20(4).
PROCEDURE IN THE ISSUANCE OF AUTHORITY TO INVESTIGATE AND LETTERS OF
CONFIRMATION. —
xxx xxx xxx
SUBJECT: Amendments to Field Circular No. V-157,
as amended by Revenue Memorandum Order No. 22-64.
To all
internal revenue officers and others concerned:
It
has been observed by this Office in the present procedures of the issuance of
authorities to investigate and the corresponding letters of confirmation in
Regional Offices Nos. 4, 5 and 6 that there are loopholes and defects which
lead to ineffective control and supervision. In order, therefore, to achieve
tighter control and closer supervision in the assignment, investigation and
reporting of income tax returns and to achieve uniformity in procedure in all
inspection districts, the following amendments to Field Circular No. V-157, as
amended by Revenue Memorandum Circular No. 22-64, are hereby promulgated for
the guidance of all concerned:
Section
1. Paragraph 3.d. of Field
Circular No. V-157, as amended by Revenue Memorandum Circular No. 22-64, is hereby
amended to read as follows:
"3d. Letters
of Authority to Investigate shall be issued only by the following officials:
(1) The Chief
Revenue Officer of Inspection Districts for the fieldmen under his
jurisdiction.
(2) The
Regional Director for the fieldmen of the Investigation Branch and the Alcohol
& Tobacco Tax Branch.
(3) The
Chiefs of the Investigation Division, Withholding Tax Division and Narcotic
Drugs Division for the fieldmen of their respective divisions.
(4) The
Director, Office of International Operations for the fieldmen under his
jurisdiction.
(5) The
Chief, Assessment Department for the fieldmen under special groups in the
Department or those directly assigned by the Commissioner of Internal Revenue.
(6) For the
fieldmen of inspection districts under the jurisdiction of Regional Offices
Nos. 4, 5 and 6, the following procedure should be followed in the issuance of
the authority to investigate.
xxx
xxx xxx
Section
2. Paragraph 10 of Field Circular
No. 157, as amended by Memorandum Circular No. 22-64, is hereby further amended
to read as follows:
"Henceforth,
fieldmen will no longer sign the books of accounts upon termination of the
investigation. Instead, a confirmation of the investigation should be sent to
the taxpayer within thirty (30) days from the termination of the investigation.
The confirmation letter to the taxpayer should contain information, informing
the taxpayer that the corresponding report of investigation of his tax
liabilities has been submitted and that the recommended discrepancies and
deficiency tax, if any, are under consideration. This procedure will prevent or
minimize unauthorized investigations as well as those conducted without any
corresponding report of investigation being submitted. It will also obviate the
signing of books of accounts of taxpayers by impostors.
The form prescribed
shall be prepared in triplicate and should bear the same number as the
authority to investigate. The original shall be sent to the taxpayer, the duplicate
shall be attached to the report and the triplicate shall serve as the file
copy.
The confirmation
letter should be prepared by the Assistant Chief Revenue Officer for signature
of the Assistant Regional Director and should be initialed by the Chief Revenue
Officer before being forwarded to the Regional Office. In Inspection Districts
where there is no Assistant Chief Revenue Officer, the confirmation letter
should be prepared by the Chief Revenue Officer likewise for the signature of
the Assistant Regional Director.
For cases handled by
fieldmen in the Regional Office, the confirmation letter should be prepared by
the Assistant Chief of the Branch, initialed by the Chief of the Branch and
signed by the Assistant Regional Director. In the National Office, the
confirmation letter should be prepared by the Assistant Chief of the Division
concerned for the signature of the Chief of the Division. Confirmation letters
for cases emanating from the Assessment Department should be prepared for the
signature of the Assistant Revenue Operations Head. For cases handled by the
Office of International Operations, the confirmation letter should be prepared
by the Assistant Director for Audit, for signature of the Director.
The confirmation
letter prepared in the inspection district should be forwarded immediately to
the Administrative Branch of the regional office for recording. The latter
should immediately forward the report to the Assistant Director for the
signature of the confirmation letter, after which the docket should be returned
to the Administrative Branch for the release of the original of the
confirmation letter. Upon release of the original, the docket, together with
the duplicate copy of the confirmation letter, should be forwarded immediately
to the Income and Business Tax Branch for review and preparation of the demand.
The triplicate copy of the confirmation letter should be forwarded to the
Regional Director for attachment to his file copy of the authority to
investigate.
The confirmation
letter should be treated as an accountable form and the person authorized to
prepare the same should be held accountable for all issuance of confirmation
letters. He is required to keep a register in order to determine the letters of
confirmation issued by his office.
Section
3. This Memorandum Circular
supersedes all orders, circulars, instructions or portions thereof which are
inconsistent herewith.
Section
4. This Revenue Memorandum
Circular shall take effect upon approval. (Rev. Memo. Circular No. 35-65, dated
Oct. 12, 1965).
20(5).
EXAMINATION OF BOOKS WHERE OFFICE AND PLACE OF BUSINESS TRANSACTIONS ARE IN
DIFFERENT PLACES. — Where a corporation has an office in Manila but all its
manufacturing, selling and other transactions are conducted in Quezon City, the
place of its business is deemed to be in the latter city. Accordingly, Regional
District No. 4, Quezon City, has the authority to examine its books of accounts
and other accounting records, it being necessary that said books and records be
kept in the place of business of the corporation. (B.I.R. Ruling No. 92, s.
1961).
20(6).
JURISDICTION TO INVESTIGATE BOOKS OF ACCOUNTS WHERE TAXPAYER'S BUSINESS IS
LOCATED IN ONE PLACE AND THE PRINCIPAL OFFICE IN ANOTHER. — A corporation was
incorporated in the Philippines with principal office in Manila for purely
trading purposes. Later on, said corporation established a manufacturing
division with factory in Quezon City, where at the same time sales of its
manufactured products are conducted. The factory is deemed to be a separate
business establishment and, therefore, must be provided with a separate C-14
privilege tax receipt. It must also register a separate business name in Quezon
City for purposes of Section 203 of the Tax Code. Sales invoices originally
registered by the corporation in Manila may be superimposed with its address in
Quezon City when used in the latter City.
While
the controlling books are registered and kept in Manila, the factory in Quezon
City must keep such books and records as would clearly reflect all the
transactions effected therein. All such records, such as the subsidiary ledger
should be registered in Quezon City may be consolidated and returned for the
percentage tax by the main office in Manila. (B.I.R. Ruling No. 7, s. 1962).
Where
the taxpayer's factory is located in Makati, Rizal, and its "sales
office," wherein most of its transactions are consummated in Manila,
Regional Offices of Manila has jurisdiction to examine its books of accounts,
provided that said books are kept in the "sales office." (B.I.R.
Ruling No. 272, s. 1961).
20(7).
COLLECTION AGENTS, POWERS AND DUTIES. — A collection agent can inquire or
determine whether or not a taxpayer has paid the corresponding privilege taxes,
such as the C-13, B-9, etc. However, he does not have the power to seize or
confiscate goods subject to specific tax even if the tax has not been paid
thereon.
A
collection agent can seize defective instruments of weights and measures (Sec.
284, Tax Code). However, pursuant to paragraph III-8, Memorandum Circular No.
3, dated August 15, 1960 of the Department of Finance, the duties and
responsibilities of collecting, among others, weights and measures, fees,
repose with the local treasurers. He (collection agent) has also the power to
apprehend bus conductors for not issuing tickets or receipts to passengers,
such act being a patent violation of internal revenue law (Sec. 14, Tax Code).
(B.I.R. Ruling No. 362, s. 1961).
Approves
and registers books of accounts and invoices presented by taxpayers for their
use and keeps records thereof, in accordance with Revenue Regulations No. V-1,
except in cities and towns where the Provincial Revenue Offices are located.
(Revenue Administrative Order No. 3-62, May 31, 1962).
Collection
Agents are not internal revenue officers in the strict sense such that they
cannot, under any circumstances perform, directly or indirectly, the functions,
duties, and or legal prerogatives of Agents and Examiners or their assistants,
unless delegated by the commissioner of Internal Revenue or the Secretary of
Finance. They shall perform only such other duties and functions as were
previously conferred upon Municipal and City Treasurers in the collection of
internal revenue taxes in accordance with Republic Act No. 2665, (except
collection of taxes on imported articles) and those otherwise not included and
described under Memorandum Circulars Nos. 3 and 4 of the Secretary of Finance
dated March 21, 1961 and August 15, 1961, respectively. However, with respect
to fees, fines, forfeitures, costs and other moneys paid to the Justice of the
Peace and Municipal Courts, the same should be collected by the Collection
Agents and Clerks because the collection thereof is entrusted to the
Commissioner of Internal Revenue. (Secs. 93 and 94, R.A. No. 296; Judiciary Act
of 1948; B.I.R. Ruling No. 415, s. 1961; Division Memo. Circular No. 5, dated
Nov. 10, 1961)
20(8).
EXAMINATION OF BOOKS OF ACCOUNTS. — As a rule, the examination of a taxpayer's
books of accounts is undertaken once only for each taxable period. However,
there is no prohibition against further examination of said books if the
circumstances so warrant.
The
yearly examination of books of accounts is not only necessary but a duty which
the Bureau of Internal Revenue must perform. In conducting such examination
reference to other books kept within the five-years period immediately
preceding the date of examination may be had. (B.I.R. Ruling No. 126, s. 1960).
Books
of accounts are open to examination and inspection by internal revenue officers
when properly authorized by the Commissioner of Internal Revenue, Director, or
Provincial Revenue Officer (now Chief Revenue Officer). Said examination and
inspection may be conducted in the taxpayer's place of business or outside
thereof. In the latter case, however, the internal revenue officer concerned
must issue a receipt. (B.I.R. Form No. 19.14) therefor. (B.I.R. Ruling No. 141,
1960).
20(9).
INSPECTION OF BOOKS PREPARATORY TO ASSESSMENT. — As the inspection of books of
accounts is a step preparatory to assessment and the power to assess internal
revenue taxes belongs exclusively to the Bureau of Internal Revenue, municipal
treasurers (now collection agents) may not inspect books of accounts, they not
being empowered to assess (but only to collect) internal revenue taxes. (B.I.R.
Ruling No. 215, s. 1960).
20(10).
RE-EXAMINATION OF BOOKS OF ACCOUNTS. — Internal revenue officers, when duly
authorized by their superiors, can re-examine the books of accounts of a
taxpayer only where, subsequent to the previous examination, information is
received indicating fraud, malfeasance, concealment or misrepresentation of
material facts. (B.I.R. Ruling No. 315, s. 1960). HTDcCE
20(11).
ADOPTION OF BOOKKEEPING SYSTEM. — Any bookkeeping system authorized under
existing law or regulations may be adopted by a taxpayer. If any system is not
understandable to the fieldmen of the Bureau of Internal Revenue, the taxpayer
should explain it. If notwithstanding the explanation, the fieldmen cannot
understand its operations, they may disregard the bookkeeping records kept by
the taxpayer and resort to the best evidence available reflecting his
operations. (B.I.R. Ruling No. 572, s. 1959).
20(12).
WHERE TO EXAMINE BOOKS OF ACCOUNTS OF TAXPAYERS. — An internal revenue officer
can examine a taxpayer's books of accounts and other accounting records either
at the latter's place of business or establishment or outside thereof. Should
the examination be done, outside the taxpayer's place of business, the internal
revenue officer is duty bound to issue a receipt. (B.I.R. Form No. 19-14) for
the books and records taken by him, and such examination can be undertaken only
in his office, not elsewhere. (B.I.R. Ruling No. 552, s. 1959).
20(13).
RIGHT OF REFUSE EXAMINATION. — A taxpayer has a right to refuse examination of
his books of accounts where the revenue officer is not provided with the
required letter of authority or where said officer fails or refuses to show,
upon request of the taxpayer, his identification card, or where the examination
is conducted in the presence of unauthorized persons. (B.I.R. Ruling No. 486,
s. 1959).
20(14).
WHEN BOOKS OF ACCOUNTS ARE TAKEN OUTSIDE OF TAXPAYER'S ESTABLISHMENT. —
Internal revenue officers may examine the books of accounts of taxpayers in or
outside the latter's place of business. But, when said officers take the books
of accounts of taxpayer for purposes of examination outside the latter's place
of business, they should issue a receipt on the required internal revenue form
(B.I.R. Form No. 19.14). As a general rule, books of accounts of taxpayers
should not be retained by internal revenue officers for more than sixty (60)
days except (1) when the books, records or papers constitute the evidence of
this Office in an unsettled case; (2) in case such records and papers pertain
to a case pending in courts; (3) in all cases where fraud is evident and the
records and papers must accompany the fieldman's report for evaluation
purposes; and (4) in all cases where the records and papers have been seized by
virtue of a search warrant and the court has not ordered their return to the
taxpayer. (Sec. 20, Rev. Regs. No. V-1; Field Circular No. V-88)
The
taxpayer's proof that his books of account has been examined by internal
revenue officers is the certification or notation to the effect made by said
officers on the inner side of either cover of the books examined.
As
a matter of policy, this Office undertakes the examination of the books of
accounts of taxpayers covering a particular period, only once. However, there
is no prohibition on the re-examination of said books. Accordingly, books of
accounts which were previously examined may be examined for the second time or
more, if and when the subsequent examinations are duly authorized and the
circumstances surrounding the case so warrant. (B.I.R. Ruling No. 87, s. 1959):
(B.I.R. Ruling No. 486, s. 1959).
20(15).
EXAMINATION OF BOOKS OF ACCOUNTS. — Internal Revenue Agents and Examiners may
not examine a taxpayer's books of accounts and other accounting records without
the necessary letter of authority. A letter of authority is a request to the
taxpayer to permit the bearer thereof to conduct the necessary examination of
said books and records, and signed either by the Commissioner of Internal
Revenue, Deputy Commissioner of Internal Revenue, Chief, Investigation
Division, or the Regional Director, Assistant Director or Provincial Revenue
Officer (now Chief Revenue Officer) of the regional district concerned. (B.I.R.
Ruling No. 640, s. 1959).
20(16).
EXAMINATION CAN BE CONDUCTED ANY DAY OR TIME. — Books of accounts can be
examined by the agents and examiners of the Bureau of Internal Revenue even on
Sundays and holidays or after office hours, provided that they have been
authorized to do so by the Commissioner of Internal Revenue or by their other
superiors. (B.I.R. Ruling No. 388, s. 1959).
20(17).
HOW EXAMINATION OR INVESTIGATION OF BOOKS OF ACCOUNTS IS CONDUCTED. — Fieldmen
of this Bureau are provided with B.I.R. identification cards. Before conducting
an examination or investigation, said fieldmen are required to show their
identification cards to the taxpayer concerned in order to give the latter an
opportunity to take note or copy, if he so desires, the name, designation and
identification number of the investigating agent. Should an agent or examiner
refuse to show his B.I.R. identification card, the taxpayer has the right to
refuse examination. (Field Circulars Nos. V-48 and V-70).
The
examination or investigation of taxpayers undertaken by virtue of the authority
issued by the officers mentioned in paragraph 2 hereof is confined within the
scope of said authority. (Field Circular No. V-89).
No
fixed number of examiners are assigned in a given community or to a particular
store. Agents or examiners may examine any store or business establishment
within their respective districts when so ordered. (B.I.R. Ruling No. 87, s.
1959).
20(18).
BRANCH ESTABLISHMENTS REQUIRED TO KEEP BOOKS OF ACCOUNTS. — Where a branch
establishment need not keep and use the regular books of accounts, however, it
is under obligation to keep such books and records as will clearly reflect the
transactions being effected therein. (B.I.R. Ruling No. 373, s. 1959).
A
branch establishment, the activities of which are limited to buying, storing
and preparing copra for sale is, although said sales are perfected by the main
office, under obligation to keep the use the necessary books of accounts.
(B.I.R. Ruling No. 233, s. 1959).
Pursuant
to section 20 of the Bookkeeping Regulations, all books registers and other
records, and vouchers and other supporting papers required by said regulations
shall be kept at all times at the place of business of the taxpayer. However,
in the case of branch establishment, there shall be kept in that establishment
such books and records as would clearly reflect all the transactions effected
therein. Accordingly, where a sawmill has its principal office in Quezon City
and a field office in another place where its sawmill is located, a complete
set of books of accounts need not be kept in the latter office, it being enough
that it keeps such books and records as would clearly reflect all the
transactions effected therein. (B.I.R. Ruling No. 286, s. 1959).
20(19).
WHERE TO KEEP BOOKS OF ACCOUNTS. — All books of accounts shall be kept at all
times at the place of business of the taxpayer, subject to inspection of any
internal revenue officer, and upon demand, the same must be immediately
produced and submitted for inspection. When required by the inspecting officer,
the owner, bookkeeper, or manager shall give the necessary explanations
regarding the items in the entries contained in said books. (B.I.R. Ruling No.
163, s. 1958).
20(20).
ISSUANCE OF RECEIPTS (B.I.R. FORM NO. 19.14) FOR SEIZED DOCUMENTS, BOOKS,
PAPERS AND ARTICLES. — It has been observed by this Office from the reports
submitted by fieldmen that seizure of tax receipts, licenses, books, documents,
papers and/or articles from taxpayers or persons with whom they have official
dealings is not in accordance with the provisions of Field Circular No. V-19
dated October 28, 1947. Seizures are made with plain paper as receipts or with
the required form (B.I.R. Form No. 19.14) but no reports on the results of the
investigation are submitted. An inspection of the offices of Chief Revenue
Officers and Regional Directors show that there are plenty of seized books,
papers and other articles which are just lying around with no proper inventory
and which pile up from year to year without any disposal thereof being made.
Even if the case had been terminated, the seized articles remain in the custody
of the Regional Director and Chief Revenue Officer to the extent that
complaints have been received from taxpayers that articles seized from them
have not been returned although the corresponding case had been terminated.
In
view thereof and in order to insure an effective control in the seizure of
articles from taxpayers and to pinpoint responsibility the following procedure
is hereby promulgated for the compliance of all concerned:
1. Effective immediately all Chief Revenue
Officers, Assistant Chief Revenue Officers, Group Supervisors, Examiners,
Inspectors and other fieldmen authorized to investigate books of accounts are
hereby enjoined to see to it that no other receipt except B.I.R. Form No. 19.14
is issued for seized tax receipts, licenses, books, documents, papers and/or
articles from taxpayers or persons with whom they have official dealings.
Upon
receipt of this Revenue Memorandum Circular sufficient number of receipt books
should be requisitioned from the Property Division to last for a period of one
(1) year for distribution to the fieldmen under their respective jurisdiction.
In the National Office requisitions should be made by the Division Chiefs who
have fieldmen conducting investigating work.
An
inventory should be taken by the Chief Revenue Officer, Chief of Branch or
Chief of Division concerned, of all the booklets of receipts in the possession
of the fieldmen within their jurisdiction, which should be forwarded to the
Chief Revenue Officer within their jurisdiction, which should be duly listed.
Three extra copies of the list should be forward to the following officials:
(a) Regional Director
(b) Revenue Operations Head (Assessment or
Specific Tax)
(c) Chief, Property Division
The
Chief of the Property Division should determine from the copy of the list
forwarded to him whether the booklets issued are all properly accounted for.
As
much as possible each fieldmen should be issued a receipt book for which he
shall be made accountable. In case there are not enough booklets to distribute,
a common receipt book may be kept by the Chief Revenue Officer or Group
Supervisor as the case may be, for the use of the district or the group as the
needs may arise.
The
receipt should be accomplished in triplicate and distributed as follows:
a. Original — to the Taxpayer.
b. Duplicate — to the Group Supervisors;
if there is no group supervisor in the Unit to the Assistant Chief Revenue
Officer; and if there is no Assistant Chief Revenue Officer to the Chief
Revenue Officer.
c. Triplicate — should remain with the
booklet.
All the blank spaces on the face of
the receipt should be filled by the issuing officer who should sign his name
clearly above his official title which should also be written clearly. Upon the
settlement of the case, the blank spaces on the reverse side of the triplicate
should likewise be accomplished.
5. At the end of the month, the revenue
official who has supervision over fieldmen issuing the receipts and is in
possession of the duplicate copies, should check the duplicates in his
possession against the triplicates remaining with the receipt book in the
possession of the fieldman, to determine the status of cases apprehended for
which receipts have been issued during the month. If the cases have been
settled, he should check whether the corresponding reports have been submitted.
If there are cases not yet settled, he should, call the attention of the
fieldmen to expedite settlement thereof. As soon as all the cases in a booklet
have been settled, the receipt book should be surrendered by the fieldman to
his immediate superior who shall in turn forward it to the Regional Office for
permanent file in the Administrative Branch.
6. The Chief Revenue Officer or the Chief
of Branch in the Regional Office should prepare a monthly report of receipts so
issued containing the following information:
1. Number of receipt
2. Name of taxpayer
3. Nature of violation
4. Issuing Fieldman
5. Status of the case
The
monthly report should also include a summary statement illustrated as follows:
(1) Number of receipts pending at the
beginning of the month xxxx
(2) Number of receipts issued during the
month xxxx
——
(3) Total Handled During the Month xxxx
(4) Number of receipts settled during the
month xxxx
——
(5) Balance at the end of the month xxxx
====
Copies of this report should be
furnished the Regional Director and the National Office.
7. The official who has custody of the
records and articles seized should see to it that in all cases settled or
closed, the seized articles composed of books, records, privilege tax receipts
and licensees are returned to the owners immediately upon the settling or
closing of the case. If the seized articles consist of fraudulent weights and
measures, articles subject to specific tax and other similar articles which the
law requires to be forfeited in favor of the government instead of returning
them to the taxpayer from whom seized, the official concerned should take
appropriate action towards disposing the said articles in accordance with law
and regulations.
This
Revenue Memorandum Circular revokes the provisions of Field Circular No. V-19,
dated October 28, 1947 and is effective immediately (Rev. Memo. Circular No.
37-65, dated Oct. 13, 1965).
20(21).
TAXPAYERS MAY BE REQUIRED TO PRODUCE THEIR BOOKS OF ACCOUNTS UNDER A SUBPOENA
DUCES TECUM. — Section 20 of Revenue Regulations No. V-I (Bookkeeping
Regulations) empowers internal revenue officers to take the books of accounts
and related records or papers of the taxpayer for purposes of inspection and or
examination. On the other hand, under Section 580 of the Revised Administrative
Code, internal revenue agents, agent's assistants and examiners may require the
production of documents under a subpoena duces tecum or otherwise. Accordingly,
said officers, when duly authorized to examine or investigate a taxpayer, can
validly order the latter to submit his books of accounts and related records or
papers to the office of the former. (B.I.R. Ruling No. 251, s. 1958).
20(22).
PROCEDURE IN THE INVESTIGATION OF BOOKS OF ACCOUNTS OF TAXPAYERS IN THE
PROVINCES AND CITIES. — Pursuant to the provisions of field Circular No. V-70,
every Fieldman of the Bureau of Internal Revenue assigned to field investigation
work is required, before proceeding to a taxpayer to commence investigation, to
secure from the Provincial Revenue Officer (now chief revenue officer), if in
the province, a letter or memorandum instructing him to examine or investigate
such taxpayer. Exception to this requirement are cases that requires immediate
action on the spot, such as apprehension of merchants: (1) who do not issue
sales receipts or invoices; (2) who keep private books of accounts; (3) who are
not provided with the necessary privilege tax receipts; and (4) persons who
possess illicit articles on which the specific tax is not paid. (B.I.R. Ruling
dated May 23, 1957).
Except
in the cases mentioned in Field Circular No. V-70 that requires immediate
action, a taxpayer has the right to refuse inspection of his books and other
records if and when the agent is not armed with a letter of authority
instructing him to examine or investigate said books of accounts and records.
Agents
of the Bureau of Internal Revenue are authorized to bring the books of accounts
and other records of merchants to the office of the provincial revenue officer
(now chief revenue officer) only upon issuance of official receipts showing the
receipt of all books and records confiscated after apprehension. (Ibid.)
20(23).
EXCLUSIVE POWER TO INVESTIGATE BOOKS OF ACCOUNTS. — The power to investigate,
examine and determine tax liabilities of taxpayers devolves exclusively upon
the provincial revenue agents (now chief revenue officers), pursuant to
Department Order No. 12, dated Sept. 25, 1952). Accordingly, Deputy provincial
treasurers (now collection agents) have no authority to require a taxpayer to
present his books of accounts for examination. (B.I.R. Ruling dated Jan. 3,
1956; B.I.R. Ruling dated Feb. 18, 1954; March 21, 1956).
Under
the provisions of Department Order No. 192, dated September 25, 1952, revoking
Department Order No. 134, dated Dec. 5, 1950, provincial and city treasurer and
their deputies are not empowered to inspect the books of accounts of merchants.
The power to investigate, examine and determine the tax liabilities of
taxpayers devolves exclusively upon the provincial revenue agents or examiners.
(B.I.R. Ruling dated Feb. 18, 1954).
20(24).
PROVISIONS OF SECTION 20, REVENUE REGULATIONS NO. V-I, MANDATORY. — Section 20
of the Bookkeeping Regulations is mandatory and may not be dispensed with for
the purpose of bringing the said books by the certified public accountant to
the public accounting office for audit purposes. (B.I.R Ruling dated Feb. 28,
1953).
20(25).
RETURNS WHERE PERCENTAGE TAXES ARE KEPT. — The books of accounts and other
records from which the figures shown in the percentage tax return were based
should always be kept on file at the principal place of business of the
taxpayer and shall be subject to inspection by the internal revenue officers
duly authorized to examine the books of accounts of the said taxpayer.
Invoices,
receipts and other supporting papers and documents relating to deductions from
sales or receipts should be filed separately, kept and preserved in the manner
prescribed by Revenue Regulations No. V-1.
The
books of accounts and other records shall be maintained for a period of five
years from the date of the last entry in the said books and records. (Revenue
Regulations No. 3-64, dated March 10, 1964).
20(26).
EXAMINATION OF BOOKS OF ACCOUNTS — WHEN PRODUCTION REQUIRED. —
Books
of accounts and other business records of taxpayers are open to examination and
inspection by internal revenue officers when properly authorized by the
Commissioner, Regional Director, or Chief Revenue Officer. Said examination and
inspection may be conducted in the taxpayer's place of business or outside
thereof. In the latter case, however, the internal revenue concerned must issue
a receipt (B.I.R Form No. 19.14) therefore. Under Section 580 of the Revised
Administrative Code, internal revenue agents. Agent's Assistants and Examiners
may require the production of books of accounts under a subpoena duces tecum.
Accordingly, said officers, when duly authorized to exercise or investigate a
taxpayer, can validly order the latter to submit his books of accounts and
related records to the office of the former. (B.I.R. Ruling No. 251, s. 1958;
Section 20, Rev. Regs. No. V-1; Field Circular No. V-88; B.I.R. Ruling No. 38,
s. 1965).
SECTION 21. Preservation of Books of Accounts and Other
Records. —
All the books, registers, records, vouchers, and other supporting papers and
documents prescribed in these regulations, and other records kept by taxpayers
at their option, shall be preserved intact, unaltered, and unmutilated for at
least five years from the date of the last entry in each book or from the date
of the last transaction, and the same shall be kept at all times in the place
of business of the taxpayer, who shall produce them for examination or deliver
the same or any of them for inspection outside of his place of business upon
demand of any internal-revenue officer.
21(1).
PRESERVATION OF "GIFT CERTIFICATES". — Where the gift certificates
issued by a taxpayer constitutes part of its accounting records, the same
should be preserved for a period of at least five (5) years. Microfilms of said
certificate cannot take the place of the original certificate. (B.I.R. Ruling
No. 336, s. 1960).
21(2).
PRESERVATION OF BOOKS OF ACCOUNTS COUNTED FROM THE DATE OF LAST ENTRY. — The
period of five (5) years within which books of accounts, invoices, receipts and
other accounting records should be preserved is counted from the date of last
entry, in case of books of accounts, registers and other accounting records,
and from the dates appearing thereon, in the case of invoices and receipts.
However, as entries in the books of accounts have to be supported with the
corresponding invoices, receipts or vouchers, it is advisable to preserve said
invoices; receipts and vouchers for five (5) years from the date of last entry
of the book in which they have been entered. (B.I.R. Ruling No. 130, s. 1959).
Sales
invoices, vouchers, journal vouchers and receipts supporting the entries or
postings in entries of at least five years counted not from the dates of
accomplishment or issuance thereof but from the date of last entry in the books
to which they relate. (Ibid.)
21(3).
PERSONS RETIRING FROM BUSINESS. — The obligation to preserve the books and
other accounting records of a taxpayer for a period of at least five (5) years
from the date of last entry in each book applies to persons who have retired
from business and whose books and other records had already been examined. (B.I.R.
Ruling No. 130, s. 1959).
21(4).
PERIOD WITHIN WHICH THE BUREAU MAY EXERCISE THE RIGHT TO EXAMINE BOOKS OF
ACCOUNTS OF TAXPAYERS. — The right of the Bureau of Internal Revenue to examine
and/or inspect books of accounts and other accounting records of taxpayers does
not prescribe. Accordingly, the books of accounts and other accounting records
of a factory which ceased to operate on Dec. 31, 1954 may be examined or
inspected by authorized internal revenue officers any time. However, Section
337 of the Tax Code provides that books of accounts and other accounting
records of taxpayers shall be kept for a period of at least five (5) years from
the date of last entry and shall be subject to examination and inspection at
any time by internal revenue officers. Hence, taxpayers cannot be compelled to
preserve the said books and accounting records for a period of over five (5)
years. (B.I.R. Ruling No. 414, s. 1959).
21(5).
MEANING OF THE PHRASE, "LAST ENTRY". — The term, "last
entry," as used in section 337 of the Tax Code, refers to a particular
business transaction or an item thereof that is entered or posted last or
latest in the books of accounts when the same was closed. (B.I.R. Ruling No.
401, s. 1958).
The
phrase "last entry" has no reference to a particular business
transaction or an item thereof that is entered or posted last or latest in the
book when the name was closed. For purposes of determining the period of at
least five years within which the books shall be kept, the same shall be
recorded from the date of the last entry in said books. (Ibid.)
21(6).
WHERE TO KEEP BOOKS OF ACCOUNTS. — The provisions of section 21 of the
Bookkeeping Regulations, requiring that all books of accounts and other records
of taxpayers be kept at all times in his place of business is mandatory.
(B.I.R. Ruling dated Jan. 24, 1956).
21(7).
PRESERVATION OF BOOKS OF ACCOUNTS AND OTHER RECORDS. — Preservation of
microfilm copies of books of accounts does not satisfy the requirements of
section 337 of the National Internal Revenue Code. Said section implies that
the records to be preserved by taxpayers for a period of five (5) years from
date of last entry made therein must be originals thereof. This requirement is
necessary for the reason that the originals of the books of accounts are the
best evidence to prove the entries made therein. (B.I.R. Ruling dated Feb. 20,
1954).
21(8).
BOOKS OF ACCOUNTS CANNOT BE AUDITED OUTSIDE OF TAXPAYER'S ESTABLISHMENT. — A
certified public accountant, in the exercise of his profession, particularly in
auditing the books of accounts of a taxpayer, cannot bring such books outside
the business establishment of his client without violating section 21 of the
Bookkeeping Regulations. The law does not provide any exception to these
requirements. (B.I.R. Ruling dated April 16, 1953).
21(9).
KEEPING OF RECORDS. — The books of accounts and other records from which the
figures shown in the percentage tax return were based should always be kept on
file at the principal place of business of the taxpayer and shall be subject to
inspection by internal revenue officers duly authorized to examine the books of
accounts of the said taxpayer.
Invoices,
receipts and other supporting papers and documents relating to deductions from
sales or receipts should be filed separately, kept and preserved in the manner
prescribed by Revenue Regulations No. V-1.
The
books of accounts and other records shall be maintained for a period of five
years from the date of the last entry in the said books and records.
(Revenue
Regulations No. 3-64, March 10, 1964, re Filing of monthly percentage tax
return and payment of tax due thereon.)
21(10).
PRESERVATION OF BOOKS OF ACCOUNTS, PENALTY FOR FAILURE TO KEEP THE SAME. —
Besides being a violation of section 4 of Act No. 3292, which provides that the
merchants' books and records "shall be preserved by them for a period of
at least five years from the date of the last entry in each Book" and
"shall be subject to examination and inspection at any time by internal
revenue officers," is penalized by section 2741 of the Administrative
Code, which does not refer exclusively to rules and regulations issued by the
Bureau of Internal Revenue, but to any lawful regulation of the Bureau of
Internal Revenue whether issued by the same or by the Department of Finance.
(People of the Phil. Is. vs. Alberto Tan Chaco, CA No. 44133, Nov. 28, 1936;
Off. Gaz., Vo. XXXV pp. 1773, Aug. 21, 1937).
SECTION 22. Submission of Books and Records Upon
Retirement. —
All taxpayers required by these regulations to keep books of accounts or other
records who retire from business or cease to pursue their calling shall, within
ten (10) days from the date of such retirement, or within such period of time
as may be allowed by the Commissioner of Internal Revenue in special cases upon
application therefor in writing, submit their books of accounts and other
records pertaining to their business, including the translation thereof, to the
city treasurer or the deputy provincial treasurer (now Collection Agents) for
examination. The city treasurer or the deputy provincial treasurer shall keep
all such books and records in a secure place and notify the corresponding
provincial revenue agent of the receipt hereof within forty-eight hours after
the receipt of such books and other records. An examination of such books of
accounts and records shall be conducted immediately by an internal-revenue
officer to ascertain if all the taxes due from the taxpayer have been paid.
22(1).
RULES GOVERNING THE DISSOLUTION OF THE PARTNERSHIP RELATION TO THE APPLICATION
AND ENFORCEMENT OF THE BOOKKEEPING REGULATIONS, (ETC.; FACTS. — "A, B, C,
D, and E" formed and operated a registered general partnership on June 30,
1956 which was to continue for a period of ten (10) years for the business of
buying and selling of general merchandise. On June 30, 1959, partners
"C" and "E", decided to quit from the partnership, so a
Deed of Dissolution was executed among all the partners and, at the time, new
articles of partnership was formed and executed by the remaining partners
"A" and "B" with the admission of a new partner
"F", in order to take over and continue the business of the dissolved
partnership under the same business name and location with the understanding
that the new partnership shall assume all the assets and liabilities of said
dissolved partnership. Both instruments were duly registered with the
Securities & Exchange Commission. . . . The books of accounts of the
dissolved partnership were not closed, neither inventory was taken, nor income
tax return was filed for the period covering from January 1, 1959 to June 30,
1959. However, the new partnership filed its income tax return for 1959 showing
all the transactions covering the period from January 1, 1959 to December 31,
1959 in accordance with the stipulated provision of the new Articles of
Partnership which took effect on January 1, 1959.
RULING:
(1) The old partnership was considered dissolved on June 30, 1959. (Art.
1830(1) (c), New Civil Code. 'It is a well established general rule that an
existing partnership is dissolved and a new partnership is formed whenever a
partner retires or a new one is admitted." (40 Am. Jur. 298). Therefore,
the privilege tax receipt secured by the said partnership for 1959 was deemed
retired on the date of its dissolution, pursuant to Section 181 of the National
Internal Revenue Code.
2) The dissolved partnership should file
its income tax return covering the period from January 1, 1959 to June 30, 1959
within thirty (30) days after the approval of the resolution authorizing its
dissolution in accordance with Section 244 of the Income Tax Regulations. The
filing of the income tax returns covering the period from Jan. 1, 1959 to Dec.
31, 1959 by the new partnership which assumed the assets and liabilities of the
old partnership was not in conformity with the aforesaid Regulations for those
two partnerships have distinct and separate juridical personality.
3) The new partnership violated Section 3
of Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations
for not adopting a new set of books of accounts. The books of accounts of the
dissolved partnership cannot be used by the new partnership. The provisions of
Section 22 of the aforesaid Regulations provide that all taxpayers required by
these regulations to keep books of accounts and other records who retire from
business or cease to pursue their calling shall, within ten (10) days from date
of such retirement, or within such period of time as may be allowed by the
Commissioner of Internal Revenue to submit their books of account and other
records to the Bureau of Internal Revenue.
4) A partnership which neglects to make a
return at the time or times specified by the Tax Code shall be liable to a fine
of not exceeding P20,000.00 (Sec. 74, Tax Code; Sec. 240, Income Tax
Regulations). Failure of the new partnership to provide itself with a new set
of books of accounts is punishable by a fine of not more than P300.00 or by
imprisonment for not more than six months, or both. (Sec. 352, Tax Code).
5) Assuming that the old partnership was
dissolved on December 31, 1959, the basis of the privilege tax receipt (C-13)
to be secured by the new partnership for 1960 is not the gross annual sales
realized by the former. The latter shall be liable only for P10.00 for the same
year as initial graduated fixed annual tax prescribed by Section 182 (A)(2) of
the Tax Code. The reason being that the two partnerships are distinct juridical
persons regardless of the fact that the business of the new partnership is but
a continuation of the business of the old partnership.
6) Assuming again that the old partnership
was dissolved on December 31, 1959, the basis of the payment of additional
residence tax (C-1) for 1960 by the new partnership is not the total receipts
or earnings of the dissolved partnership for the same reason adduced in No. 5.
(B.I.R. Ruling No. 96, s. 1963).
22(2).
REQUISITES UPON RETIRING FROM BUSINESS. — Persons who retire from business are
required to submit to the Bureau of Internal Revenue, within ten (10) days from
such retirement or within such period as may be allowed by the Commissioner of
Internal Revenue, their books of accounts and other accounting records for
examination. And in case of transfer of ownership of the business, the
transferor should submit to the Bureau within thirty (30) days from the date of
transfer an inventory of the stocks on hand at the time of such transfer.
(B.I.R. Ruling No. 610, s. 1959).
SECTION 23. Return of Books and Records. — The books of
accounts and other records mentioned in the preceding section shall not be
returned until after the taxes, charges and penalties found to be due, if any,
shall have been paid unless authority to do so shall have been first secured
from the Commissioner of Internal Revenue. Furthermore, in case a violation of
MISSING PAGES 86-87
VI(1).
FALSE OR FICTITIOUS ENTRIES. — Any person who shall knowingly make false or
fictitious entries in the books of accounts or accounting records of persons
subject to internal revenue tax or who shall abet or aid in any manner in the
making or writing of said entries shall be liable to a fine of not less than
P500.00 nor more than P5,000.00 or to an imprisonment for a period of not less
than six months and one day nor more than five years or both such fine and
imprisonment. The same penalty applies in the case of false or fictitious
entries in sales invoices and receipts. (B.I.R. Ruling No. 548, s. 1959).
VI(2).
SCHEDULE OF COMPROMISES. — General Circular No. V-240, March 15, 1957 —
Subject: — Prescribing schedules of compromises for violations of the penal
provisions of the laws on taxes on business and occupation, documentary stamp
tax, mining taxes, amusement taxes, firearms tax, and weights and measures,
fees, provides in part, as follows:
xxx xxx xxx
"UNDER
SCHEDULE "C" —
(a) Engaging in business without first
securing 10.00
tax
receipt for every capital investment of P2,500.00
or
fractional part thereof, penalty not to exceed. 300.00
(b) Failure to post privilege tax-receipt in
a conspicuous place
10.00
(c) Failure to record daily sales or
receipts
for
every P1,000.00, or fractional part thereof, of
unrecorded
gross sales or receipts, penalty not to exceed 300.00
(d) Failure to render return of gross sales
of receipts
correctly
or within the time allowed:
i. When voluntarily rendered 10.00
for
every P100.00 or fractional part thereof of the
regular
tax assessed, penalty not to exceed P5,000.00.
ii. When rendered upon demand of an
internal revenue officer 20.00
for
every P100.00, or fractional part thereof of the regular
tax
assessed, penalty not to exceed P10,000.00
(e) Failure to produce books of accounts or
other 300.00
records
upon demands of an internal revenue officer
for
every capital investment of P2,500.00 or
fractional
part thereof, penalty not to exceed P300.00.
(f) Failure to register privilege tax
receipt or business name
within
the time prescribed by law 5.00
for
every capital investment of P2,500.00 or fractional
part
thereof, penalty not to exceed P300.00.
(g) Failure to inform the Bureau of Internal
Revenue
of
retirement from business:
i. When voluntarily presented 5.00
for
every capital investment of P5,000.00, or
fractional
part thereof, penalty not to exceed P300.00.
ii. When discovered by an internal revenue
officer 10.00
for
every capital investment of P5,000.00, or
fractional
part thereof, penalty not to exceed P300.00.
(h.) Failure to record in the sales invoices
or repurchaser in
the
case of sales, receipts or transfers in
the
amount of P50.00 or more 10.00
(i) Failure to keep books of account and
other records in the
establishment
or office of the taxpayer for every capital
investment
of P100.00, or fractional part thereof, penalty
not
to exceed P300.00. 10.00
UNDER
SCHEDULE "D"
(a) Engaging in the practice of an
occupation
without
first securing tax-receipt
10.00
(b) Failure to register the name of style as
prescribed
under Section 203 of the Tax Code 10.00
xxx xxx xxx
SECTION 24. Penalty for Making False Entries or Writing
False or Fictitious Names in Books or Records. — Any person who
knowingly makes any false entry or writes any false or fictitious name in his
books of accounts or other records, or who abets or aids in the making or
writing thereof, is punishable under section 355 of the National Internal
Revenue Code by a fine of not less than P500 nor more than P5,000 or by imprisonment
of not less than six months and one day nor more than five years, or both.
In
order to obviate the possibility of entering false or fictitious name in their
books, taxpayers should require persons to whom they have transactions which
should be entered in their books exhibit their residence certificates, if
subject thereto, and take note of their number and the date and place of issue.
A
person who fails to keep the books or records mentioned in section 334 of the
National Internal Revenue Code in a native language, English, or Spanish, or to
make a true and complete translation of books kept in other languages into a
native language, English, or Spanish, or whose books or records kept in a
native language, English or Spanish are at material variance with books or
records kept by him in another language, is liable to a fine of not less than
P2,000 nor more than P10,000, or imprisonment for not less than two nor more
than six years, or both.
24(1).
PAYMENT OF COMPROMISE PENALTY FOR FAILURE TO KEEP BOOKS AND OTHER ACCOUNTING
RECORDS. — One cannot be compelled to produce books of accounts which he failed
to keep and for which failure he was already made to pay a compromise penalty.
(B.I.R. Ruling No. 447, s. 1960).
SECTION 25. Penalty for Violation of Other Provisions of
These Regulations.
— Any person who shall violate any provision of these regulations for which
violation the National Internal Revenue Code or any other law does not provide
any specific penalty shall be penalized, under section 352 of the aforesaid
Code, by a fine of not more than P300 or by imprisonment of not more than six
months, or both.
25(1).
COMPROMISE PENALTIES FOR VIOLATIONS OF THE BOOKKEEPING REGULATIONS. — Effective
Feb. 16, 1957, taxpayers who violate any of the provisions of the Bookkeeping
Regulations shall be liable to the compromise penalty prescribed by General
Circular No. V-236 (as amended by General Circular No. V-240). (B.I.R. Ruling
No. 188, s. 1960).
25(2).
PENALTY FOR FAILURE TO PRESERVE BOOKS OF ACCOUNTS. — The penalty imposable on
taxpayers who fail to keep their books of accounts for a period of at least
five (5) years from the date of last entry and to produce said books upon
demand made within the said period by an authorized internal revenue officer is
a fine of not more than P300.00 or imprisonment of not more than six (6)
months, or both, regardless of whether or not the same books have been
previously examined by internal revenue officers. (B.I.R. Ruling No. 248, s.
1958)
SECTION 26. Repealing Provisions. — Regulations Nos. 34,
48, 58, 84, 91, 101, 105 and 108 of the Department of Finance and other
regulations inconsistent herewith are hereby repealed.
SECTION 27. Date of Effectivity. — These regulations
shall take effect upon their promulgation in the OFFICIAL GAZETTE.
27(1).
PUBLICATIONS OF THE BOOKKEEPING REGULATIONS (REVENUE REGULATIONS) IN THE
OFFICIAL GAZETTE. —
1) No. V-1, 43, O.G. No. 11, p. 4563,
November, 1947
2) No. V-13, 47 O.G. No. 8, p. 4048,
August, 1951
3) No. V-20, 48 O.G. No. 1, p. 13,
January, 1952
4) No. V-35, 49 O.G. No. 1, p. 11,
January, 1953
5) No. V-43, 52 O.G. No. 3, p. 1234,
March, 1956
6) No. V-45, 52 O.G. No. 4, p. 1876,
April, 1956
7) No. V-58, 53 O.G. No. 19, p. 6486, Oct.
15, 1957
8) No. V-77, 58 O.G. No. 6, p. 1086, Feb.
5, 1962
9) No. 5-62, 58 O.G. No. 45, p. 7359, Nov.
5, 1962
"A" — Explanatory note for
the RECORD OF DAILY SALES AND CASH RECEIPTS
(Form No. 1, Appendix
I)
All
transactions concerning SALES and SERVICES RENDERED and MONIES RECEIVED,
including those received as investment and other income, shall be entered in
this Record. The amount of every transaction shall be entered under two money
columns, first under a column on the left side of "Explanation,"
second under a column on the right side. The total of the columns on the left
side must equal the total of the columns on the right side.
DATE
— correspondents to the date of the transaction.
EXPLANATION
— refers to a brief statement of the nature of the transaction, such as total
cash sales, credit sale with the name of the customer, other income, payment
for previous credit sale with the name of the customer and any other
explanation which may be necessary.
INVESTMENT
IN CASH shall be entered first under "Cash Received" and second under
"Other Credits."
CASH
SALES for the day shall be entered in total only, first under "Cash
Received" and second under "Sales," classified according to
privilege tax receipt.
CREDIT
SALES shall be entered individually, by invoice if sales invoices are issued
therefor, first under "Due from Customers" and second under
"Sales," classified according to privilege tax receipt.
SERVICE
RENDERED and OTHER INCOME — by total for the day — shall be entered first under
"Cash Received" and second under "Other Credits."
PAYMENT
FOR PREVIOUS CREDIT SALES shall be entered individually first under "Cash
Received" and second under "Received for Credit Sales."
The
columns designed on this form may be increased into such number as the needs of
each particular business may require.
"B"
— Explanatory note for the RECORD OF DAILY PURCHASES, EXPENSES AND CASH
DISBURSEMENTS
(Form
No. 2, Appendix II)
All
transactions concerning PURCHASES, EXPENSES, and MONIES disbursed, including
those for payments for previous purchases on credit and as withdrawals of
investment, shall be entered in this Record. The amount of every transaction
shall be entered under two money columns also, first under a column on the left
side of "Explanation," second under a column on the right side. The
total of the columns on the left side must likewise equal the total of the
columns on the right side.
DATE
— corresponds to the date of the transaction.
EXPLANATION
— refers to a brief statement of the nature of the transaction, such as total
purchases without invoices, purchases on credit with the name of the creditor,
payment for previous purchases on credit with the name of the creditor, nature
of the expenses incurred, withdrawal of investment and any other explanation
which may be necessary.
WITHDRAWAL
OF CASH INVESTMENT shall be entered first under "Cash Disbursed,"
second under "Other Debits."
CASH
PURCHASES without invoices or receipts for the day shall be entered by the
total first under "Cash Disbursed," second under
"Purchases," classified according to privilege tax receipt.
PURCHASES
ON CREDIT shall be entered individually first under "Payable to
Creditors," second under "Purchases," classified according to
privilege tax receipt.
EXPENSES
shall be classified and entered by the classification indicated under
"Explanation" first under "Cash Disbursed," second under
"Expenses."
PAYMENTS
FOR PREVIOUS PURCHASES ON CREDIT shall be entered first under "Cash
Disbursed," second under "Payment to Creditors."
OTHER
DISBURSEMENT shall be entered first under "Cash Disbursed," second
under "Other Debits."
The
columns designed on this form may be increased into such number as the needs of
each particular business may require.
Form No. 4 Appendix
IV
SUMMARY
OF TRANSACTIONS
Accomplish
this Record by using the data shown on Form No. 3, Appendix III and Statement
of Net Worth for the past year.
CASH
ON HAND
Cash on
hand at beginning of the year (z) Pxxxx
Add:
(1) Cash received during the year Pxxxx
Total
cash on hand at beginning of the year
and received during the year Pxxxx
Less
(6) Cash disbursed during the year xxxx
(a) Cash on hand at end of the year Pxxxx
DUE
FROM CUSTOMERS
Unpaid
sales at beginning of the year (z) Pxxxx
Add:
(2) Sales on credit during the year xxxx
Total
receivables from customers Pxxxx
Less:
(3) Payments received from
customers
during the year xxxx
(b) Due
from Customers at end of the year Pxxxx
PAYABLE
TO CUSTOMERS
Unpaid
accounts at beginning of the year (z) Pxxxx
Add:
(7) Obligation incurred during
the year xxxx
Total
payables to creditors Pxxxx
Less: (9) Payments
made to creditors during the year Pxxxx
(c) Payable
to Creditors at the end of the year Pxxxx
OTHER
ASSETS
Total
(11) other debits during the year Pxxxx
Less:
Withdrawals of investment during the year xxxx
Other
assets acquired during the year Pxxxx
Add:
Other assets at beginning of the year (z) xxxx
(d) Other
assets at end of the year Pxxxx
OTHER
LIABILITIES
Total
(5) Other credit during the year Pxxxx
Less:
Investments made during the year xxxx
(f) Other
income during the year xxxx
Other
liabilities incurred during the year Pxxxx
Add:
Other liabilities at beginning of the year xxxx
(e) Other
liabilities during the year xxxx
OTHER
INCOMES
Total
(5) Other Credits during the year Pxxxx
Less:
Investments made during the year xxxx
Other liabilities incurred during the
year xxxx
(f) Other
incomes during the year Pxxxx
SALES
Sales
(3-a) under first privilege tax receipt Pxxxx
Sales
(3-b) under second privilege tax receipt xxxx
Sales
(3-c) under third privilege tax receipt xxxx
(g) Total
Sales during the year Pxxxx
PURCHASES
Purchases
(8-a) under first privilege tax receipt Pxxxx
Purchases
(8-b) under second privilege tax receipt xxxx
Purchases
(8-c) under third privilege tax receipt xxxx
(h) Total
Purchases during the year Pxxxx
EXPENSES
Distribute (j-1) Salaries, wages, etc. Pxxxx
(j-2) Rents and taxes xxxx
(j-3) Sundries xxxx
(j) Total
Expenses during the year Pxxxx
(z) Statement
of Net Worth for past year. Pxxxx
Form No. 5 Appendix
V
YEARLY
STATEMENTS
STATEMENT
OF NET WORTH
as
of ____________
(a) Cash on hand Pxxxx
(b) Due from Customers (Unpaid Sales) xxxx
(x) Merchandise at end of the year xxxx
(d) Other Assets Pxxxx
Less: Estimated Depreciation xxxx xxxx
TOTAL
ASSETS
Less: (c) Payable to Creditors (Unpaid Obligations) Pxxxx
(e) Other liabilities xxxx
TOTAL
LIABILITIES xxxx
NET
WORTH AS OF Pxxxx
STATEMENT
OF OPERATIONS
For
the year ending ________
(g) Total Sales Pxxxx
(x) Inventory at end of the year xxxx
Total Pxxxx
(h) Total Purchases Pxxxx
(y) Inventory at the beginning of the year xxxx
Total Pxxxx
GROSS
INCOME FROM OPERATIONS Pxxxx
Less:
Deductions
(j-1) Salaries, wages, etc. Pxxxx
(j-2) Rents and taxes xxxx
(j-3) Sundries xxxx
(j) Total expenses Pxxxx
Add: Estimated
Depreciation xxxx
TOTAL
DEDUCTIONS xxxx
NET
INCOME FROM OPERATIONS Pxxxx
Add: (f)
Other Income xxxx
NET
INCOME FOR THE YEAR Pxxxx
NOTE:
(x) See
inventory sheet for the present year.
(y) See
inventory sheet for the past year.
The
depreciation expenses is not taken up in the bookkeeping records. It is
estimated and shown only in these statements. REVENUE REGULATIONS No. V-13.
ANNEX "B"
COMPARATIVE PROFIT
& LOSS STATEMENT
Ending
December31, 19 A) (Ending December 31,
19 B
Gross
sales P100,000 P150,000
Less
returned sales and allowances
1,000 1,200
————— ————
Net
Sales P99,000 P148,800
Less
cost of goods sold:
Inventory — finished goods, begin. P10,000 P15,000
Add cost of goods manufactured
50,000 80,000
———— ————
Total P60,000 P95,000
Deduct inventory —finished goods,
and
10,000 50,000
20,000 75,000
——— ———
Gross
profit on sales P49,000 P73,000
Deduct
selling expenses:
Advertising P3,000 P5,000
Salesman's salaries
10,000 15,000
Salesman's traveling expenses 2,000
3,000
Insurance 1,000
1,000
Taxes 500
700
Misc. selling expense 1,000 17,500 2,000 24,700
——— ——— ——— ———
Net
profit on sales P31,500 P49,100
Deduct
general and
administrative expenses:
Office salaries P2,000 P2,000
Officers' salaries 3,000
3,000
Stationery & printing
200
300
Office supplies
300
500
Telephone & telegraph
200
200
Misc. general expense 100 200
Bad debts 1,000 2,000
Depreciation — of. equip 200 7,000 200 8,400
——— ——— ——— ———
Net
profit on operations P24,500 P40,700
Deduct
net financial expenses:
Bond interest P1,000 P1,000
Interest on notes payable& bank
loans 300 500
Discount on sales 500 700
——— ———
Total P1,800 P2,200
Less:
Int. on notes receivable (200) (400)
Discount on purchases (600) (800)
——— ———
——— ———
Net
income P23,500 P39,700
` ====== ======
"ANNEX A"
1. 15-Minute Simplified Bookkeeping
Records (Sari-sari)
2. Drugstore Simplified Bookkeeping
Records
3. Farmer's Simplified Accounts & Tax
Record
4. Professional's Simplified Accounts
& Tax Records
5. General Simplified Accounts & Tax
Record (Retail and Wholesale)
6. P. U. Operator's Simplified Accounts
& Tax Record
7. Gasoline Service Station Simplified
Accounts & Tax Record
8. Rice-Corn Mill Simplified Accounts
& Tax Record including Mill Office Record
9. Restaurant-Hotel Simplified Accounts
& Tax Record
10. Dressmaker-Milliner-Embroiderer's &
Tailor's Simplified Accounts & Tax Record
11. Beauty Parlor & Barber Shop's
Simplified Accounts & Tax Records
12. Manufacturer's Simplified Accounts &
Tax Record
13. Poultry-Livestock Accounts & Tax
Record
14. Fishermen's-Fishpond's Accounts &
Tax Record
15. Broker's and Dealer's Simplified
Accounts and Tax Record
"Annex
A" of Rev. Reg. No. 5-62.
REGULATIONS
NO. V 58
Footnotes
1. The designations of the chief and the
assistant chief of the Bureau of Internal Revenue have been changed from
Collector of Internal Revenue and Deputy Collector of Internal Revenue,
respectively, in the classification of positions by the Wage and Position
Classification Office (WAPCO). BIR General Circular No. V-266, dated Jan. 14,
1958.
CHAPTER III
1. Repealed by implication by Republic Act
No. 3704. Operators or owners of rice or corn mills are now subject to an
annual graduated fixed tax based upon the total capacity per machine used and
not on the percentage tax imposed by section 189 of the National Internal
Revenue Code.
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