When the BIR validates sales activities

As the hackneyed saying goes: “Taxes are the lifeblood of the nation”. Simply put, without the needed funds it gets from taxes, government will be paralyzed to perform its basic functions. And to ensure that taxes constantly run though those government “veins”, so to speak, the Bureau of Internal Revenue (BIR) has to make sure that the “supply” of taxes do not run dry.

One of the activities that the BIR undertakes to achieve this purpose is to check and validate that taxpayers engaged in the sale of goods/services declare the proper sales income from their business activities. Just recently, the BIR, through Revenue Memorandum Circular (RMC) No. 72-2018, has provided policies and guidelines for the effective monitoring and validation of taxpayers’ sales declarations generated from the following sources:

Point of Sale (POS)/Cash Register Machines (CRM);
Special Purpose Machines (SPM);

Other Sales Receipting System Software;
Receipting/Invoicing of Computerized Accounting System (CAS), including online sales transactions; and Manual invoices/receipts/supplemental commercial documents.

The following are the salient points of RMC No. 72-2018:

The monitoring and validation of accuracy of sales (also called “Post Evaluation”) by the BIR, may be conducted simultaneously with other BIR enforcement activities, such as the “Tax Compliance Verification Drive” (TCVD), Surveillance, Inventory Stocktaking, and Tax Audit/Investigation.
An inventory of all POS/CRM/SPM and other receipting machines/software shall be taken, matched, and reconciled with the list from the BIR database. Particularly, the BIR will provide a listing of matched and unmatched machines per the BIR’s database as against the machines that are physically in the taxpayer’s place of business. In case of a discrepancy, the BIR shall issue a Letter Notice (LN), requiring the taxpayer to explain and reconcile in writing, within 5 days from receipt of the LN, why such discrepancy exists.

If needed, the service provider of the machines shall assist the taxpayer in extracting the sales data during the scheduled Post Evaluation of the BIR. The taxpayer shall submit to the BIR the extracted sales data not later than the second day of the Post Evaluation.

The BIR shall ensure that sales data is extracted and validated from all available sources, such as:
CRM/POS/Other Sales Receipting System Software/CAS;

Sales book/accounting records and manual invoices/receipts, including unregistered/expired receipts/invoices/records, if any;
All SPMs used for supplementary invoicing/receipting such as collection/acknowledgement receipt or bills
payment without corresponding principal invoice/receipt.

If the taxpayer is unable to provide the sales information/machines during the period required by the BIR to do so, the BIR will issue a Subpoena Duces Tecum (SDT) to compel the submission/presentation of such documents/machines. Note that the failure to abide by the SDT will subject the erring taxpayer to possible criminal charges.

The sales data from all sources as discussed above shall be reconciled and compared by the BIR with the taxpayer’s returns filed with the BIR, such as value-added tax (VAT) returns, income tax returns, eSales reports, and summary list of sales (SLS).

Note that under the “Tax Reform for Acceleration and Inclusion” (TRAIN) Law, any taxpayer required to transmit sales data to the BIR’s electronic sales reporting system, but fails to do so, shall pay for each day of violation, a penalty amounting to 1/10th of 1 percent of the annual net income as reflected in the taxpayer’s audited financial statements, or P10,000, whichever is higher. Should the total number of days in violation exceed 180 days within a taxable year, the BIR shall impose an additional penalty of permanent closure of the taxpayer’s business.


source:  Manila Times Column By ATTY. PEACHES ARANAS