Cash Register Machines Used for Internal Control Purposes

August 20, 1992 BIR RULING NO. 226-92 RR 4-80; RMO 90 000-00 226-92 The Regional Director Revenue Region No. 10-A Cagayan de Oro City S i r : This refers to your undated letter requesting a ruling from this Office as to whether or not Accounting Machine and/or Cash Register Machine maintained by lessees in a business mall as a precondition to a lease contract is still required to be registered with this Bureau, where the use of such machine is for "internal control purposes" of the lessor in order to determine the amount of rental which the lessees should pay. cdll It appears the Limketkai Center, a business mall thereat, is leasing spaces for business purposes for a minimum fixed rental or a rental fee equivalent to 3% based on the gross sales of a lessee, whichever is higher; that as a condition to the contract of lease, the lessees are required to have cash register machines for said purpose; and that the lessees issue official invoices or receipts for every sale, although they still punch the amount of sale in the cash register machines as stipulated in the contract. In reply, please be informed that pursuant to Section 5 of Revenue Regulations No. 4-80 reading "SEC. 5. Cash Register Machines for Internal Control . Any proprietor, owner or operator of a business establishment may use a cash register machine of any type for "internal control purposes", provided that, duly registered sales invoices or receipts are issued for every sale. However, such proprietor, owner or operator shall first notify the proper Revenue District Officer of his intention to use the machine solely for "internal Control" and shall secure a poster from the said Office which shall be securely attached at the back of the machine conspicuous to the public showing the following: xxx xxx xxx a permit need not be secured from the BIR before the actual use of said cash register machines, it appearing from your representations that the same are intended solely for "internal control purposes" of the lessor coupled with the fact that the lessees are reportedly issuing sales invoices or receipts for every sale made. Hence, no violation could be imputed against the lessees for failure to secure a permit before the actual use of the cash register machines in question. If at all, their (lessees) violation is for failure to notify the Revenue District Officer concerned that the cash register machines are solely for internal control and to attach at the back of said machines poster coming from the Revenue District Officer with the following markings: " WARNING THIS MACHINE IS NOT AUTHORIZED TO ISSUE RECEIPT. ASK FOR SALES INVOICES. REPORT ANY VIOLATION TO THE BIR" It is noted however, that Revenue Regulations No. 4-80 does not provide a specific penalty for the said violation; hence, you should impose and collect from each lessee a compromise penalty of P1,000.00, pursuant to Revenue Memorandum Order No. 1-90. LLjur Very truly yours, JOSE U. ONG Commissioner of Internal Revenue