Preservation of Books and Records Within the Statutory Period is Required Despite Availment of Executive Order Nos. 41 and 44

November 4, 1987 BIR RULING NO. 344-87 275 000-00 344-87 Gentlemen : This refers to your letter dated May 8, 1987, requesting information as to whether you could now dispose your accounting records for the year ending 1985 and below on the ground that you have duly availed of Executive Order Nos. 41 and 44. In reply, I have the honor to inform you that your request is answered in the negative. Section 275 of the Tax Code provides: "SEC. 275. Preservation of Books of Accounts and Other Accounting Records . All books, and other accounting records of corporations, partnerships, or persons shall be preserved by them for a period beginning from the last entry in each book until the last day prescribed by Section 268 within which the Commissioner is authorized to make an assessment. The said books and records shall be subject to examination and inspection by internal revenue officers: Provided, That for income tax purposes, such examination and inspection shall be made only once in a taxable year, except in the following cases: (a) Fraud, irregularity or mistake as determined by the Commissioner; (b) The taxpayer requests reinvestigation; (c) Verification of compliance with withholding tax laws and regulations; (d) Verification of capital gains tax liabilities; and (e) In the exercise of the Commissioner's power under Section 7(b) to obtain information from other persons, in which case, another or separate examinations and inspection may be made. Examination and inspection of books of accounts and other accounting records shall be done in the taxpayer's office or place of business or in the office of the Bureau of Internal Revenue. All corporations, partnerships or persons that retire from business shall, within ten days from the date of retirement or within such period of time as may be allowed by the Commissioner in special cases, submit their books of accounts, including the subsidiary books and other accounting records to the Commissioner or any of his deputies for examination after which they shall be returned. Corporations and partnerships contemplating dissolution must notify the Commissioner; and shall not be dissolved until cleared of any tax liability." xxx xxx xxx Under the above-quoted provision, books of accounts must be preserved for a period beginning from the last entry in each book until the last day of the prescriptive period of three (3) years within which an assessment may be issued, pursuant to Section 268 of the Tax Code, as amended by B.P. No. 700. Said 3-year prescriptive period applies to assessments beginning taxable year 1984. Prior to taxable year 1984, the applicable prescriptive period is five (5) years. (Revenue Memorandum Circular No. 33-84). adc The preservation of the books within the period above-prescribed is mandatory so as to afford this Office opportunity to examine the same and to issue assessment, if any, based on said examination. Consequently, you should preserve your books and records within the prescribed period despite the fact that you have availed of the tax amnesty under Executive Order No. 41. It is noted that for availing said tax amnesty, your immunity covers only examination of books and records for income tax purposes. [Sec. 6(c), Executive Order No. 41] Moreover, the preservation of your books and records, within the statutory period is also required, despite your availment of Executive Order No. 44 which covers only the compromise of tax cases pending as of December 31, 1985. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner