Amending Certain Provisions of Revenue Memorandum Order No. 10-05, Prescribing the Policies and Procedures in the Accreditation of Cash Register Machine (CRM), Point of Sale (POS), Other Sales Machines

July 21, 2014 REVENUE MEMORANDUM ORDER NO. 027-14 SUBJECT : Amending Certain Provisions of Revenue Memorandum Order No. 10-05, Prescribing the Policies and Procedures in the Accreditation of Cash Register Machine (CRM), Point of Sale (POS), Other Sales Machines TO : All Internal Revenue Officers and Others Concerned I. Objectives . This Order is being issued to amend certain provisions of Revenue Memorandum Order (RMO) No. 10-05 dated March 31, 2005 relative to the policies and procedures in the accreditation of Cash Register Machine (CRM), Point of Sale (POS), other sales machines including sales receipting system software and registration for the use thereof pursuant to Revenue Regulation No. 11-2004 and Revenue Regulations No. 5-2005. II. Amendatory Provisions. Pertinent portions of Paragraph V, Sub-paragraph C are hereby amended to read as follows: "V. REGISTRATION ON THE USE OF SALES MACHINE MODEL/SYSTEM xxx xxx xxx C. POLICY and PROCEDURES of REVOCATION of Registration/POSTAUDIT of PROVISIONAL PERMIT to USE 1. The Bureau reserves the right to inspect any machine/system registered at any time during store hours, to verify compliance with specifications of a valid machine/system, the data requirements of the machine generated invoice, the conditions for use of the machines as well as other regulations that may be subsequently issued governing use of machines. The taxpayer-users and store personnel are thus required, under the authority granted for the use of machine/system, to present the machine for inspection and reading by the concerned revenue personnel. cCSDaI If during the conduct of any TCVD, post evaluation, CRM/POS machines reading operations, surveillance, stocktaking, or audit, the taxpayer-user or store personnel shall refuse to permit an inspection or reading of the CRM/POS or other sales machine to be made by the concerned revenue officer(s) and/or to provide backend report from servers, the refusal shall be a ground for the concerned revenue officer(s) to immediately seal the CRM/POS or other sales machine either by placing the necessary seal or lock. The seal or lock shall not be removed until such time that concerned revenue officer(s) is allowed to inspect or read the CRM/POS or other sales machine and/or is provided with the backend report. The taxpayer-user or store personnel shall be given forty-eight (48) hours from demand within which to allow the concerned revenue officer(s) to inspect or read the CRM/POS or other sales machine and/or to provide the backend report. After the lapse of this forty-eight (48)-hour period, the continued refusal shall be a ground for the revocation of the permit to use the CRM/POS and other sales machines. TDCcAE 2. The RDO where the taxpayer-user is registered shall conduct the post-audit of the Provisional Permit to Use. The RDO shall ensure that the sales machines/software is compliant with the policies of accreditation as stipulated in this RMO. Please refer to the Functional and Technical Evaluation/Appraisal Checklist of Sales Machines and/or Sales Receipting System Software Applied for Accreditation (Annex "E"). 3. If compliant, the RDO shall issue the new Permit to Use using the BIR web facility (detailed procedures in the application shall be included in the manual guide). 4. If non-compliant, the RDO shall revoke the Provisional Permit to Use, by releasing to the taxpayer-user the Letter of Warning/Revocation (Annex "F") 5. If during conduct of TCVD, post evaluation, CRM/POS machines reading operations, surveillance, stocktaking, or audit, the following findings have been observed, the permit to use CRM/POS and other sales machines shall be subject for revocation: a) Tampering of sales data/integrity of the data and/or software specification/features to alter/avoid the recording of a sale transaction; b) Any major repairs, upgrading, integration and modification/alteration without prior notification and approval by the BIR office concerned; aSIAHC c) Refusal of the taxpayer-user or store personnel to allow the concerned revenue officer(s) to inspect or read the CRM/POS or other sales machine and/or to provide backend report from servers after forty-eight (48) hours from demand; d) Any violation(s) on the policies and procedures for registration under RR 11-2004 and this order. 6. The Revenue Officer(s) who conducted the TCVD, post evaluation, CRM/POS machines reading operations, surveillance, stocktaking, or audit shall: a) Immediately seal the CRM/POS or other sales machine, either by placing the necessary seal or lock, based on the grounds set forth in Paragraph V, Sub-paragraph C(1) and C(5)(a), (b), and (d) above; b) Immediately submit a report and recommendation to the RDO for the issuance of a Letter of Warning (Annex "F") for the violations set forth in Paragraph V, Sub-paragraph C(5)(a), (b), and (d) above. Provided that after five (5) working days of non-compliance to the written warning, the recommendation shall be made for the issuance of a Letter of Revocation of the permit to use the CRM/POS and other sales machines. Provided further that for violation based on Paragraph V, Sub-paragraph C(5)(c) above, the recommendation shall outright be for the issuance of a Letter of Revocation (Annex "F") already containing a notice of the revocation of the permit to use the CRM/POS and other sales machines. IASCTD The concerned RDO shall: a) Upon recommendation, issue the corresponding Letter of Warning/Revocation (Annex "F"); b) In case of revocation of the permit to use the CRM/POS and other sales machines based on violations set forth in Paragraph V, Sub-paragraph C(5)(a) and (c) above, order the confiscation of the CRM/POS or other sales machine within ten (10) working days from service of the Letter of Revocation. III. Repealing Clause. All issuances and/or portions thereof inconsistent with this Order are hereby revoked, modified or amended accordingly. IV. Effectivity. This Order shall take effect immediately. (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue ANNEX E Functional and Technical Evaluation/Appraisal Checklist of Sales Machines and/or Sales Receipting System Software Applied for Accreditation (For Each Model/Brand/Software) Name of Applicant (Supplier/Vendor of machine) __________________________ Business Name/Trade Name ___________________________________________ Business Address ____________________________________________________ TIN/Branch Code ___________________________________________________ E-mail Address ____________________ Telephone Number _________________ Machine Brand/Model: _______________________________________________ Applying for Accreditation of: (Please check appropriate answer) ______ Hardware only ______ Software only ______ Hardware & Software Please specify software: _________________ DESCRIPTION/SPECIFICATION YES NO REMARKS A. Technical Aspect 1. Does the machine have a non-volatile memory? _____ _____ __________ 2. If answer to # 1 is NO, does the machine have a back-up system? Specify back-up procedures, indicate on the remarks column. _____ _____ __________ 3. Is the machine used as stand alone or linked to a server (CAS)? _____ _____ __________ 4. Does the machine have a non-resettable accumulating grand total? If yes, specify the maximum number of digits including decimal place of the accumulated grand total sales. _____ _____ __________ 5. Is the machine capable of generating at least ten (10) digits or 12 digits including decimal points for its grand total sales? _____ _____ __________ 6. Is the machine equipped with a reset counter that advances by one (1) every time the accumulating grand total is reset to zero? _____ _____ __________ 7. Is the machine capable of generating sequential number for each transaction entered? _____ _____ __________ 8. Does the machine have a minimum of 6 digit OR number or at least a 4-digit OR number with at least 2-digits visible/ programmable reset counter? _____ _____ __________ 9. Is the machine tamper-free? _____ _____ __________ 10. Can the machine be switched to training mode or "no sale transaction mode" or other manipulations that will avoid the recording of sale transactions? _____ _____ __________ 11. Is the machine capable of printing the words "THIS IS NOT AN OFFICIAL RECEIPT", if it is switched to "Training Mode" or "No Sale Transaction" mode? _____ _____ __________ 12. For CRM machine: are the machines equipped with two (2) rollers or their equivalent (1 tape for audit and other internal revenue purposes and the other tape to be given to the customer which shows the itemized and consecutively numbered receipts? _____ _____ __________ 13. If only one roller is used, does the machine have safety mechanisms to prevent its use? _____ _____ __________ 14. Can the data printed on the Official Receipt be preserve/stored for at least three (3) years from its issuance? _____ _____ __________ 15. When machine is punched for purposes of recording sales discounts, refunds, etc., can the machine automatically print such discount, refunds on the customer's tape receipt and the audit journal tape? _____ _____ __________ 16. For POS machines, are all sales automatically and completely recorded in a central server (back-end server)? _____ _____ __________ 17. Does the POS have a native back-up of all its sales transactions (database) and how long will the machine hold the data until such time that it is being purged? _____ _____ __________ 18. POS linked/or not linked to a server- does the machine store an Electronic Journal (EJ) in its own hard disk? _____ _____ __________ 19. Can the machine preserve the data stored in the central server for a minimum period of 3 years from the time of the transaction? _____ _____ __________ 20. Can the machines/central server generate a report showing the reading of daily sales and the accumulated grand total sales recorded therein? _____ _____ __________ 21. Will the distributor/dealer/vendor of the machine attest that BIR can view, validate and verify the machines especially on sales transactions? _____ _____ __________ 22. Is the machine capable of clearly indicating separately in words, sales that are subject to VAT & sales that are exempt from VAT (in case the user of the machine is engaged in both VATable and Non-VATable transactions)? _____ _____ __________ 23. Is the machine capable of generating a report summarizing all VAT sales and Non-VAT sales? _____ _____ __________ 24. Are the monitoring controls & verification techniques to identify voided sales & actual sales not recorded in the Proprietor's record, disclosed by distributor/dealer/vendor of the machine to the BIR? _____ _____ __________ 25. Are the following data required to be reflected on the tape receipt or invoice indicated on the sample print of the tape receipt/invoice? _____ _____ __________ Business Name; _____ _____ __________ Registered taxpayer's name with BIR; _____ _____ __________ TIN (12 digits including branch code); _____ _____ __________ Address where the machine will be used; _____ _____ __________ Receipt/invoice Number (minimum 6 digits); _____ _____ __________ Machine Model Accreditation Number; _____ _____ __________ Date of Transaction; _____ _____ __________ Quantity; _____ _____ __________ Product Description; _____ _____ __________ Amount of transaction (separate totals for VAT & Non-VAT); _____ _____ __________ Word "THIS SERVES AS AN OFFICIAL RECEIPT" _____ _____ __________ B. Other Aspect of System 1. Is the receipt/invoice number systems- generated? _____ _____ __________ 2. Does the system post the sales at the back-end at 'real-time'? If not, what is the mode/time of recording the sales at the back-end? _____ _____ __________ 3. Once sales are posted at the back-end, can adjustments be done by the user/taxpayer? If yes, specify control mechanism of the machine/system that can detect such adjustments. _____ _____ __________ 4. Is there a report that will show summary of adjustments, void transactions, etc.? _____ _____ __________ 5. Can the sales report be generated at anytime? _____ _____ __________ 6. Does the computer application system prevent users from having the capability to override edits within computer programs? _____ _____ __________ 7. Is the system capable of detecting the user of the machine at anytime or does the system have an activity log or transaction log? Individual that created the transactions? _____ _____ __________ 8. Does the system automatically total and double-check/cross-check totals of all accounts and report an out-of-balance condition? _____ _____ __________ 9. Is the system capable of generating reportorial requirement of BIR such as but not limited to: Daily sales with classification as to the type of sales _____ _____ __________ Accumulated grand total sales with classification (i.e., cash sales, credit card sales, gift check sales, etc. _____ _____ __________ List of voided transactions _____ _____ __________ List of adjustments made to sales _____ _____ __________ RECOMMENDATION: (please check) ______ Approved ______ Disapproved Reason/s: _____________________________ _____________________________ _____________________________ National/Regional Accreditation Board: _________________________ _________________________ Member Member (Representative LTAD I/LTAD (Representative LTAID I/LTAID II/TSS-LTDO/RDO) II/Assessment Section-LTDO/RDO) _________________________ _________________________ Member Asst. Head, NMAB/RMAB (RDC/ISOS-DC Representative) (Chief, CONED) ____________________________ ____________________________ Head, Accreditation Board (Chief, LTAD I & II/LTDO/RDO ANNEX F Letter of Warning/Revocation