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How Does the Auditing Process go?

How does the Bureau of Internal Revenue conduct its auditing process?

The very first step is a Letter of Authority, a very crucial document. It is usually issued by the CIR and presented by its duly authorized revenue officer to the company or individual involved in the tax complaint.

It must be issued 30 days from its issuance. On the other hand, concerned taxpayers should prepare the supporting documents for verification from the assigned examiner.

Once the concerning taxpayer has accepted the LOA, the revenue officer should conduct its assessment and examination services within 120 days from the date of receipt to submit the required investigation report. 

If the said time frame isn’t enough for the assigned examiner to complete its auditing, they will submit a Progress Report to his Head of Office and surrender the LOA for its revalidation. They must continue once the letter has received its validation from the CIR.

As the bureau cited its findings, BIR will issue its preliminary assessment notice. The taxpayer has 15 days to respond if he disagrees with the conclusions stated in the document and intends to contest the proposed assessment.

If a taxpayer fails to appear, a Notice for Informal Conference will be issued, and then informing the audited taxpayer of conclusions of the audit conducted on his books of accounts and accounting records indicates that additional taxes or deficiency assessments needed to be paid. This prompts the Revenue Office to recommend imposing deficiency assessments such as a notice of the evaluation or letter of demand, citing the due the erring taxpayer needs to pay.

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