Prescribing a Uniform Procedure in the Issuance of Permits and Providing Rules on the Use of Cash Register Machines in Lieu of Sales Invoices or Receipts

May 16, 1977 REVENUE MEMORANDUM ORDER NO. 19-77 SUBJECT : Prescribing a Uniform Procedure in the Issuance of Permits and Providing Rules on the Use of Cash Register Machines in Lieu of Sales Invoices or Receipts TO : All Internal Revenue Officers And Others Concerned Section 14 of Revenue Regulations No. V-1, as amended, otherwise known as the Bookkeeping Regulations, allows the use of cash register machines with roll sheets in lieu of a record of petty sales or receipts. The sudden increase in the number of taxpayers applying for permits to use such machines has rendered it necessary to formulate a uniform procedure to guide applicants in securing the desired permit and to enable the Bureau of Internal Revenue to maintain a closer supervision and control over establishments using such machines in order to protect the interest of the government. For the guidance of all concerned, therefore, the following procedures and rules are hereby promulgated: cdta A. Procedures: 1. All requests or applications for permits to use cash register machines by taxpayers conducting business should be filed with the Revenue District Office where the business is located. The application should contain the following data: (a) Brand of the Cash Register Machine (b) Model and Serial Number (c) Name of the business establishment or place where the machine will be used. (d) Nature of business of the applicant (e) Reason for applying to use a cash register machine. There should be attached to the request or application an authentic copy of the current privilege tax receipt, a copy of the certificate of registration of business name or style issued by the Bureau of Internal Revenue as well as that issued by the Bureau of Commerce and, if the applicant is a corporation, proof of registration with the Securities and Exchange Commission. 2. Upon receipt of the application, the Revenue District Officer concerned shall direct an examiner to conduct an immediate verification to ascertain the necessity for the use of the machine by the applicant. The examiner must clearly state in his report the reasons for his recommending approval or disapproval of the application. 3. The revenue office, before processing and taking final action on the application heretofore mentioned, shall forward the papers to the Collection Branch of each corresponding revenue district for notation as to whether or not the taxpayer/applicant in delinquent in the payment of his tax liabilities. If delinquent, the fact should be communicated to the taxpayer with the request that the delinquent tax or taxes should be paid; otherwise, the application shall not be given due course. 4. In appropriate cases or where the use of a cash register machine is justified or meritorious as recommended, the permit requested for by the applicant shall be prepared by the revenue district concerned for the signature and approval of the Regional Director The said permit should contain the following conditions: a. The machine intended to be used should be equipped with two (2) rollers, one on which to mount the roll tape intended for audit and internal revenue tax purposes and the other on which to mount the customer's roll which comes out of the machine as an itemized receipt consecutively number issued to customers' for every sale not exceeding P49.99. b. When the machine is punched for purposes of recording a sale, the transaction should automatically be printed on the customer's receipt and the audit roll. Under no circumstance should the machine be operated without the corresponding roll sheet installed in each roller. c. The audit roll should be identified by the signature or initial of the taxpayer or his bookkeeper or manager and should show the sales amount of each transaction, consecutive number and date. The entries in the audit roll shall be entries in the audit roll shall be summarized at the end of the day and the total transferred to the journal or to the internal revenue sales or receipt book. The roll shall form part of the accounting records of the taxpayer and shall be preserved in the same manner and within the same period prescribed by revenue regulations for such records. d. The machine shall moreover be provided with a reset counter which advances by "1" every time the total is reset to zero. Such counter, once the machine operates, is however, nonresettable. The sales invoice for cash sales of P50.00 or more shall be issued in the prescribed form previously registered and approved by the Bureau. e. There shall be no change of location of the said cash register or change of business name and license without previous notice and approval of the Regional Director. Neither shall any transfer or sale of the machine be affected without his previous authority. 5. Upon receipt of the permit and before using the machine, the grantee shall report to the revenue district concerned, the figure appearing in the reset counter. Thereafter, at the beginning of each year and before using the machine, the grantee shall report the figures indicated in the same reset counter. Such figure shall be used as the starting basis in determining the number of audit rolls to be accounted for by the grantee or owner at the end of the calendar year. Failure on the part of the grantee to present the required number of audit rolls upon demand by a duly authorized internal revenue officer shall be sufficient ground for withdrawing and/or cancelling the permit unless the grantee by clear and convincing proof, is able to justify his failure to comply with the aforesaid requirement. 6. In every meritorious cases and where the volume of business so dictates a taxpayer who has been previously granted a permit to use a cash register machine in lieu of sales invoices or receipts for every sale not exceeding P49.99, may be allowed to use the same machine for sales in excess of the amount upon proper applications and subject to the same conditions hereinbefore enumerated. 7. A xerox copy of the permit should be glued or taped at the back of the machine to which it refers; the serial number of the machine should be painted in bold figures at the back thereof to facilitate any verification required to be made on the machine. 8. All previous permits hereinbefore issued without any expiration date should be renewed yearly after issuance thereof and under the same procedures as that required in this memorandum order. B. Responsibility for compliance: 1. Field Office a. The examiners of the revenue district office should conduct a monthly inspection of business establishments using cash register machines to ascertain whether the grantees are complying strictly with the conditions strictly with the conditions set forth in the permit. Non-compliance with the provisions stated in the permit or any irregularities which may be discovered should immediately be reported to the Revenue District Officer for recommendation of cancellation of the permit or for any appropriate action which is necessary under the circumstances. b. In the annual examination of the books of accounts of business establishments, examiners should see to it that sales recorded from the use of cash registers are properly identified in the presentation of gross sales if gross sales constitute sales from issuance of ordinary receipts and from cash registers in order to insure that sales thru the use of cash registers are properly accounted for. c. At the end of the year, not later than the 5th day of December, the revenue district office should prepare a list of all establishments issued cash register permits including any findings discovered to the Regional Director. In turn, the Regional Director should consolidate the reports of all revenue district offices under his jurisdiction including copies of permits issued and submit the same to the Indirect Taxes Division, not later than the 30th of December for its information and guidance. 2. Central Office Upon receipt of said reports, the Indirect Taxes Division should prepare an overall list of all establishments issued cash register permits including recommendations for improvements of policies or procedures relative thereto per findings or reports submitted by regional offices and submit the same to the Assistant Commissioner, Bernardo D. Carpio, not later than the 30th of January of each year. The Indirect Taxes Division should be responsible for seeing to it that all the reports required to be prepared by the Revenue District Offices and regional offices are complied with. If necessary, inspection of said field offices should be conducted by either the Indirect Taxes Division or the Performance Control Division in order to insure that the field offices are accordingly complying with their responsibility set forth in this order. All Internal Revenue Officers and others concerned charged with the enforcement of internal revenue laws and regulations are enjoined to enforce the provision of this Order accordingly and to give it as wide a publicity as possible. This Order amends Revenue Memorandum Order No. 11-76, and all previous orders and circulars which are inconsistent with this order are hereby repealed, amended or superseded. This Order takes effect upon approval. cdta EFREN I. PLANA Acting Commissioner of Internal Revenue TAN P4519-S2828-A-S