Tax notes: Keeping of books of accounts for 10 years-A A +A
Monday, October 28, 2013
THE Bureau of Internal Revenue (BIR) now requires taxpayers to preserve their books of accounts, including subsidiary books and other accounting records for an extended period of 10 years with the issuance of Revenue Regulations (RR) No. 17-2013.
Prior to this, taxpayers were generally required to preserve their books of accounts for three years from the last day prescribed by law for the filing of the return or if filed beyond the prescribed day, it shall be from the day the return was actually filed. However, the three-year period retention of books or the period of limitation of assessment is still subject to exceptions: a) when the taxpayer has been investigated by the BIR for falsity, fraud or omission in the returns, the investigation would be conducted within 10 years after the discovery; or b) if the taxpayer agreed in writing to a longer period of assessment after the three-year period of limitation (Section 235 in relation to Section 203 and 222 of the Tax Code).
To clearly set the guidelines on the preservation of books of accounts and other accounting records, BIR requires the following:
a) All taxpayers are required to preserve their books of accounts for a period of 10 years reckoned from the day following the deadline in filing a return, or if filed after the deadline, from the date of the filing of the return, for the taxable year when the last entry was made in the books;
b) If the taxpayer has any pending protest or claim for tax credit/refund of taxes, and the books and records concerned are material to the case, the taxpayer is required to preserve the books of accounts until the case is finally resolved;
c) Unless a longer period is required, the independent Certified Public Accountant (CPA) who audited the records and certified the financial statements of the taxpayer has the responsibility to maintain and preserve copies of the audited and certified financial statements for 10 years from the filing due date of the annual income tax return or the actual filing date thereof, whichever comes later;
d) All books of accounts shall be kept at all times at the place of business of the taxpayer, subject to inspection by any internal revenue officer, and upon demand, the same must be immediately be produced and submitted for inspection; and
e) Examination and inspection of books of accounts shall be done in the taxpayer’s office or place of business or in the office of the BIR.
(Source: Punongbayan & Araullo)
Published in the Sun.Star Cebu newspaper on October 29, 2013.