Dear Attorney,

I am renting out a residential house and recently ended the contract with a tenant. The tenant requested a summary of payments and a receipt for those payments. However, I do not have any receipts to provide. What should I do in this situation?

Landlord Concerned About Receipts

Insights

Under Philippine law, landlords are legally required to issue receipts for rent payments. This obligation is stated in Section 237 of the National Internal Revenue Code (NIRC), which mandates that any person engaged in trade or business, or engaged in the practice of a profession, must issue official receipts for services rendered, sales, or lease payments.

In the case of a residential landlord, failure to issue a receipt for rent payments can lead to tax and legal consequences. Receipts serve as proof of transaction for both the tenant and the Bureau of Internal Revenue (BIR).

Legal Consequences for Not Issuing Receipts

Non-Compliance with BIR Rules: The BIR requires landlords to register and issue official receipts for rent payments, whether or not the landlord operates a formal business. Not issuing receipts could lead to penalties, including fines for failing to comply with tax regulations.
Tenant Protection: Under Republic Act No. 9653, also known as the Rent Control Act, tenants have the right to request documentation for their payments. A landlord who refuses to provide such documentation may face legal claims, as tenants can use the lack of receipts as evidence in rent disputes or claims for reimbursement.
Proof of Income: Issuing receipts helps landlords keep accurate records of rental income, which is essential for tax filing purposes. Without receipts, landlords might struggle to justify the rental income reported to the BIR, possibly leading to audits or tax assessments.

Solutions for Landlords Without Receipts

Generate Receipts Retroactively: If no receipts were initially issued, the landlord should immediately prepare a statement of account summarizing the rent payments received and generate the corresponding receipts. While retroactive issuance might raise questions with tax authorities, it's better than not issuing receipts at all.
Seek Legal Advice: Landlords may consult with a tax attorney or accountant to address potential liabilities with the BIR and ensure that they are compliant with tax rules moving forward.
Regularize Documentation: To avoid similar issues in the future, landlords should register with the BIR and obtain official receipt books. This not only ensures compliance but also protects the landlord from potential legal disputes with tenants.

By understanding these obligations, landlords can avoid complications in their rental business and ensure transparency with tenants and tax authorities alike.