Filing of ITR by Farmers

March 5, 1959 BIR RULING NO. 128-59 The Philippine Free Press Free Press Building 708 Rizal Avenue, Manila Attention : Information Department Gentlemen : In attention to the request contained in your letter dated October 28, 1958, hereunder are the answers to the queries of Messrs. Bernardino M. Samson and Juan Cabanban. cdta Re: Queries of Mr . Bernardino M . Samson 1. Beginning with the filing of their income tax returns for 1952, when Revenue Regulations Nos. V-13 and V-20 became effective, farmers who are subject to internal revenue tax and whose gross quarterly sales, earnings, receipts or output do not exceed P5,000 should file with their income tax returns the yearly statement of net worth (balance sheet) and operations (profit and loss). With regard to farmers whose gross quarterly sales, earnings, receipts or output are above P5,000 but below P25,000, they should file the said statement with their income tax returns beginning with their returns for 1957 the year when General Circular No. V-236 was promulgated. Those whose gross quarterly receipts, earnings, or output exceed P25,000 must have this statement certified to by an independent certified public accountant and should file the same beginning with the filing of their income tax returns for 1951, pursuant to Section 334 of the Tax Code, as amended. Farmers coming within the purview of the foregoing rules are required to file with their income tax returns the yearly statement of net worth and operations even though they are not engaged in other business or businesses. 2. Failure on their part to comply with the above requirements makes them liable to a fine of not more than three hundred pesos or an imprisonment for not more than six months or both pursuant to Section 352 of the Tax Code. However, if they would like to settle their penal liability extrajudicially, they must pay the compromise penalty prescribed in paragraph IV of General Circular No. V-236. 3. There is no fixed form prescribed by this Bureau for the yearly statement of net worth and operations. It is enough that the said statement shall conform substantially with the form prescribed by Revenue Regulations No. V-13, (sample form submitted) in the case of those authorized to keep and use the Simplified Sets of Bookkeeping Record. The balance sheets to be submitted by those whose gross quarterly sales, earnings or output exceed P5,000 but do not exceed P25,000 must be prepared in accordance with the generally accepted principles of accounting. In the case of those whose gross quarterly sales, receipts or output exceed P25,000, the balance sheet must be certified by an independent certified public accountant and in addition, shall submit certified profit and loss statements, schedules listing income producing properties and the corresponding incomes therefrom and other relevant statements. cdti Re: Queries of Mr . Juan Cabanban The answers to the queries of Mr. Cabanban depend on the validity of the municipal ordinance in question. The determination of the legality of a municipal ordinance is not within the jurisdiction of this Office. It is suggested that the same be referred to the Secretary of Finance. As requested, the basic inquiries are returned herewith. aisadc Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue