Keeping of Books of Accounts and Records by Taxpayers

September 9, 1966 REVENUE MEMORANDUM ORDER NO. 64-66 SUBJECT : Keeping of Books of Accounts and Records by Taxpayers TO : All Internal Revenue Officers and Others Concerned It has been observed by this Office that most of the TACOMA and ACA farmers, coconut/abaca planters, jeepney operators, small drugstores, repair shops, beauty parlors, dress shops, fishermen/poultrymen and many professional practitioners do not keep books of accounts in gross violation of section 334 of the Tax Code with regard to the keeping of books of accounts and records. Due to their non-keeping of books of accounts and/or other accounting records, the figures reflected in their income tax returns, if they file at all, have become arbitrary and none or very little tax liability is being made to appear. This practice has resulted in a yearly loss of revenue to the government which is detrimental to the growth and progress of our country. cdta For the information and guidance of all concerned, there is quoted hereunder section 334 of the National Internal Revenue Code, requiring corporations, companies, partnerships and persons to keep books of accounts. "Sec. 334. Corporations, companies, partnerships, or persons required to keep books of accounts . All corporations, companies, partnerships, or persons required by law to pay internal revenue taxes shall keep a journal and a ledger, or their equivalents: Provided, however, That those whose gross quarterly sales, earnings, receipts or output do not exceed five thousand pesos shall keep and use a simplified set of bookkeeping Records duly authorized by the Secretary of Finance wherein all transactions and results of the operations are shown and from which all taxes due the Government may readily and accurately be ascertained and determined anytime of the year: And provided, further, That in the case of corporations, companies, partnerships, or persons whose gross quarterly sales, earnings, receipts, or output exceed twenty-five thousand pesos, shall have their Books of Accounts audited and examined yearly by Independent Certified Public Accountants and their income tax returns accompanied with certified balance sheets, profit and loss statements, schedules listing income-producing properties and the corresponding incomes therefrom and other relevant statements." The essential requisites of simplified sets of bookkeeping records required of persons whose gross quarterly sales, earnings, receipts or output do not exceed five thousand pesos are defined and prescribed under Revenue Regulations No. V-1 or the Bookkeeping Regulations, as amended by Revenue Regulations No. V-13 and Revenue Regulations No. V-43. All Internal Revenue officers concerned are hereby enjoined to see to it that the laws and regulations governing the keeping of books of accounts and other records be strictly enforced and complied with in order that the interests of the government may not be prejudiced. MISAEL P. VERA Commissioner of Internal Revenue