A compromise penalty is a sum proposed by the BIR to settle what liability?

A compromise penalty is a sum proposed by the BIR to settle what liability?

• A. Criminal liability
• B. Civil liability
• C. Administrative penalties
• D. Interest

Answer: (A)

Compromise penalty is a settlement option used by the BIR to resolve civil liabilities arising from a tax deficiency by paying a single negotiated amount. It addresses the civil side of what is owed—tax due plus civil penalties and related interest—so the case can be closed without litigation. This is not about criminal liability, which is handled through criminal prosecution in court, nor is it simply about administrative penalties, which are separate enforcement actions. The idea is to settle the taxpayer’s civil obligation to the government in a practical, one-time amount.

Compromise penalty is a settlement option used by the BIR to resolve civil liabilities arising from a tax deficiency by paying a single negotiated amount. It addresses the civil side of what is owed—tax due plus civil penalties and related interest—so the case can be closed without litigation. This is not about criminal liability, which is handled through criminal prosecution in court, nor is it simply about administrative penalties, which are separate enforcement actions. The idea is to settle the taxpayer’s civil obligation to the government in a practical, one-time amount.