BIR Ruling [DA-114-05]

April 5, 2005 BIR RULING [DA-114-05] Regulations No. V-1; 598-88 Baniqued & Baniqued Suite 803, 8/F Jollibee Centre San Miguel Avenue Pasig City Attention: Atty. Carlos G. Baniqued and Atty. Suzette A. Celicious Gentlemen : This refers to your letter dated January 19, 2005 stating that several of your clients applied for registration of a new set of books of accounts prior to their use for taxable year 2005; that the last volume used for each of the books of accounts was previously registered several years back but prior to such use (e.g. some of the books were registered in 2002 and were used up by end of 2004); that upon presenting the new set of books of accounts to the BIR, they were required to pay the penalties for every year of non-registration of their books of accounts; that the reason why your clients did not apply for registration of a new set of books every year is that the previously registered books have not been entirely filled up and the same are continuously used in recording entries for transactions arising from several taxable years until the pages are entirely filled up, in other words, they did not use a different set of books for each taxable year but, instead, used the remaining pages of the duly registered books: and that since the books were already registered prior to their use or recording of first entry, your clients did not present the same for registration with the BIR nor did they change their set of books every taxable year. In connection therewith, you now request confirmation of your opinion that "1. A taxpayer's books of accounts are required to be registered only once with the BIR prior to their use; "2. A taxpayer's books of accounts previously registered with the BIR but whose pages are not fully used up do not need to be changed and registered every year. In other words, a taxpayer may use the same set of registered books of accounts for several taxable years as long as the pages are not yet completely filled up; and "3. The registration of a new volume of books of accounts for the continuation of entries for a particular taxable year should be done before the period of first entry in such new volume of books of accounts, and not necessarily before the taxable year commences. For instance, when the pages are all used up by the end of June 2005, a new set of books of accounts shall be registered prior to July 2005 or before the date of first entry in such new set of books." In reply thereto, please be informed that your opinion is hereby confirmed as follows: 1. Section 19 of Revenue Regulations No. V-1, as amended, provides that persons who are required to keep books of accounts, internal revenue books, records of receipts and disbursements, additional registers, and other records, invoices and receipts for recording their transactions as prescribed in these regulations, shall before using any of the aforesaid books, records, registers, invoices and receipts first present them to the Commissioner of Internal Revenue. ACDIcS It is clear that there is nothing in the above-cited regulations that requires each taxpayer to use a different set of books of accounts for each taxable year and consequently to register the same books or a new set of books every year. Hence, the practice of your clients to register a new set of books of accounts only after the previously registered books are completely used up and not annually is in order. Accordingly, the imposition of the penalties for every year of non-registration of their books of accounts is unwarranted. 2. In BIR Ruling No. 598-88 dated December 27, 1988, this Office ruled that ". . . Revenue Regulations No. V-45 only requires that books of accounts should be registered before using them. Hence, the books of accounts of taxpayers previously registered may be used in succeeding years without registering them again. It is requested, however, that the portion pertaining to a particular year be properly labeled or marked." Such being the case, your client's books of accounts previously registered with the BIR but whose pages are not fully used up do not need to be changed and registered every year. In other words, your client may use the same set of registered books of accounts for several taxable years as long as the pages are not completely filled up. 3. Finally, the registration of a new volume of books of accounts for the continuation of entries for a particular taxable year should be done before the period of first entry in such new volume of books of accounts, and not necessarily before the taxable year commences. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group