RMO No. 7-2015 Compromise Penalties Explained: Schedule, Consent, and Separate Payment

Revenue Memorandum Order (RMO) No. 7-2015, issued January 22, 2015, is the BIR’s revised consolidated schedule of suggested compromise amounts for non-fraudulent criminal violations of the National Internal Revenue Code — offers in lieu of prosecution, not automatic civil surcharges. Revenue Memorandum Circular (RMC) No. 3-2022 confirms that compromise is collected only under a valid compromise agreement and must be billed and paid separately from basic tax, surcharge, and interest. RR No. 6-2024 now cuts the schedule amount in half for micro and small taxpayers on covered violations.

This guide is the compromise deep-dive beside BIR Late Filing Penalties and Civil vs Criminal BIR Tax Liability. For willful-failure crimes the compromise is meant to avoid, see Section 255. For registration and receipt/invoicing violations instead of late filing, see BIR Compromise Penalty Table for Registration, Receipts, and Invoicing Violations; for the full micro/small taxpayer discount, see RR No. 6-2024: The 50% Reduced Compromise Penalty for Micro and Small Taxpayers.

What problem does RMO No. 7-2015 solve? #

RMO No. 7-2015 (adopted January 22, 2015) updates and consolidates the compromise-penalty schedule previously reflected in RMO No. 19-2007 so revenue officers apply uniform suggested amounts for covered, non-fraudulent Tax Code violations. Fraudulent acts commonly used as tax-evasion devices were deleted from compromise coverage under the order’s policy — those cases are not meant to be settled through the ordinary schedule.

The order’s own policies (carried forward from RMO No. 19-2007) emphasize:

1. Follow the annexed Revised Schedule of Compromise Penalties for covered criminal violations not involving fraud
2. Do not invent ad hoc amounts except as the order allows with proper approval
3. Itemize compromise separately from the assessment of basic tax, surcharge, and interest
4. Treat unpaid suggested compromise as a cue to refer for criminal action, not as a forced civil levy of the schedule figure

How is compromise different from surcharge and interest? #

Surcharge (Section 248) and interest (Section 249) attach as civil additions; an RMO No. 7-2015 compromise is a consensual alternative to criminal prosecution.

RMC No. 3-2022 expressly defines compromise penalties as amounts collected in lieu of criminal prosecution where payment is based on a compromise agreement validly entered into between the taxpayer and the Commissioner.

What does RMC No. 3-2022 change about assessment paperwork? #

RMC No. 3-2022 (January 14, 2022) standardizes how compromise appears on deficiency assessments so it is never smuggled into the civil tax bill. Under the circular:

• Part I — deficiency basic tax(es) and civil penalties (surcharge, interest)
• Part II — assessed/suggested compromise penalty(ies) for violations found in audit
• Settlement uses two BIR Form 0605 payments — one for Part I, one for Part II

Taxpayers who pay only the Part I “tax + surcharge + interest” total have not automatically cleared Part II. Conversely, paying a Part II compromise does not erase Part I.

What does the Annex A schedule actually charge for late filing and non-payment? #

RMO No. 7-2015’s Annex A prices a Section 255 violation — failure to file a return and/or pay tax on time — on two separate tables, one keyed to gross sales/receipts when no tax is due, the other keyed to the amount of unpaid tax. Both scale upward with the size of the business or the deficiency, from a ₱1,000 floor to a ₱50,000 ceiling.

Return filed late with no tax due (compromise keyed to gross sales/receipts):

Return filed late, or tax paid late/short (compromise keyed to the unpaid tax amount):

Worked example: A self-employed professional with ₱8 million in annual gross receipts files their BIR Form 1701Q one month late with ₱35,000 in unpaid tax for the quarter. Part I of the assessment charges the ₱35,000 basic tax plus the Section 248 surcharge and Section 249 interest. Part II suggests the RMO No. 7-2015 compromise for the ₱20,001–₱50,000 unpaid-tax bracket — ₱10,000 — payable on a separate BIR Form 0605. Paying Part I settles the civil tax bill; accepting and paying the ₱10,000 compromise in Part II closes the criminal-referral track for that late filing.

For registration, receipt, and invoicing violations — a different Annex to the same RMO — see BIR Compromise Penalty Table for Registration, Receipts, and Invoicing Violations. Micro and small taxpayers should also check RR No. 6-2024’s 50% discount before paying either table’s listed amount in full.

Frequently asked questions #

What is an RMO No. 7-2015 compromise penalty? #

It is a suggested amount under the BIR’s Revised Consolidated Schedule of Compromise Penalties that the taxpayer may agree to pay, and the Commissioner may accept, in lieu of criminal prosecution for a non-fraudulent Tax Code violation. It is not an automatic civil addition like the Section 248 surcharge.

How much is the compromise penalty for filing a return late or not paying tax on time? #

Under RMO No. 7-2015’s Annex A, a return filed with no tax due carries a compromise from ₱1,000 (gross sales/receipts ₱50,000 and below) up to ₱25,000 (over ₱25,000,001). A return with unpaid tax carries a compromise from ₱1,000 (tax unpaid ₱5,000 and below) up to ₱50,000 (tax unpaid over ₱5,000,000) — see the full bracket table above.

Is a compromise penalty mandatory if it appears on a BIR letter? #

No. RMO No. 7-2015 treats compromise penalties as amounts suggested in settlement of criminal liability. If the taxpayer refuses to pay the suggested amount, the violation is to be referred for criminal action rather than collected as if it were surcharge.

Should compromise appear on the same assessment line as surcharge and interest? #

No. RMO No. 7-2015 and RMC No. 3-2022 require compromise to appear separately from the assessment of deficiency basic tax, surcharge, and interest. RMC No. 3-2022 formats PAN/FLD Part I for tax and civil penalties and Part II for suggested compromise, each paid on a separate BIR Form 0605.

Does paying a compromise erase surcharge and interest? #

No. Paying an accepted compromise settles the criminal-exposure track for the covered violation under the compromise agreement. Section 248 surcharge and Section 249 interest remain civil additions unless separately abated or compromised under other authority (such as Section 204).

Do micro and small taxpayers get a lower compromise penalty? #

Yes. RR No. 6-2024, implementing Section 45 of the EOPT Act (RA No. 11976), applies a compromise penalty rate of 50% of the RMO No. 7-2015 schedule amount for micro and small taxpayers, for non-fraudulent criminal violations of NIRC Sections 113, 237, and 238. Micro and small status follows the gross-sales thresholds set in RR No. 8-2024.

Can the BIR accept more or less than the RMO No. 7-2015 schedule? #

The order directs officers to follow the annexed schedule amounts. Higher compromises may be accepted by the Commissioner or authorized representative; lower offers require approval by the Commissioner or the concerned Deputy Commissioner, Assistant Commissioner, or Regional Director, as provided in the order.

Summary #

RMO No. 7-2015 compromise is a negotiated off-ramp from criminal prosecution, documented and paid apart from the civil tax bill under RMC No. 3-2022. Read Part I and Part II of every assessment as two different questions — what you owe as tax, and what you may agree to pay to avoid a criminal referral for a covered, non-fraudulent violation.