Old BIR open cases, unpaid assessments, and penalties can become a serious concern for small businesses, especially when updating registration records, securing tax clearances, or formally closing a business.

The Bureau of Internal Revenue (BIR) has introduced a limited opportunity that may help qualified micro taxpayers resolve certain outstanding tax liabilities.

UnderRevenue Regulations (RR) No. 4-2026, qualified micro taxpayers may apply for a one time abatement of covered taxes and penalties, including applicable surcharge and interest. The BIR subsequently issuedRevenue Memorandum Circular (RMC) No. 84-2026to clarify the qualifications, documentary requirements, payment procedures, and covered cases under the program. RR No. 4-2026 became effective on July 7, 2026.

This is welcome relief for small taxpayers, but it is important to understand that the program isnot an automatic tax amnesty. The taxpayer, the taxable year, and the outstanding case must all meet the prescribed conditions.

What Is the One Time Abatement Program?

The program allows qualified micro taxpayers to settle certain:

• Delinquent tax accounts
• Preliminary or final tax assessments
• Disputed or undisputed assessments
• Open stop filer cases
• Penalties arising from certain violations of the Tax Code
• Covered cases involving businesses that have already ceased operations

The purpose is to provide micro taxpayers with an opportunity to resolve qualifying tax cases existing as ofDecember 31, 2025through the payment of the prescribed abatement fee.

Who Can Apply?

A taxpayer may qualify when all the following conditions are met.

1. The taxpayer is classified as a micro taxpayer

A micro taxpayer is generally a taxpayer whose gross sales for the taxable year areless than ₱3,000,000.

This may include:

• Sole proprietors
• Freelancers and self employed professionals
• Online sellers and other small business owners
• Partnerships
• One Person Corporations
• Corporations and other juridical entities

For mixed income earners, only gross sales from the business or professional activity are considered. Compensation income earned under an employer and employee relationship is excluded when determining the taxpayer’s classification.

For purposes of the program, the BIR will refer to the taxpayer classification reflected in its records as ofDecember 31, 2025. Taxpayers may verify their classification through the BIR Online Registration and Update System or directly with their Revenue District Office.

2. The tax case already existed as of December 31, 2025

The program generally covers qualifying delinquent accounts, assessments, and open stop filer cases that were already outstanding as of December 31, 2025.

A liability that arose only after December 31, 2025 will generally not qualify. For example, the 2025 Annual Income Tax Return that became due for filing and payment in 2026 is not treated as an existing liability as of December 31, 2025 for purposes of this program.

3. The amount falls within the ₱80,000 threshold

The covered liability must not exceed₱80,000 for each taxable year.

RMC No. 84-2026 provides an important clarification. In determining whether the taxpayer is within the ₱80,000 threshold, the BIR considers the outstanding:

• Basic tax
• Compromise penalties

Surcharge and interest are excluded from the threshold computation, although they may still be abated together with the approved case.

Example

Suppose a micro taxpayer has the following outstanding liability for one taxable year:

Although the total assessment is ₱114,000, the amount considered for the threshold is only₱75,000, consisting of the ₱60,000 basic tax and ₱15,000 compromise penalty.

The taxpayer may therefore still qualify, subject to the remaining requirements of the program. This treatment is illustrated in RMC No. 84-2026.

Can a Taxpayer Apply for Several Taxable Years?

Yes. A taxpayer with qualifying liabilities from several taxable years may apply for more than one year.

However, the taxpayer must:

1. File a separate application for each taxable year.
2. Determine eligibility separately for each year.
3. Pay the required abatement fee for each application.
4. Include all covered unpaid liabilities for the taxable year concerned.

A taxpayer cannot simply select one small penalty while excluding other outstanding covered liabilities from the same taxable year to remain within the ₱80,000 threshold.

How Much Is the Abatement Fee?

The required abatement fee is₱5,000 for each taxable year covered by an accepted application.

The taxpayer must pay the fee usingBIR Form No. 0605within five working days from filing the application. Proof of payment must then be submitted to the concerned RDO within five working days from the date of payment.

Failure to pay the fee within the required period may result in denial. Failure to submit proof of payment on time automatically voids the application, although the taxpayer may refile while the availment period remains open.

The fee is not refundable if the taxpayer withdraws the application or if the application is denied. Instead, the amount will be applied as partial payment of the taxes or penalties covered by the application.

What Documents May Be Required?

The documentary requirements will depend on whether the taxpayer is an individual or a juridical entity. These generally include:

• Three accomplished copies of BIR Form No. 2121
• Valid government issued identification
• Proof of authority when filed through a representative
• Board Resolution or Secretary’s Certificate for corporations, when applicable
• Certificate of Existence of Outstanding Tax Liability
• Relevant assessment notices, such as the PAN, FAN, FLD, or FDDA
• Withdrawal letter for an existing compromise or abatement application, when applicable

Only applications with complete documentary requirements will be received and processed.

TheCertificate of Existence of Outstanding Tax Liabilityis particularly important because it serves as the controlling BIR document for determining the taxpayer’s outstanding liabilities and whether the cases may qualify for the program.

Can an Inactive or Closed Business Apply?

Yes. A micro taxpayer who has ceased business operations may apply for qualifying open cases existing as of December 31, 2025.

Once approved, the Certificate of Availment may be used to support an application for the closure or cancellation of the taxpayer’s BIR registration. However, approval of the abatement does not automatically close the business registration. The taxpayer must still comply with the applicable BIR closure procedures.

Who May Not Qualify?

A taxpayer may be disqualified when:

• The taxpayer was not classified as a micro taxpayer as of December 31, 2025.
• The covered liability arose only after December 31, 2025.
• The applicable amount exceeds ₱80,000 for the taxable year.
• The application does not include all covered liabilities for that taxable year.
• Required tax types or basic tax amounts are omitted.
• The application is filed by an unauthorized person.
• The application or abatement fee is submitted late.
• The supporting documents contain material misrepresentations.

The BIR may deny or void applications that fail to meet the prescribed requirements.

When Is the Deadline?

Qualified micro taxpayers may avail themselves of the program untilDecember 31, 2026, unless the period is extended by the Secretary of Finance upon the recommendation of the Commissioner of Internal Revenue.

Taxpayers should avoid waiting until the final weeks of the availment period. Obtaining the taxpayer’s open case records, securing the Certificate of Existence of Outstanding Tax Liability, reconciling liabilities by taxable year, and completing the documentary requirements may require sufficient preparation time.

The Bottom Line

RR No. 4-2026 and RMC No. 84-2026 provide a valuable opportunity for qualified micro taxpayers to resolve certain long standing BIR liabilities at a significantly reduced cost.

However, paying ₱5,000 does not automatically erase every old tax case. Eligibility must first be established based on the taxpayer’s classification, the date and nature of the liability, the ₱80,000 threshold, and the completeness of the application.

A careful review before filing is essential because an incomplete or unqualified application may be denied, and the abatement fee will not be refunded.

Need Assistance Reviewing Your Eligibility?

Bong Corpuz & Co. CPAscan assist in reviewing your BIR registration, identifying covered open cases, organizing outstanding liabilities by taxable year, and preparing the applicable documentary requirements.

Contact our office to schedule an initial consultation and determine whether your tax cases may qualify under RR No. 4-2026 and RMC No. 84-2026.

This article is intended for general information only and should not be treated as a substitute for professional advice. Eligibility depends on the taxpayer’s actual BIR records, supporting documents, and the evaluation of the concerned Revenue District Office.