Financial Records may be Disposed After Three (3) Years Reckoned from the Day Following the Deadline in Filing a Return for the Taxable Year Involved

May 31, 1991 BIR RULING NO. 094-91 235 223 081-90 094-91 Gentlemen : This refers to your letter dated March 1, 1991, requesting to be advised about the length of time within which the taxpayer-members of your federation have to preserve their financial records like receipts, invoices, purchase orders, delivery receipts and other book of accounts. In reply, please be informed that pursuance to Section 235 of the Tax Code, as amended, "all books of accounts including subsidiary books and other accounting records of corporations, partnerships, or persons shall be preserved for a period beginning from the last entry in each book until the last day prescribed by Section 203 within which the Commissioner is authorized to make an assessment." Said Section 203 states that the period within which the Commissioner is authorized to make an assessment is three (3) years "after the last day prescribed by law for filing of the return"; but in a case where a return is filed beyond the period prescribed by law, the three-year period shall be counted from the day the return was filed. A return filed before the last day prescribed by law for the filing thereof, shall be considered as filed on such day. Based on the foregoing, it is clear that you can dispose of your general ledgers, journals, subsidiary books and other accounting records after three years reckoned from the day following the deadline in filing a return for the taxable year involved . However, if you have a pending protest or claim for tax credit/refund of taxes, it is desired that you keep such books and records longer than the prescribed period of three years until your case is finally resolved; and further, your accounting records would also be needed if you are investigated by the BIR for any falsity, fraud or omission in your returns. In such case, the investigation would be conducted "within ten years after the discovery of the falsity, fraud or omission" (Section 223 of the Tax Code). Very truly yours, (SGD.) JOSE U. ONG Commissioner