Not Exceed is
deductions from gross NIRC) P 2,000,000 P 5,000,000 P 7,500
estate certified by an 5,000,000 10,000,000 10,000
independent CPA duly 10,000,000 25,000,000 20,000
accredited by the BIR 25,000,000 50,000,000 25,000
50,000,000 xxx 50,000

232/235 Failure to keep/preserve Fine of not more than P1,000 or If gross annual sales, earnings or receipts
records required by law or imprisonment for not more than Exceeds But Does Compromise
regulations (six) 6 months, or both. (Sec. Not Exceed is
275, NIRC) P xxx P 50,000 P 1,000
50,000 100,000 3,000
100,000 500,000 5,000
500,000 5,000,000 10,000
5,000,000 10,000,000 15,000
10,000,000 20,000,000 20,000
20,000,000 50,000,000 30,000
50,000,000 xxx 50,000

232 Failure to have books of Fine of not more than P1,000 or If gross annual sales earnings or receipts
accounts audited and have imprisonment of not more than 6 Exceeds But Does Compromise
the financial statements months, or both. (Sec. 275, NIRC) Not Exceed is
attached to the income tax P 25,000 (for P 200,000 P 3,000
return certified by an any Quarter); (for the year);
independent CPA duly
accredited by the BIR 200,000 500,000 5,000
500,000 5,000,000 10,000
5,000,000 10,000,000 15,000
10,000,000 25,000,000 20,000
25,000,000 xxx 25,000

236/258 Failure to Register Fine of not less than P5,000 but If the subject establishment is located in
not more than P20,000 and the following:
imprisonment of not less than 6 a. Cities 20,000*
months but not more than 2 b. 1st class municipalities 10,000*
years c. 2nd class municipalities 5,000*
d. 3rd class municipalities 2,000*

* Penalties provided are inclusive of all other

violations
258 Failure to pay annual Fine of not less than P30,000 but a. Cities 30,000
registration fee by a person not more than P50,000 and b. 1st class municipalities 20,000
engaged in the business of suffer imprisonment of not c. 2nd class municipalities 15,000
distilling, rectifying, less than 2 years but not more d. 3rd class municipalities 10,000
repacking, compounding or than 4 years
manufacturing article
subject to excise tax

1/12
 CODE NATURE OF VIOLATION CRIMINAL PENALTY IMPOSED AMOUNT OF COMPROMISE
SEC

236/275 Failure to Pay & Display the Fine of not more than 1,000 or P 1,000
Annual Registration Fee imprisonment of not more than 6
(BIR Form 0605) months (Sec. 275, NIRC)

236/275 No Certificate of Fine of not more than 1,000 or P 1,000

Registration displayed imprisonment of not more than 6
months (Sec. 275, NIRC)

236/275 Failure to display the Fine of not more than 1,000 or P 1,000
poster "Ask for imprisonment of not more than 6
BIR Receipt" or "Notice to months, or both.
the Public to demand (Sec 275, NIRC)
receipts / invoice"
236/275 Failure to attach or paste Fine of not more than 1,000 or P 1,000 per unit
authorized sticker/DECAL imprisonment of not more than 6
authorizing the use of months, or both. (Sec 275, NIRC)
CRM/POS/CAS

Failure to present P 1,000

application form (BIR Form
1900 and 1905) to use
registered sales
books/permit to use loose
leaf sales books
238/275 Failure of the printer to Fine of not more than P1,000 or First Second
submit the required imprisonment of not more than 6 Offense Offense
quarterly report (Sec. 238, months or both P 5,000 P 10,000
NIRC)
Subsequent offenses shall be considered as
willful failure, and thus not subject to
compromise.
250 Failure to make, file, or One Thousand Pesos (₱1,000) for each failure
submit the complete to make, file, or submit the said information
quarterly Summary Lists of returns. Provided, however, that the
Sales and Purchases-Local & aggregate amount to be imposed for such
Imported (SLSP), the Annual failures during a calendar year shall not
Alpha List of Payees and/or exceed Twenty-Five Thousand Pesos
Employees subjected to (₱ 25,000).
withholding taxes, or
supply correct and accurate For this purpose, failure to supply the
information therein at the required information for each buyer or seller
time or times required by of goods and services shall constitute a
the Tax Code, as amended, single punishable act or omission
or other existing pursuant to Revenue Memorandum Circular
rules and regulations (RMC) No. 51-2009.

Notwithstanding the foregoing, failure on the

part of the taxpayer to make, file or submit
the required complete Schedules of
Sales/Purchases including Importations, if
any, (SLS/P/I)/Annual Alpha Lists at the time
or times required by the Tax Code, as
amended, and other existing rules and
regulations under the following
circumstances shall be considered as willful
failure/neglect tantamount to fraud and thus
cannot be compromised:
(a) failure to submit for at least:

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CODE NATURE OF VIOLATION CRIMINAL PENALTY IMPOSED AMOUNT OF COMPROMISE
SEC

 two (2) times in a taxable year, in

the case of required complete
SLS/P/I;
 two (2) consecutive years, in the
case of Annual Alpha Lists of
Payees from whom Taxes were
Withheld; and
(b) non-submission in the format
prescribed.

Complete Summary Lists refers to the set of

Summary Lists of Sales (SLS) and Summary
Lists of Purchases (SLP). In the case of those
with importations, completeness shall
include not only SLS and SLP but also the
Summary Lists of Importations (SLI). Failure
to submit the full/complete lists shall be
counted as one violation.

Thus, submission of incomplete lists,

including the submission of erroneous lists,
shall be considered as an act of non-
submission. The submission of falsified
information is an act of fraud and cannot be
compromised.

Non-compliance with a duly issued

Subpoena Duces Tecum (SDT) is penalized
under Sec. 266 of the Tax Code, as amended,
and the prosecution thereof is provided under
RMO No. 10-2013.

250 Failure to make, file or One Thousand Pesos (₱1,000) for each
submit information returns, information return, schedule, report, sworn
schedules, reports, sworn statement, certification and other document
statements, certifications not made, filed or submitted, or for each
and other documents, record not maintained. Provided, however,
(except quarterly SLS/P/I, that the aggregate amount to be imposed for
and the Annual Alpha List of such failures during a calendar year shall not
Payees and/or the Annual exceed Twenty Five Thousand Pesos
Alpha List of Employees (₱25,000).
subjected to withholding
taxes), or keep any record
required by the Tax Code, as
amended, or other existing
rules and regulations

250 Failure to supply correct One Thousand Pesos (₱1,000) for each
and accurate information incorrect or erroneous information
in the information returns, supplied in the information return, schedule,
schedules, reports, sworn report, sworn statement, certification and
statements, certifications other document. Provided, however, that the
and other documents aggregate amount to be imposed for such
(except quarterly SLS/P/I, failures during a calendar year shall not
and the Annual Alpha List of exceed Twenty Five Thousand Pesos
Payees and/or the Annual (₱25,000).
Alpha List of Employees
subjected to withholding
taxes) required by the Tax
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CODE NATURE OF VIOLATION CRIMINAL PENALTY IMPOSED AMOUNT OF COMPROMISE
SEC

Code, as amended, or other

existing rules and
regulations

254 Willful attempt to evade or Fine of not less than P30,000 but This violation cannot be compromised
defeat any tax imposed by not more than P100,000 and because it involves fraud. (Sec 204, NIRC)
the National Internal imprisonment of not less than
Revenue Code or the two (2) years but not more than
payment thereof. four (4) years
255 Failure to Fine of not less than P10,000 and If gross sales, earnings or receipts; or gross
make/file/submit any imprisonment of not less than estate or gift (based on the subject
return or supply correct one (1) year but not more than returns/information for filing/submission)
information at the time or ten (10) years But does not Compromise
times required by law or Exceeds exceed is
regulation P xxx P 50,000 P 1,000
50,000 100,000 3,000
100,000 500,000 5,000
500,000 5,000,000 10,000
5,000,000 10,000,000 15,000
10,000,000 25,000,000 20,000
25,000,000 xxx 25,000
255 Failure to withhold or Fine of not less than P10,000 and If the amount of tax not withheld or
remit withheld taxes at the imprisonment of not less than remitted
time or times required by one (1) year but not more than But Does Compromise
law or regulations ten (10) years Exceeds Not Exceed is
P xxx P 5,000 P 1,000
5,000 15,000 3,000
15,000 20,000 5,000
20,000 50,000 10,000
50,000 500,000 15,000
500,000 1,000,000 20,000
1,000,000 xxx 25,000
255 Failure to refund excess Fine of not less than P10,000 and If the amount of excess withholding taxes
taxes withheld on imprisonment of not less than not refunded
compensation one (1) year but not more than Exceeds But does not Compromise
ten (10) years Exceed is
P xxx P 5,000 P 1,000
5,000 15,000 3,000
15,000 20,000 5,000
20,000 50,000 10,000
50,000 500,000 15,000
500,000 1,000,000 20,000
1,000,000 xxx 25,000
255 Misrepresentation as to Fine of not less than P10,000 but This violation cannot be compromised
actual filing of return or not more than P20,000 and because it involves fraud. (Sec. 204, NIRC)
statement or withdrawal of imprisonment of not less than
return or statement one (1) year but not more than
already filed three (3) years
255 Failure to make, file or Fine of not less than Ten “Willful failure” implies fraud which cannot
submit the required Thousand Pesos (₱10,000) and be compromised.
complete SLS/P/I, Annual imprisonment of not less than one
Alpha List of Payees and (1) year but not more than ten
Annual Alpha List of (10) years
Employees in the prescribed
format at the time or times
required by the Tax Code, as
amended, or other existing
rules and regulations.
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CODE NATURE OF VIOLATION CRIMINAL PENALTY IMPOSED AMOUNT OF COMPROMISE
SEC

Failure to make, file or

submit for at least:

 two (2) times in a

taxable year, in the
case of complete
SLS/P/I; and/or
 two (2) consecutive
years, in the case of
Annual Alpha List of
Payees and/or Alpha
List of Employees from
whom Taxes were
Withheld

in the prescribed format at

the time or times required
by the Tax Code
constitutes willful failure
and cannot be
compromised.
255 Failure to file and/or pay Fine of not less than P10,000 and If the amount of tax unpaid
any internal imprisonment of not less than But Does Compromise
revenue tax at the time or one (1) year but not more than Exceeds Not Exceed is
times required by law or 10 years P xxx P 5,000 P 1,000
regulation 5,000 10,000 3,000
10,000 20,000 5,000
20,000 50,000 10,000
50,000 100,000 15,000
100,000 500,000 20,000
500,000 1,000,000 30,000
1,000,000 5,000,000 40,000
5,000,000 xxx 50,000
256 Any act or omission by a Fine of not less than P50,000 but P10,000 for corporation, or the amount of
corporation which is not more than P100,000 (in compromise penalty set forth in this
penalized under the NIRC addition to penalty set forth or Schedule for particular act or omission,
imposed on the responsible whichever is higher.
corporate officer, partner or
employee) P5,000 for responsible officer, partner or
employee
257 a) Violations committed by Fine of not less than P50,000 but
any financial officer or not more than P100,000 and
an independent CPA, or imprisonment of not less than
any person under his two (2) years but not more than
direction as follows: six (6) years. (if the offender is a
CPA, his certificate shall
automatically be revoked or
cancelled upon conviction.)

1) Willful falsification of This violation cannot be compromised

any report or statement because it involves fraud. (Sec. 204, NIRC)
on any examination or
audit; rendering reports
(including exhibits,
statements, etc.) not
verified by him
personally or under his

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supervision or by a
member of his firm or
staff in accordance with
sound auditing
practices.

2) Certification of financial This violation cannot be compromised

statement of a business because it involves fraud. (Sec. 204, NIRC)
enterprise containing an
essential misstatement
of facts or omission as to
transactions, taxable
income, deduction and
exemption of a client.

b) Violations committed by Fine of not less than P50,000 but

persons who are not not more than P100,000 and
CPAs- imprisonment of not less than 2
years but not more than 6 years.
In case of foreigners, conviction
under this Code shall result in his
immediate deportation after
serving sentence without further
1) Examination and audit proceedings for deportation.
of books of accounts of P 25,000
taxpayers;

2) Offering to sign and P 25,000

certifying financial
statements without
audit;

3) Offers any taxpayer the P 25,000

use of accounting or
bookkeeping records for
internal revenue
purposes not in
conformity with the
requirements in the
Code and regulations;
4) Knowingly making false
entry or enters any false This violation cannot be compromised
or fictitious name in the because it involves fraud. (Sec. 204, NIRC)
books of accounts
mentioned in the
preceding paragraphs;

5) Keeping of two or more

sets of such records or This violation cannot be compromised
books of accounts; because it involves fraud. (Sec. 204, NIRC)

6) In any way commits an

act or omission in P1,000 or the compromise penalty set forth
violation of the in this Schedule for the particular act or
provisions of Sec. 257, omission, whichever is higher, or cannot be
NIRC; or compromised if it involves fraud.

If gross sales, earnings or receipts

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7) (i) Failure to keep books Exceeds But Does Compromise

of accounts or records in Not Exceed is
a native language, P xxx 50,000 P 1,000
English or Spanish or 50,000 100,000 3,000
make a true and 100,000 500,000 5,000
complete transaction 500,000 5,000,000 10,000
5,000,000 10,000,000 15,000
10,000,000 20,000,000 20,000
20,000,000 50,000,000 30,000
50,000,000 xxx 50,000

This violation cannot be compromised

(ii) Where books kept in because it involves fraud. (Sec. 204, NIRC)
a native language, English
or Spanish are found to
be at material variance
with books kept in
another language
This violation cannot be compromised
8] Willful attempt to evade Fine of not less than P50,000 but because it involves fraud. (Sec. 204, NIRC)
or defeat any tax not more than P100,000 and
imposed under the Code suffer imprisonment of not less
or knowingly uses fake than two (2) years but not less
or falsified Revenue than six (6) years
Official Receipts, Letters
of Authority, Certificates
Authorizing
Registration, Tax Credit
Certificates, Tax Debit
Memoranda and other
Accountable Forms
259 Illegal collection of foreign Fine of not less than P20,000 but P 20,000
payments collection of not more than P50,000 and
foreign payments under imprisonment of not less than 1
Sec. 67, NIRC without any year but not more than 2 years
license or in violation of
implementing regulations
260 Unlawful possession of Fine of not less than P20,000 but P 100,000, including forfeiture of unlawful
cigarette paper in bobbins not more than P100,000 and articles/items;
or rolls, cigarette tipping imprisonment of not less than 6 Subsequent violations shall not be subject to
paper or cigarette filter tips years and 1 day but not more compromise.
than 12 years
261 Unlawful use of denatured Fine of not less than P20,000 but P 100,000, including forfeiture of unlawful
alcohol not more than P100,000 and articles/items;
imprisonment of not less than 6 Subsequent violations shall not be subject to
years and 1 day but not more compromise.
than 12 years
261 Unlawful recovery or Fine of not less than P20,000 but P 100,000, including forfeiture of unlawful
attempt to recover by not more than P100,000 and articles/items;
distillation or other process imprisonment of not less than 6 Subsequent violations shall not be subject to
any denatured alcohol or years and 1 day but not more compromise.
who knowingly disposes than 12 years
alcohol so recovered or
redistilled

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262 Shipment or removal of Fine of not less than P20,000 but P 100,000, including forfeiture of unlawful
liquor or tobacco products not more than P100,000 and articles/items;
under false name or brand imprisonment of not less than 6 Subsequent violations shall not be subject to
or as an imitation of any years and 1 day but not more compromise.
existing name or brand than 12 years
263 a) Unlawful possession or If the appraised value of the Compromise allowable on a case
removal of imported article under the Tariff and to case basis
articles subject to excise Customs Code (TCC) –
tax without payment of
tax Value Does Penalty
Exceeds Not Exceed is
xxx P1,000 Fine: P1,000-2,000
and imprisonment of not less than 60 2,000*
days but not more than 100 days

1,000 50,000 Fine: 10,000-20,000

2,000*
and imprisonment of not less than 2
years but not more than 4 years

50,000 150,000 Fine: 30,000-60,000 60,000*

and imprisonment of 4 years but not
more than 6 years

150,000 xxxx Fine : 50,000-100,000 100,000*

and imprisonment of not less than 10
years but not more than 12 years
 Plus forfeiture of the untaxed article
b) Unlawful possession of Fine of not less than 10 times the P100,000 plus forfeiture of the untaxed
locally manufactured amount of excise tax due but not article
articles subject to excise less than P500 and imprisonment Subsequent violations shall not be subject to
tax without payment of of not less than two (2) years but compromise.
the tax not more than four (4) years
263 c) Unlawful removal of Fine of not less than 10 times the P100,000 plus forfeiture of the untaxed
untaxed articles subject amount of excise tax due but not article
to excise tax from the less than P1,000 and Subsequent violations shall not be subject to
place of production imprisonment of not less than compromise.
one (1) year but not more than
two (2) years
264 a) Failure or refusal to Fine of not less than P1,000 but Specific First Second
issue receipts or sales or not more than P50,000 and Violation Offense Offense
commercial invoices; imprisonment of not less than a) For failure to P 10,000 P 20,000
issuing receipts invoices four (4) years issue receipts Subsequent violations
not truly reflecting or sales or shall not be subject to
and/or containing all sales or compromise.
information required commercial
therein or using invoices
multiple or double
receipts or invoices b) For refusal to P 25,000 P 50,000
issue receipts Subsequent violations
or sales or shall not be subject to
commercial compromise.
invoices

If the P 20,000 P 50,000

information Subsequent violations
missing is the shall not be subject to
correct amount compromise.
of the
transaction

P 5,000 P 10,000
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c) For issuance of Subsequent violations

receipts that shall not be subject to
do not truly compromise.
reflect and/or
contain all the
information
required to be
shown therein
P 20,000 P 50,000
If the duplicate Subsequent violations
copy of the shall not be subject to
invoice is blank compromise.
but the original
copy thereof is
detached from
the booklet and
cannot be
accounted for
Not qualified for
If the amount compromise
of the
transaction
stated in the
taxpayer’s
copy is
understated
versus the
amount per
copy of the
invoice issue to
the purchaser
P 20,000 P 50,000
d) (i) For use of Subsequent violations
unregistered shall not be subject to
receipts or compromise.
invoices
P25,000/unit P50,000/unit
(ii) Use of Subsequent violations
unregistered shall not be subject to
cash register compromise.
machines in
lieu of invoices
or receipts
Not qualified for
e) For possession compromise
or use of
multiple or
double receipts
or invoices

f) For printing or
causing, aiding
or abetting the
printing of:
P 25,000 P 50,000
1) Receipts Subsequent violations
or invoices shall not be subject to
without compromise.
authority from
the BIR
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Not qualified for

2) Double compromise
or multiple sets
of receipts or
invoices
P 20,000 P 50,000
3) Receipts Subsequent violations
or invoices shall not be subject to
bearing any of compromise.
the following:

a. Consecutive
numbers
b. Name of
Taxpayer
c. Business Style
d. Business
address of the
person or
entity to use
the same
e. TIN
f. Name,
address, date,
authority no.
of the printer
and inclusive
serial
numbers of
the batch or
receipts
printed
265 Offenses relating to
internal revenue stamps –

1) Making, importing, Fine of not less than P20,000 but P 20,000, including forfeiture of unlawful
selling, using or not more than P50,000 and articles/items;
possessing without imprisonment for not less than 4 Subsequent violations shall not be subject to
express authority from years but not more than 8 years compromise.
the Commissioner any
dye for printing or
making stamps, label
tags or playing cards

2) Erasing the Fine of not less than P20,000 but This violation cannot be compromised
cancellation marks of not more than P50,000 and because it involves fraud.
any stamps previously imprisonment for not less than 4 (Sec. 204, NIRC)
used or altering the years but not more than 8 years
written figures or
letters, or cancelling
marks on internal
revenue stamps

3) Possession of false, Fine of not less than P20,000 but

counterfeit, restored or This violation cannot be compromised
not more than P50,000 and because it involves fraud.
altered stamps, labels, imprisonment for not less than 4
or tags, or causes the (Sec. 204, NIRC)
years but not more than 8 years
commission of any such
offense by another

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4) Selling or offering for Fine of not less than P20,000 but This violation cannot be compromised
sale any box or package not more than P50,000 and because it involves fraud.
containing articles imprisonment for not less than 4 (Sec. 204, NIRC)
subject to excise tax years but not more than 8 years
with false, spurious or
counterfeit stamps or
labels or sells from any
such fraudulent box,
package or container as
aforesaid

5) Giving away or Fine of not less than P20,000 but P 50,000, including forfeiture of unlawful
accepting from another not more than P50,000 and articles/items;
or sells, buys, or uses imprisonment for not less than 4 Subsequent violations shall not be subject to
containers on which years but not more than 8 years compromise.
the stamps are not
completely destroyed
266 Failure to obey summons; Fine of not less than P5,000 but First Offense : P10,000
to testify;; or to appear and not more than P10,000 and
produce books of accounts, imprisonment for not less than Second Offense : P 20,000
records, etc. or to furnish one (1) year but not more than
information required under two (2) years Subsequent violations shall not be subject to
the NIRC compromise.
268 Misdeclaration or Summary cancellation or This violation cannot be compromised
misrepresentation by withdrawal of permit to engage because it involves fraud. (Sec. 204, NIRC)
manufacturers of articles in business as a manufacturer of
subject to excise tax under articles subject to excise tax
Title IV, NIRC, or any
pertinent data or
information required
therein
272 Failure of government Fine of not less than P5,000 not If the amount of tax not withheld
officer or employee more than P50,000 or or remitted -
charged with the duty to imprisonment of not less than 6 Exceed But Does Compromise
deduct and withhold any months and 1 day but not more Not Exceed is
internal revenue tax and than 2 years, or both P xxx P 5,000 P 1.000
failure to remit the same in 5,000 15,000 3,000
accordance with the 15,000 20,000 5,000
provisions of the NIRC 20,000 50,000 10,000
50,000 500,000 15,000
500,000 1,000,000 20,000
1,000,000 xxx 25,000
275 Violation of any provision Fine of not more than P1,000 or P1,000 for each violation
of the National Internal imprisonment of not more than 6
Revenue Code or any months or both
regulation of the
Department of Finance for
which no specific penalty is
provided by law
276 Sale, transfer, encumbrance Fine of not less than twice the 20% of the value of the property
or any other disposition of value of the property sold,
any property or part encumbered or disposed of, but
thereof placed under not less than P5,000 or
constructive distraint, imprisonment of not less than 2
without the knowledge and years and 1 day but not more
consent of the than 4 years, or both
Commissioner

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277 Failure to surrender Violator is personally liable to P 50,000

property placed under pay a sum equal to the value of
distraint and levy the property or rights not
surrendered (not exceeding the
amount of taxes due including
penalties and interest together
with costs and interests). In
addition, such violation shall be
fined in a sum of not less than
P5,000 or imprisonment for not
less than 6 months and 1 day but
not more than 2 years, or both
278 Procuring the unlawful Fine of not more than P2,000 or This violation shall not be compromised
divulgence of any imprisonment of not less than 6 because it is against public policy to allow
confidential information months nor more than 5 years, or divulgence of confidential information,
regarding the business, both unless this is validly authorized under
income or inheritance of existing law.
any taxpayer; unlawfully
publishing or printing the
income, profits, losses or
expenditures appearing in
any income tax return

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