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BIR Form 2107 Application for Compromise Settlement

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BIR Form 2107 Application for Compromise Settlement

What the BIR Form 2107 Application for Compromise Settlement is

BIR Form 2107 Application for Compromise Settlement is a formal request submitted to a tax authority to settle a disputed tax liability for less than the full assessed amount. The form explains the taxpayer's economic circumstances, the basis for requesting compromise, and a proposed settlement figure. It is accompanied by documentary proof of financial condition and any assessments or notices being contested. While the form title references the Philippine Bureau of Internal Revenue, the procedures emphasize clear disclosure, supporting schedules, and an organized presentation of facts to enable fair administrative review.

Why a carefully prepared BIR Form 2107 matters

A complete, well-documented Application for Compromise Settlement increases the chance of administrative acceptance, reduces review time, and helps establish a clear record in case of appeals or follow-up inquiries.

Why a carefully prepared BIR Form 2107 matters

Who prepares and files this application

Prepare this application when you need an administratively negotiated resolution and can document inability to pay or other mitigating circumstances.

  • Taxpayers and business owners preparing personal or corporate compromise petitions for assessed liabilities.
  • Authorized representatives and tax professionals who assemble financial exhibits and negotiate settlement terms.
  • In-house counsel and external lawyers handling disputes, appeals, or structured payment plans.

Core sections to include in a professional Application for Compromise

A professional submission organizes identity and contact details, the specific assessment under dispute, an itemized financial position, a clear compromise proposal, supporting evidence, and signatures or representative authorization.

Identification

Taxpayer legal name, identification number, business name, registered address and contact details; match official ID and tax registry records to avoid processing delays.

Assessment details

Reference notices or assessment numbers, dates of assessments, tax types and tax periods under compromise, and any enforcement actions already taken.

Financial statement

Present current balance sheet, income statement, cash-flow summary, and bank statements demonstrating inability to fully satisfy the assessed liability.

Compromise proposal

State the precise monetary offer or payment plan, the rationale for the amount, and how payment will be made if accepted.

Supporting documents

Attach creditor statements, proof of expenses, affidavits, notarized declarations, and any third-party verification supporting the financial position.

Authorization

Provide a signed authorization when an agent or tax representative files on the taxpayer's behalf; include scope, dates, and contact information.

Essential data fields to complete on the form

Taxpayer Name: Full legal name
Tax Identification: TIN or equivalent
Contact Address: Street, city, state
Assessment ID: Notice or assessment number
Proposed Amount: Numeric currency value
Signature Line: Signed and dated

Step-by-step: completing BIR Form 2107

Follow a clear sequence: gather documents, fill identification fields, compile financial exhibits, state your proposal, attach authorizations, and sign before submission.

  • 01
    Gather records: Collect assessments, bank statements, and creditor schedules.
  • 02
    Complete form: Enter identification, assessment, and proposal details accurately.
  • 03
    Attach exhibits: Append financial statements, sworn affidavits, and supporting invoices.
  • 04
    Sign and authorize: Sign in ink or via accepted eSignature; include representative authorization if applicable.

How to prepare this application for secure online submission

Set up a coherent digital workflow: convert forms to PDF, add fillable fields, include conditional attachments, and record an audit trail for each signer.

Document format Use locked PDF/A to preserve page layout and prevent edits.
Field placement Add required fields for signature, date, and numeric amounts.
Conditional attachments Set document rules to require supporting schedules when certain boxes are checked.
Signer authentication Choose email, SMS, or stronger verification for representative signers.
Audit and storage Enable audit trail and long-term archival with access controls.

Where to file and how submissions are routed

Filing routes depend on the issuing tax authority’s procedures: in-person acceptance counters, postal submissions to designated offices, or electronic portals where supported.

  • Local office: Deliver to the assessment office handling the notice.
  • Mail submission: Use certified mail or courier with tracking and a return receipt.
  • Online portal: Upload documents to the authority’s e-filing system if available.
  • Agent filing: Submit with a signed authorization and ID for representative filers.

Preparing the application for electronic signing and delivery

Retain signed copies and the signing audit trail for your records and to respond to any follow-up requests from tax authorities.

  • File formats: PDF preferred; avoid editable Word files.
  • Authentication: Use email or SMS-based verification for signers.
  • Audit trail: Capture timestamp, IP, and signer identity.

Timing, review periods, and what to expect after filing

Processing timelines vary by jurisdiction and caseload; expect an administrative review, possible requests for additional evidence, and a formal decision or negotiated agreement.

Initial review period:

Varies widely; weeks to months depending on authority.

Requests for information:

You may receive a 15–30 day request for additional documents.

Negotiation stage:

May involve multiple rounds of offers and counteroffers.

Decision notice:

Formal acceptance, counteroffer, or denial is issued in writing.

Appeal window:

If denied, statutory appeal deadlines and procedures apply.

Common preparation mistakes to avoid

  • Submitting incomplete financial statements or unsigned exhibits that force administrative requests and delay final decision.
  • Mismatched names, identification numbers, or inconsistent addresses that prevent the authority from matching the application to existing files.
  • Failing to include a clear, supported compromise amount and justification — vague proposals often receive outright rejection.
  • Using nonstandard file formats or unsigned scanned documents when the authority requires original signatures or notarized copies.

Consequences of incorrect or late submissions

Processing delay: Longer review
Denial risk: Application may be rejected
Enforcement actions: Levy or lien possible
Interest accrual: Interest may continue
Penalty exposure: Fines or extra charges
Appeal limitations: Shortened remedy window

Frequently asked questions about completing and submitting the application

Answers below address signature validity, common rejection causes, electronic submissions, and recordkeeping to help avoid delays.


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