THE Bureau of Internal Revenue (BIR) has lifted the suspension on the issuance of letters of authority (LOAs), allowing tax audits to resume with reforms aimed at making the process fairer said to have been established.
Finance Secretary Frederick Go told reporters on Tuesday that the move followed a comprehensive review of BIR procedures.
“We are announcing that we are lifting the suspension of issuing letters of authority, mission order and field audits with reforms in place,” Go said.
The BIR was said to have reviewed its systems thoroughly and worked closely with the private sector to design safeguards that address long-standing taxpayer concerns.
“The BIR did a comprehensive review and engaged the private sector. It has designed concrete reforms to make audits fairer, more predictable, and more accountable,” Go said.
The Finance Department ordered the suspension of BIR field audits and related operations, including the issuance of LOAs, last November following allegations that the system was being used to harass taxpayers.
LOAs give BIR examiners the authority to inspect a taxpayer’s books of accounts. Business groups and taxpayers complained of repeated and overlapping audits and also said that fake or unauthorized LOAs were being used to extort money.
BIR Commissioner Charlito Martin Mendoza said the temporary suspension gave the agency time to reassess its audit framework, consult stakeholders, and implement structural reforms to restore trust in the system.
“As audits resume, taxpayers will feel the difference immediately,” he said.
A key reform is the adoption of a single-instance audit framework. Under this, a taxpayer will generally be issued only one LOA per taxable year, with multiple audit authorities consolidated into a single document, subject to clearly defined exceptions.
The BIR will also shut down the Value-Added Tax Audit Service (Vatas) and the Value-Added Tax Audit Units (Vatau) and disband audit task forces.
“Audit authority will now be limited to the regional offices and the large taxpayers’ service,” Mendoza said.
The BIR has also introduced a verification system to protect taxpayers from fake or unauthorized LOAs. Taxpayers can now verify LOAs through the BIR website using the REVI chatbot.
Mendoza said this would allow taxpayers to immediately confirm whether the LOA presented was officially issued.
To further strengthen accountability, the BIR has tightened documentation, verification and oversight procedures and is launching an Audit Auditor Program to ensure the accountability of revenue officers involved in examinations. The reforms also address concerns over how audits are conducted, particularly for businesses with voluminous records.
While the examination and inspection of books of accounts will generally take place at the taxpayer’s office, place of business or at the BIR office, taxpayers will be given reasonable options on the manner and venue. This applies in cases where records are extensive and transporting or handling them would be impractical, burdensome or disruptive to business operations.
“With audits resuming under these improved rules, we call on taxpayers and the public to actively work with the BIR, reach out for assistance when needed, and uphold the compliance so that together we can ensure fair and professional audits for all,” Mendoza said.