On June 22, 2026, the Bureau of Internal Revenue (BIR) released Revenue Regulations No. 4-2026 to announce the guidelines and procedures in the availment of One-time Abatement of Taxes and/or Penalties for micro taxpayers.
If you are classified micro taxpayer and you have certain unresolved/unpaid tax cases/dues dating on or before December 31, 2025, you may be able to settle them by paying a one-time abatement fee of ₱5,000, subject to compliance of the requirements set in Revenue Regulation No 4-2026 and upcoming applicable Revenue Memorandum Circular (RMC) or Revenue Memorandum Orders (RMO).
The period for availment is available until December 31, 2026, unless extended. This abatement program can help micro taxpayers, engaged in business, self-employment, practice of profession and mixed income earners (on their business or self-employment income), clear any unfiled, unpaid, delinquent and/or pending tax cases, at a much lower cost than they expected.
Micro Taxpayers May Have BIR Tax Problems Without Realizing It
Not every unresolved tax issue is the result of intentional tax evasion.
These micro taxpayers may have registered as doing business, self-employed or practicing professional years ago but later:
- Closed the business without formally closing registration in the BIR.
- Became employed and stopped freelancing without formally closing and updating income status in the BIR.
- Started an online business that never took off but did not close registration in the BIR.
- Forgot to continue filing required tax returns
- Received a BIR notice but were unable to settle it at the time.
Over the years, failure to file and pay your taxes, as well as failure to file application for closure, can lead to accumulated tax payable plus penalties such as interest, surcharges, and compromise. What started as a relatively small issue may now appear too expensive to resolve.
Recognizing this situation, the BIR introduced the one-time Tax Abatement Program to give qualified micro taxpayers an opportunity to resolve unfiled, unpaid or delinquent taxes, as well as any pending deficiency tax audit cases, among others.
What is the BIR Tax Abatement?
Per Revenue Regulation No 4-2026, the BIR gave the qualified micro taxpayers, with eligible tax cases, to resolve those cases by paying a one-time abatement fee of ₱5,000 per approved application, instead of paying the full amount of accumulated taxes, penalties, surcharges, and interest that would otherwise apply under normal collection procedures. If the amount of tax liabilities, including penalties, do not exceed ₱80,000 for a taxable year and the covered period is as of December 31, 2025.
The goal is to encourage taxpayers to become compliant again while allowing the BIR to efficiently resolve long-pending small tax cases.
This is a one-time opportunity, and applications must generally be filed on or before December 31, 2026, unless extended.
We contacted several BIR RDO to clarify a few things about this program and they mentioned that they (BIR) will be releasing a Revenue Memorandum Circular (RMC) and/or Revenue Memorandum Order (RMO) for more details on this matter.
Why does the BIR Tax Abatement Matters?
For taxpayers, unresolved BIR issues is a source of stress, especially for micro taxpayers with limited resources.
These unresolved records may affect your ability to:
- Properly close your business registration.
- Start a new business.
- Obtain certain government permits.
- Clean up your tax records for future compliance.
For qualified taxpayers, paying a fixed abatement fee may be significantly less expensive than settling years of accumulated penalties under the regular rules.
Who May Benefit and Avail the Tax Abatement?
Per Revenue Regulation No 4-2026, only micro taxpayers can avail of the abatement of taxes. To be considered micro taxpayers, your annual gross sales must be less than ₱3,000,000 per Revenue Regulation No. 8-2024 Classification of Taxpayers
Below micro taxpayer can benefit from this tax abatement:
Former Sole Proprietors
You stopped operating years ago but never formally closed your business registration.
Freelancers
You registered with the BIR but later accepted full-time employment and stopped filing tax returns.
Online Sellers
You opened an online business during the pandemic but eventually stopped operations.
Small Family Businesses
Your business received a tax assessment that remained unresolved because of financial difficulties.
What Types of Tax Cases May Be Covered?
The Tax Abatement may apply to the the following:
- All delinquent accounts as of December 31, 2025.
- Assessments, whether preliminary or final, disputed or not, as of December 31, 2025.
- All open stop-filer cases as of December 31, 2025, including those who have ceased business operations.
In addition, the following micro taxpayers with delinquent or assessed basic tax or penalties of not more than ₱80,000 may be applied for abatement:
- Delinquent Accounts.
- Cases with administrative protest pending in the Regional Office, Revenue District Office, Legal Service thru Appellate Division, Collection Service, Enforcement Service and other Offices in the National Office.
- Tax cases being disputed before the Department of Justice and the courts, such as MTC, RTC, CTA, CA, SC, including decided cases which are not yet final.
- Tax Collection cases filed with the courts.
- Cases with pending request for compromise settlement which are under evaluation by the TWG, NEB, REB, and NEB.
- Cases with pending request for abatement under RR No 13-2001 for evaluation.
- Criminal violations, except those already filed in Court, such as under RATE and other fraud tax cases.
- Accounts Payable or Due to BIR accounts duly recorded or acknowledged by the taxpayer in their books of accounts.
- No basic tax due but the threshold amount involves penalties due.
The ₱80,000 threshold refers to the total liabilities and/or penalties covering all of the above-mentioned cases for a taxable year.
How Much Can You Potentially Save?
Every taxpayer’s situation is different but consider these simplified examples.
Example 1
Original unpaid tax and accumulated penalties:
₱42,000
If the taxpayer qualifies under the program:
Possible payment: ₱5,000
Example 2
Old tax assessment with accumulated penalties:
₱68,000
If qualified:
Possible payment: ₱5,000
These are examples only. Actual eligibility and the amount payable depend on the applicable regulations and BIR approval.
In addition, the BIR will be issuing a Revenue Memorandum Circular (RMC) and Revenue Memorandum Order (RMO) for more detailed guidelines.
Who Qualifies?
The Tax Abatement Program is intended for qualified micro taxpayers.
Among the important requirements are:
- You qualify as a micro taxpayer under the program.
- Your annual gross sales do not exceed ₱3,000,000.
- Your eligible tax liabilities and penalties is less than ₱80,000.
- The covered period is as of December 31, 2025.
- You file your application on or before December 31, 2026, unless extended.
Because the eligibility depends on your specific circumstances, it is advisable to review the official regulations or consult your Revenue District Office (RDO) or your accountant and tax consultant.
How to Avail the Tax Abatement?
If you believe you have an unresolved BIR cases, and you are qualified micro taxpayer, consider taking these steps before submitting your application to the BIR:
- Ensure you have proper recording keeping of your transactions for applicable year(s) until as of December 31, 2025.
- Prepare and summarize the applicable tax dues and penalties excluding interest.
- Fill-out the Application Form – One-Time Abatement for Micro Taxpayers
- Submit your application form to your Revenue District Office (RDO) on or before December 31, 2026, unless extended.
It is important that in the application form, you specify the tax type and basic amount due, excluding interest, for each case covered. Failure to do so may result to denial of the application for abatement.
Once your application form is accepted, pay the ₱5,000 abatement fee within 5 working days from the filing of the application. You must submit the proof of payment to your RDO within 5 working days from the date of payment. Failure to submit proof within prescribed period will automatically void the application.
The RDO will then issue a Certificate of Availment within 5 working days from receipt and verification of the proof of payment. Such certificate shall serve as proof of availment of abatement and the closure of the case.
If unsure, visit or consult an accountant and/or tax consultant.
The BIR One-Time Abatement of Taxes for Micro Taxpayers gives an opportunity for qualified micro taxpayers to resolve certain long-standing tax issues at a significantly lower cost than they might otherwise face.
If you have an old tax assessment, a stop-filer case, or an unresolved business registration, this program may be worth exploring before the application period ends.
Even if you are unsure whether you qualify, it is often worthwhile to review your records and speak with an accountant or tax consultant. Clearing old tax issues today may help you avoid larger compliance problems in the future.
Disclaimer: This article is intended for general informational purposes only and should not be considered legal or tax advice. Eligibility for the Tax Abatement Program depends on the specific facts of each case and the applicable BIR regulations. Always refer to the official BIR issuances or consult a qualified tax professional before making tax-related decisions.
Try to Avoid Future Penalties
Resolving an old tax issue is only the first step. The best way to avoid accumulating penalties again is to file your tax returns on time.
Missing filing deadlines – even if no tax is due – can result in penalties and other compliance issues. Keeping track of due dates, preparing tax forms correctly, and maintaining organized accounting records can make tax compliance much easier.
MPM Accounting is designed to help Philippine businesses stay compliant by allowing you to:
- Generate BIR tax forms based on your accounting records.
- Keep your books of accounts organized and up to date.
- Monitor filing deadlines and tax obligations.
- Record sales, purchases, expenses, and journal entries in one place.
- Prepare reports needed for tax compliance and business management.
Whether you’re a freelancer, sole proprietor, professional, mixed income earner, or growing business, using an accounting system can significantly reduce the risk of missed deadlines and costly penalties.
Don’t wait until penalties accumulate. Building good bookkeeping habits today is far easier – and often much less expensive -than resolving compliance issues years later.
Start your free trial of MPM Accounting today and make tax compliance part of your regular business routine.
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