BIR penalties are financial sanctions and criminal liabilities imposed by the Bureau of Internal Revenue on taxpayers who violate provisions of the National Internal Revenue Code (NIRC), including failure to file returns, maintain proper records, or remit taxes on time.

Key Provisions

Under the NIRC, the BIR enforces the following penalty categories:

25% Surcharge (Section 248): Applied to the unpaid tax amount for failure to file returns, pay deficiency taxes, or remit taxes by the prescribed deadline.
20% Interest (Section 249): Assessed annually on any unpaid tax from the due date until full payment.
Compromise Penalties (RMO No. 7-2015): Administrative fines ranging from PHP 1,000 to PHP 50,000 depending on the tax amount due and nature of violation.
Criminal Penalties (Section 255): Fines of not less than PHP 10,000 and imprisonment of 1 to 10 years for willful failure to pay taxes, file returns, or supply accurate information.
Information Return Penalties (Section 250): PHP 1,000 per failure to file information returns or keep required records, capped at PHP 25,000 per calendar year.

Who is Affected?

BIR penalties apply to:

Individual taxpayers and self-employed professionals
Corporations and partnerships registered in the Philippines
Real estate brokers and real estate service practitioners
Property developers and real estate investment trusts
Employers required to withhold taxes from employees
Businesses maintaining financial records and issuing official receipts

Penalties for Improper Financial Records

Real estate brokerages must maintain accurate books of accounts under Sections 232 and 235 of the NIRC. Violations include:

Violation	Penalty
Failure to keep/preserve required records	Fine up to PHP 1,000 or 6 months imprisonment
Failure to register books of accounts	Compromise penalty per violation
Failure to supply correct information in returns	PHP 1,000 to PHP 25,000 depending on gross sales
Failure to file information returns	PHP 1,000 per failure (max PHP 25,000/year)

For brokerages with gross sales exceeding PHP 25,000,000, the maximum compromise penalty of PHP 25,000 applies for failure to submit accurate information.

Penalties Based on Tax Due

When tax remains unpaid, compromise penalties scale with the amount owed:

Tax Due Range	Compromise Penalty
Up to PHP 5,000	PHP 1,000
PHP 5,001 – PHP 10,000	PHP 3,000
PHP 10,001 – PHP 20,000	PHP 5,000
PHP 20,001 – PHP 50,000	PHP 10,000
PHP 50,001 – PHP 100,000	PHP 15,000
PHP 100,001 – PHP 500,000	PHP 20,000
PHP 500,001 – PHP 1,000,000	PHP 30,000
PHP 1,000,001 – PHP 5,000,000	PHP 40,000
Over PHP 5,000,000	PHP 50,000

Relevance to Philippine Real Estate Brokerages

For licensed brokerages operating under RA 9646 (RESA Law), proper financial recordkeeping directly affects BIR compliance. You must:

Register and maintain books of accounts at your principal place of business
Issue BIR-registered official receipts for all commission income
File quarterly and annual VAT returns if VAT-registered
Submit BIR Form 2307 for creditable withholding tax on commissions
Preserve all records for the statutory period (typically 10 years)

Failure to maintain proper records exposes brokerages to penalties up to PHP 25,000 per calendar year under Section 250, plus potential criminal liability under Section 255.

References

BIR Penalties Page – Bureau of Internal Revenue Official Website
BIR Schedule of Compromise Penalties – Bureau of Internal Revenue
NIRC Sections 248, 249, 250, 255 – National Internal Revenue Code of 1997, as amended
Bureau of Internal Revenue (Philippines) – Wikipedia

BIR Penalties