BIR Compromise Penalty for Failure to Keep or Preserve Books of Accounts and Records

Failure to keep or preserve Books of Accounts and records required by law carries a BIR compromise penalty tiered by gross annual sales, earnings, or receipts — from ₱1,000 up to ₱50,000 — under RMO No. 7-2015’s Annex A, citing NIRC Section 232/235. The underlying criminal penalty is a fine of not more than ₱1,000 or imprisonment of not more than six months under Section 275 — the compromise is the negotiated alternative revenue officers actually apply in practice.

This is a companion post to BIR Tax Mapping and Oplan Kandado, which lists books of accounts as one of the items officers check on the spot, and to BIR Books of Accounts, which covers the manual, loose-leaf, and CAS registration formats this penalty assumes exist in the first place.

What does the BIR charge for not keeping or preserving books of accounts? #

RMO No. 7-2015’s Annex A prices Section 232/235’s failure-to-keep-or-preserve-records violation on a scale tied to gross annual sales, earnings, or receipts — the larger the business, the higher the compromise.

This is the same bracket structure RMO No. 7-2015 uses for the late-filing compromise covered in RMO No. 7-2015 Compromise Penalties Explained — both scale with the size of the business rather than a flat amount.

Is failing to have books audited a separate violation? #

Yes — Section 232’s requirement that books of accounts be audited and financial statements certified by an independent, BIR-accredited CPA is a distinct line item from simply keeping records, and it carries its own, lower-ceiling table.

This audit-certification requirement only applies to taxpayers whose gross quarterly sales, earnings, receipts, or output exceed the threshold that triggers the CPA-audit requirement in the first place — it doesn’t apply to every business that simply keeps manual books.

What about keeping books in the wrong language? #

NIRC Section 257(7)(i) separately penalizes failure to keep books of accounts or records in a native language, English, or Spanish, or failure to make a true and complete record of a transaction — priced on the identical ₱1,000–₱50,000 gross-sales-tiered scale as the general Section 232/235 violation. A related but more serious finding — books kept in a native language found to be at material variance with books kept in another language — is not eligible for compromise at all, since Annex A treats that discrepancy as a fraud indicator rather than an ordinary bookkeeping lapse.

Worked example: a retailer’s missing ledger during tax mapping #

A sari-sari store chain with ₱3,200,000 in gross annual sales is visited during a tax mapping drive. The revenue officer asks to see the registered manual books of accounts; the owner can only produce loose receipts, with no ledger maintained at all for the current year. This falls squarely under Section 232/235’s failure-to-keep-records violation — at ₱3,200,000 in gross annual sales (within the ₱500,001–₱5,000,000 bracket), the compromise is ₱10,000, payable on BIR Form 0605, separate from any registration or invoicing finding at the same visit.

Frequently asked questions #

How much is the BIR compromise penalty for not keeping books of accounts? #

Under RMO No. 7-2015’s Annex A, failure to keep or preserve records required by law or regulations (NIRC Sec. 232/235) is compromised on a scale from ₱1,000 (gross annual sales, earnings, or receipts of ₱50,000 or below) up to ₱50,000 (over ₱50,000,000).

Is this the same violation as failing to have books audited by a CPA? #

No. Failure to keep/preserve books (Sec. 232/235) is a separate line item from failure to have books of accounts audited and financial statements certified by an independent, BIR-accredited CPA (Sec. 232), which carries its own gross-sales-tiered table from ₱3,000 to ₱25,000 and applies only to taxpayers required to have audited financial statements.

Is there a separate penalty for keeping books in a language other than English, Filipino, or Spanish? #

Yes. NIRC Section 257(7)(i) separately penalizes failure to keep books of accounts or records in a native language, English, or Spanish, or to make a true and complete transaction record, on the same ₱1,000–₱50,000 gross-sales-tiered scale as Section 232/235. A related violation — books in one language found at material variance with books kept in another — is not eligible for compromise at all, since it’s treated as a fraud indicator.

Does the micro/small taxpayer discount apply to this penalty? #

Yes. RR No. 6-2024 applies a 50% reduction to the RMO No. 7-2015 schedule amount for micro and small taxpayers on non-fraudulent criminal violations of NIRC Sections 113, 237, and 238 specifically — Section 232/235 record-keeping failures aren’t among the sections RR No. 6-2024 lists, so confirm which section a specific finding is charged under before assuming the discount applies.

Does a tax mapping officer check for this violation on the spot? #

Yes. Books of accounts availability is one of the standard items a revenue officer checks during a BIR tax mapping visit, alongside registration, receipts, and posted documents — if the books aren’t kept or can’t be produced, this is the compromise schedule that prices the finding.

Summary #

Failure to keep or preserve Books of Accounts is priced on the same gross-sales-tiered scale RMO No. 7-2015 uses for late filing — ₱1,000 to ₱50,000 — with a related, lower-ceiling table for failing to have books audited, and an identical ₱1,000–₱50,000 scale for keeping books in the wrong language under Section 257(7). All three are routine tax-mapping findings, distinct from the registration and invoicing violations covered in BIR Compromise Penalty Table for Registration, Receipts, and Invoicing Violations.