Why is there a need for a Letter of Authority?

In the process of facing your cases concerning your taxes, the Bureau of Internal Revenue (BIR) should send you one crucial document to start its operation. Other than that, both auditing and investigation will not be considered the rightful activity. 

This insight comes after the Supreme Court has made a statement on the disturbing trend of auditing activities conducted by the revenue officers.

In a news article by Manila Bulletin, SC, through its  Associate Justice Jhosep Y. Lopez, declared on October 7, 2021, that many tax audits or investigations are done by revenue officers:

 “under the pretext that the original revenue officer authorized to conduct the audit or investigation has been reassigned or transferred to another case or place of assignment, or has retired, resigned or otherwise removed from handling the audit or investigation.” 

A legal auditing activity usually begins with a Letter of Authority issued by either the Bureau of Internal Revenue (BIR) Commissioner or their duly authorized representatives by the CIR. Without the LOA, either auditing or investigation by the BIR officers is deemed illegal. They are considered violations of Sections 6, l0(c), and 13 of the National Internal Revenue Code (NIRC) the Revenue Memorandum Circular No. 43-90. 

Such circumstances would mean it “violates the taxpayer’s right to due process; usurps the statutory power of the CIR (commissioner of internal revenue); and does not comply with existing BIR rules and regulations…,” as per SC statement.

“A valid LOA is issued to an authorized revenue officer; the revenue officer named in the LOA is reassigned or transferred to another office, case or place of assignment, or retires, resigns, or is otherwise removed from handling the case covered by the LOA; the revenue district officer or a subordinate official issues a memorandum of assignment, referral memorandum, or such equivalent document to a new revenue officer for the continuation of the audit or investigation; and the new revenue officer continues the audit or investigation, supposedly under the authority of the previously issued LOA.”

The Supreme Court statement added, “this practice of reassigning or transferring revenue officers, who are the originally authorized officers named in the LOA, and subsequently substituting or replacing them with new revenue officers who do not have a new or amended LOA issued in their name, has been the subject of several CTA (Court of Tax Appeals) decisions. The Court hereby puts an end to this practice.”

If your business receives a Letter Of Authority from BIR, and you’re clueless on what it can do, we at Asian Consulting Group can assist you in dealing with this along with your tax-related deficiencies. Drop a line to inquire via text message to our Tax Health Check Officer, Elon Andal via (+63) 906 315 9230 or by sending an email over to consult@acg.ph, and let’s see how we can help you fix your taxes without compromises.

Panaligan, R. (October 10, 2021). Without letter of authority, taxpayers cannot be audited or probed by revenue officers — SC. Manila Bulletin.

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