Penalties for and interest on filing amended returns

The Bureau of Internal Revenue (BIR) recently issued Revenue Memorandum Circular (RMC) No. 54-2018 to clarify the imposition of surcharge, interest, and compromise penalty for filing an amended return as amended under Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Under Section 249 of the National Internal Revenue Code as amended, interest on any unpaid amount of tax must be double the legal interest rate for loans or forbearance of any money in the absence of an express stipulation as set by Bangko Sentral ng Pilipinas (BSP) from the date prescribed for payment until the amount is fully paid, provided that in no case shall the deficiency and the delinquency interest prescribed be imposed simultaneously.

In accordance with Section 1 of BSP Circular No. 799 -2013, the rate of interest is six percent per annum in the absence of any stipulated interest rate in the contract of loan or forbearance of money, goods, or credits and the rate allowed in judgments. The rate will be used until the BSP prescribes a new rate.

As for the penalties, Revenue Memorandum Order (RMO) No. 162018 and RMC No. 21-2018 cite a penalty of 25 percent of the amount due for failure to file a return and pay the full or part of the tax due thereon on the date prescribed or for failure to pay the full or part of the amount of tax shown on any return.

Beginning Jan. 1, 2018 (the effectivity date of the TRAIN Law), a 25 percent penalty and 12 percent interest per annum will be imposed based on the additional tax to be paid in an amendment of a return where an additional tax is due per amended return.

Compromise penalties, as updated by RMO No. 7-2015, on the other hand, are only BIR-suggested amounts in settling criminal liability for taxpayer violations, the payment of which are consensual and may not, therefore, be imposed or exacted on the taxpayer. Thus, the violation must be referred to the appropriate office for criminal action, if the taxpayer refuses to pay the suggested compromise penalty.

For further information, please refer to the full text and annexes of RMC No. 54-2018.