Section 255 Criminal Penalties: Willful Failure to File, Pay, or Withhold Tax
Section 255 of the National Internal Revenue Code is the core criminal provision for willful failure to file a return, pay tax, withhold or remit tax, keep required records, supply correct information, or refund excess compensation withholding. Upon conviction, the offender faces a fine of not less than ₱10,000 and imprisonment of one to ten years, in addition to other penalties — including the civil tax bill.
This guide isolates the criminal statute so it is not confused with the everyday late-filing surcharge. Compare tracks in Civil vs Criminal BIR Tax Liability, and see RMO No. 7-2015 compromise for the non-fraudulent settlement path. Officer exposure: Section 253(d) corporate officer liability.
Keep Returns and Remittances Documented FREE →What conduct does Section 255 cover? #
Section 255 targets persons who are legally required to perform a Tax Code duty and who willfully fail to perform it on time. The statutory list includes willful failure to:
- Pay any tax
- Make a return
- Keep any required record
- Supply correct and accurate information
- Withhold or remit taxes withheld
- Refund excess taxes withheld on compensation
A related clause in the same section also punishes attempts to make it appear that a return was filed when it was not, including securing an official stamp or receipt under false pretenses — with its own fine band (not less than ₱10,000 but not more than ₱20,000) and imprisonment, as reproduced in Supreme Court quotations of the provision (e.g., materials discussing G.R. No. 259284).
Willfulness is the hinge. Missing a deadline through negligence still costs civil surcharge and interest; Section 255 is the criminal statute for willful failure.
What are the criminal sanctions? #
On conviction for the main Section 255 offense, the court imposes a fine of not less than ₱10,000 and imprisonment of not less than one year but not more than ten years, in addition to other penalties provided by law. That “in addition” language means a criminal conviction does not wipe the civil assessment — and Section 253(a) adds that payment of the tax after apprehension is not a defense to prosecution.
| Layer | Still possible after a Section 255 theory is raised |
|---|---|
| Basic tax | Yes — still due |
| Section 248 surcharge / Section 249 interest | Yes — civil track |
| Section 255 fine + imprisonment | Yes — if convicted |
| RMO No. 7-2015 compromise | Possible alternative to prosecution for covered non-fraudulent cases, if offered and accepted |
How does Section 255 differ from Section 248’s 50% surcharge? #
Section 248’s 50% surcharge for willful neglect to file or for a false or fraudulent return is still a civil addition assessed by the BIR; Section 255 is a criminal offense prosecuted in court. They can arise from overlapping facts, but they are not the same remedy:
- 50% surcharge — collected as part of the civil tax assessment
- Section 255 — requires criminal process, proof beyond reasonable doubt of the elements (including willfulness), and results in penal sanctions
A taxpayer can face a 50% civil surcharge without a criminal conviction, and a Section 255 information can proceed even after the civil tax is paid.
Worked scenario: remittance failure #
Facts: A company withholds ₱80,000 of expanded withholding tax from vendor payments in Q1 but never remits it and never files the related return. Management knew the amounts were withheld and chose to use the cash for operations. The BIR discovers the gap in audit.
| Track | Exposure |
|---|---|
| Civil | Unremitted ₱80,000 + Section 248 surcharge + Section 249 interest + possible Section 251 penalty theory + Section 250 amounts for missing information returns/certificates |
| Criminal | Potential Section 255 prosecution for willful failure to remit withheld tax and/or file required returns — fine ≥ ₱10,000 and 1–10 years if convicted |
| Compromise | For a non-fraudulent framing, possible RMO No. 7-2015 suggested compromise in Part II of the assessment — separate Form 0605 — instead of (or to forestall) criminal referral |
Withholding-specific civil rules are also discussed in BIR Form 2307 Penalties.
Frequently asked questions #
What does NIRC Section 255 penalize? #
Section 255 penalizes any person required under the Tax Code or regulations to pay tax, make a return, keep a record, or supply correct and accurate information who willfully fails to pay, file, keep records, supply correct information, withhold or remit taxes withheld, or refund excess compensation withholding, at the time required by law.
What is the criminal penalty under Section 255? #
Upon conviction, Section 255 imposes a fine of not less than Ten thousand pesos (₱10,000) and imprisonment of not less than one (1) year but not more than ten (10) years, in addition to other penalties provided by law.
Is late filing automatically a Section 255 crime? #
No. Section 255 turns on willful failure. Ordinary late filing still triggers civil surcharge and interest under Sections 248 and 249; criminal prosecution requires the government to prove the willfulness element of the offense.
Does paying the tax stop a Section 255 case? #
No. Section 253(a) provides that payment of the tax due after apprehension is not a valid defense in any prosecution for violation of the Tax Code. Civil payment and criminal liability are separate.
How does Section 255 relate to RMO No. 7-2015? #
For non-fraudulent violations that could otherwise support criminal action, the BIR may suggest an RMO No. 7-2015 compromise amount in lieu of prosecution. Accepting and paying that compromise under a valid agreement is different from paying Section 248/249 civil additions, and refusal can lead to criminal referral.
Summary #
Section 255 is the Tax Code’s main willful-failure crime: file, pay, withhold, remit, or tell the truth — or risk a ₱10,000+ fine and up to ten years in prison on top of the civil bill. Treat every “we’ll just pay it later” decision as a civil-cost problem first and a willfulness problem if the delay becomes deliberate.