Waiver of surcharge and interest on the basis of good faith

Our National Internal Revenue Code ("Tax Code") mandates that interest and a 25-percent surcharge (50 percent in case of bad faith) are due when a taxpayer is late in the payment of taxes. However, there have been instances where interest and surcharge were not imposed.

In several cases, the Supreme Court (SC) held that good faith and an honest belief that one was not subject to tax on the basis of previous interpretations by government agencies tasked to implement tax law was sufficient justification to relieve a taxpayer from the imposition of interest and surcharge for late payment.