Law Summary

Introduction

This document summarizes Republic Act No. 658, enacted on June 16, 1951, which amends Section 334 of Commonwealth Act No. 466, also known as the National Internal Revenue Code. The amendment pertains to the bookkeeping requirements for various entities required to pay internal revenue taxes.

Amendment of Section 334

Explanation of Legal Provision

• The amendment updates the existing requirements for corporations, companies, partnerships, or individuals in maintaining books of accounts for tax purposes.

Key Definitions Introduced

• Books of Accounts: Refers to the journal and ledger or their equivalents that must be maintained by taxpayers.
• Simplified Set of Bookkeeping Records: A less complex bookkeeping system authorized by the Secretary of Finance for entities with lower gross sales.

Important Requirements and Procedures

• All corporations, companies, partnerships, or persons required by law to pay internal revenue taxes must:
  • Maintain a journal and a ledger, or their equivalents.
• Entities with gross quarterly sales, earnings, receipts, or output not exceeding ₱5,000 can utilize a simplified bookkeeping system.
• Entities with gross quarterly sales, earnings, receipts, or output exceeding ₱25,000 must:
  • Have their books audited yearly by Independent Certified Public Accountants.
  • Submit income tax returns accompanied by:
    • Certified balance sheets.
    • Profit and loss statements.
    • Schedules listing income-producing properties and corresponding incomes.
    • Other relevant statements.

Relevant Timeframes

• The act takes effect immediately upon its approval on June 16, 1951.

Penalties and Liabilities

• The Act does not explicitly mention penalties or liabilities; however, failure to adhere to the bookkeeping requirements could result in penalties as per existing tax laws.

Cross-References

• The amendment references:
  • Commonwealth Act No. 466 (National Internal Revenue Code)
  • Republic Act No. 438, which previously amended the National Internal Revenue Code.

Key Takeaways

• Republic Act No. 658 establishes specific bookkeeping requirements based on the gross sales of entities.
• Simplified bookkeeping is available for those with lower gross sales, while stricter audit requirements are imposed on larger entities.
• Compliance is crucial as failure to maintain proper records may lead to penalties under the National Internal Revenue Code.