July 21, 2014

REVENUE MEMORANDUM ORDER NO. 027-14

SUBJECT : Amending Certain Provisions of Revenue Memorandum

Order No. 10-05, Prescribing the Policies and
Procedures in the Accreditation of Cash Register
Machine (CRM), Point of Sale (POS), Other Sales
Machines

TO : All Internal Revenue Officers and Others Concerned

I. Objectives. —

This Order is being issued to amend certain provisions of Revenue

Memorandum Order (RMO) No. 10-05 dated March 31, 2005 relative to the
policies and procedures in the accreditation of Cash Register Machine (CRM),
Point of Sale (POS), other sales machines including sales receipting system
software and registration for the use thereof pursuant to Revenue Regulation No.
11-2004 and Revenue Regulations No. 5-2005.

II. Amendatory Provisions. —

Pertinent portions of Paragraph V, Sub-paragraph C are hereby amended to

read as follows:

"V. REGISTRATION ON THE USE OF SALES MACHINE

MODEL/SYSTEM

xxx xxx xxx

C. POLICY and PROCEDURES of REVOCATION of

Registration/POSTAUDIT of PROVISIONAL PERMIT to USE

1. The Bureau reserves the right to inspect any machine/system

registered at any time during store hours, to verify
compliance with specifications of a valid machine/system,
the data requirements of the machine generated invoice, the
conditions for use of the machines as well as other
regulations that may be subsequently issued governing use of
machines. The taxpayer-users and store personnel are thus
required, under the authority granted for the use of
Copyright 2014 CD Technologies Asia, Inc. Taxation 2014 Bulletins (3rd Release)
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 machine/system, to present the machine for inspection and
reading by the concerned revenue personnel.

If during the conduct of any TCVD, post evaluation,

CRM/POS machines reading operations, surveillance,
stocktaking, or audit, the taxpayer-user or store personnel
shall refuse to permit an inspection or reading of the
CRM/POS or other sales machine to be made by the
concerned revenue officer(s) and/or to provide backend
report from servers, the refusal shall be a ground for the
concerned revenue officer(s) to immediately seal the
CRM/POS or other sales machine either by placing the
necessary seal or lock.

The seal or lock shall not be removed until such time that
concerned revenue officer(s) is allowed to inspect or read the
CRM/POS or other sales machine and/or is provided with the
backend report. The taxpayer-user or store personnel shall
be given forty-eight (48) hours from demand within which to
allow the concerned revenue officer(s) to inspect or read the
CRM/POS or other sales machine and/or to provide the
backend report. After the lapse of this forty-eight (48)-hour
period, the continued refusal shall be a ground for the
revocation of the permit to use the CRM/POS and other sales
machines.

2. The RDO where the taxpayer-user is registered shall conduct

the post-audit of the Provisional Permit to Use. The RDO
shall ensure that the sales machines/software is compliant
with the policies of accreditation as stipulated in this RMO.
Please refer to the Functional and Technical
Evaluation/Appraisal Checklist of Sales Machines and/or
Sales Receipting System Software Applied for Accreditation
(Annex "E").

3. If compliant, the RDO shall issue the new Permit to Use

using the BIR web facility (detailed procedures in the
application shall be included in the manual guide).

4. If non-compliant, the RDO shall revoke the Provisional

Permit to Use, by releasing to the taxpayer-user the Letter of
Warning/Revocation (Annex "F")

5. If during conduct of TCVD, post evaluation, CRM/POS

machines reading operations, surveillance, stocktaking, or
audit, the following findings have been observed, the permit
to use CRM/POS and other sales machines shall be subject
 for revocation:

a) Tampering of sales data/integrity of the data and/or

software specification/features to alter/avoid the
recording of a sale transaction;

b) Any major repairs, upgrading, integration and

modification/alteration without prior notification and
approval by the BIR office concerned;

c) Refusal of the taxpayer-user or store personnel to

allow the concerned revenue officer(s) to inspect or
read the CRM/POS or other sales machine and/or to
provide backend report from servers after forty-
eight
(48) hours from demand;

d) Any violation(s) on the policies and procedures for

registration under RR 11-2004 and this order.

6. The Revenue Officer(s) who conducted the TCVD, post

evaluation, CRM/POS machines reading operations,
surveillance, stocktaking, or audit shall:

a) Immediately seal the CRM/POS or other sales

machine, either by placing the necessary seal or lock,
based on the grounds set forth in Paragraph V, Sub-
paragraph C(1) and C(5)(a), (b), and (d) above;

b) Immediately submit a report and recommendation to

the RDO for the issuance of a Letter of Warning
(Annex "F") for the violations set forth in Paragraph
V, Sub-paragraph C(5)(a), (b), and (d) above.
Provided that after five (5) working days of non-
compliance to the written warning, the
recommendation shall be made for the issuance of a
Letter of Revocation of the permit to use the
CRM/POS and other sales machines. Provided
further that for violation based on Paragraph V, Sub-
paragraph C(5)(c) above, the recommendation shall
outright be for the issuance of a Letter of Revocation
(Annex "F") already containing a notice of the
revocation of the permit to use the CRM/POS and
other sales machines.

The concerned RDO shall:

a) Upon recommendation, issue the corresponding

 Letter of Warning/Revocation (Annex "F");

b) In case of revocation of the permit to use the

CRM/POS and other sales machines based on
violations set forth in Paragraph V, Sub-paragraph
C(5)(a) and (c) above, order the confiscation of the
CRM/POS or other sales machine within ten (10)
working days from service of the Letter of Revocation.

III. Repealing Clause. —

All issuances and/or portions thereof inconsistent with this Order are
hereby revoked, modified or amended accordingly.

IV. Effectivity. —

This Order shall take effect immediately.

(SGD.) KIM S. JACINTO-HENARES

Commissioner of Internal Revenue

ANNEX E

Functional and Technical Evaluation/Appraisal Checklist of Sales Machines and/or Sales

Receipting System Software Applied for Accreditation
(For Each Model/Brand/Software)

Name of Applicant (Supplier/Vendor of machine)

Business Name/Trade Name

Business Address

TIN/Branch Code

E-mail Address Telephone Number

Machine Brand/Model:

Applying for Accreditation of: (Please check appropriate answer)

Hardware only

Software only
 Hardware & Software Please specify software:

DESCRIPTION/SPECIFICATION YES NO REMARKS

A. Technical Aspect

1. Does the machine have a non-volatile

memory?

2. If answer to # 1 is NO, does the machine

have a back-up system? Specify back-up
procedures, indicate on the remarks
column.

3. Is the machine used as stand alone or

linked to a server (CAS)?

4. Does the machine have a non-resettable

accumulating grand total? If yes, specify
the maximum number of digits including
decimal place of the accumulated grand
total sales.

5. Is the machine capable of generating at

least ten (10) digits or 12 digits including
decimal points for its grand total sales?

6. Is the machine equipped with a reset

counter that advances by one (1) every
time the accumulating grand total is
reset to zero?

7. Is the machine capable of generating

sequential number for each transaction
entered?

8. Does the machine have a minimum of 6

digit OR number or at least a 4-digit OR
number with at least 2-digits visible/
programmable reset counter?

9. Is the machine tamper-free?

10. Can the machine be switched to

"training mode" or "no sale transaction
mode" or other manipulations that will
avoid the recording of sale transactions?

11. Is the machine capable of printing the

 words "THIS IS NOT AN OFFICIAL
RECEIPT", if it is switched to "Training
Mode" or "No Sale Transaction" mode?

12. For CRM machine: are the machines

equipped with two (2) rollers or their
equivalent (1 tape for audit and other
internal revenue purposes and the other
tape to be given to the customer which
shows the itemized and consecutively
numbered receipts?

13. If only one roller is used, does the

machine have safety mechanisms to
prevent its use?

14. Can the data printed on the Official

Receipt be preserve/stored for at least
three (3) years from its issuance?

15. When machine is punched for purposes

of recording sales discounts, refunds,
etc., can the machine automatically print
such discount, refunds on the customer's
tape receipt and the audit journal tape?

16. For POS machines, are all sales

automatically and completely recorded
in a central server (back-end server)?

17. Does the POS have a native back-up of

all its sales transactions (database) and
how long will the machine hold the data
until such time that it is being purged?

18. POS linked/or not linked to a server-

does the machine store an Electronic
Journal (EJ) in its own hard disk?

19. Can the machine preserve the data

stored in the central server for a
minimum period of 3 years from
the time of the transaction?

20. Can the machines/central server

generate a report showing the reading
of daily sales and the accumulated
grand total sales recorded therein?

21. Will the distributor/dealer/vendor of the

 machine attest that BIR can view,
validate and verify the machines
especially on sales transactions?

22. Is the machine capable of clearly

indicating separately in words, sales
that are subject to VAT & sales that
are exempt from VAT (in case the user
of the machine is engaged in both
VATable and Non-VATable transactions)?

23. Is the machine capable of generating a

report summarizing all VAT sales and
Non-VAT sales?

24. Are the monitoring controls & verification

techniques to identify voided sales &
actual sales not recorded in the
Proprietor's record, disclosed by
distributor/dealer/vendor of the
machine to the BIR?

25. Are the following data required to be

reflected on the tape receipt or invoice
indicated on the sample print of the tape
receipt/invoice?

• Business Name;

• Registered taxpayer's name with

BIR;

• TIN (12 digits including branch

code);

• Address where the machine will be

used;

• Receipt/invoice Number (minimum

6 digits);

• Machine Model Accreditation

Number;

• Date of Transaction;

• Quantity;

• Product Description;
 • Amount of transaction (separate
totals for VAT & Non-VAT);

• Word "THIS SERVES AS AN

OFFICIAL RECEIPT"

B. Other Aspect of System

1. Is the receipt/invoice number systems-

generated?

2. Does the system post the sales at the

back-end at 'real-time'? If not, what is
the mode/time of recording the sales at
the back-end?

3. Once sales are posted at the back-end,

can adjustments be done by the
user/taxpayer? If yes, specify control
mechanism of the machine/system that
can detect such adjustments.

4. Is there a report that will show summary

of adjustments, void transactions, etc.?

5. Can the sales report be generated at

anytime?

6. Does the computer application system

prevent users from having the capability
to override edits within computer
programs?

7. Is the system capable of detecting the

user of the machine at anytime or does
the system have an activity log or
transaction log? Individual that created
the transactions?

8. Does the system automatically total and

double-check/cross-check totals of all
accounts and report an out-of-balance
condition?

9. Is the system capable of generating

reportorial requirement of BIR such as
but not limited to:

• Daily sales with classification as to

 the type of sales

• Accumulated grand total sales with

classification (i.e., cash sales,
credit
card sales, gift check sales, etc.

• List of voided transactions

• List of adjustments made to sales

RECOMMENDATION: (please check)

Approved

Disapproved

Reason/s:

National/Regional Accreditation Board:

Member Member
(Representative LTAD I/LTAD (Representative LTAID I/LTAID
II/TSS-LTDO/RDO) II/Assessment Section-LTDO/RDO)

Member Asst. Head, NMAB/RMAB

(RDC/ISOS-DC Representative) (Chief, CONED)

Head, Accreditation Board

(Chief, LTAD I &
II/LTDO/RDO

ANNEX F

Letter of Warning/Revocation
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