BIR halts field audits amid LOA misuse claims

The Bureau of Internal Revenue (BIR) has suspended all field audits and related operations after growing public concern over alleged misuse of Letters of Authority (LOA), according to a joint announcement by Finance Secretary Frederick D. Go and BIR Commissioner Charlito Martin R. Mendoza.

“This is in response to the concerns raised by the taxpayers regarding the issuance of Letters of Authority and Mission Orders,” Go said.

“We hear the people, we hear your concerns, and we are immediately acting on them,” he added.

Go said the Department of Finance is reviewing existing policies to prevent abuse and ensure taxpayers are treated with “the highest degree of professionalism, courtesy, and adherence to the rule of law.”

“Our economy is built upon the contributions of our taxpayers who deserve fair and honest tax audits,” he said.

Mendoza said the suspension takes effect immediately under Revenue Memorandum Circular No. 107-2025 and covers the issuance and enforcement of LOAs and Mission Orders.

“No LOA or MO shall be created, printed, signed, or served during the suspension period,” Mendoza said.

He said the order followed internal consultations and aligned with national priorities on taxpayer protection and good governance under the guidance of Go.

The suspension applies to all BIR units involved in audit and field operations, including the Large Taxpayers Service, revenue regions and district offices, assessment divisions, VAT audit units, and intelligence and special audit units.

Exceptions will apply only to legally mandated and urgent cases such as ongoing criminal investigations, audits close to prescription deadlines, refund claims requiring auditing, or actions based on verified intelligence.

“This suspension is necessary to protect taxpayer rights, strengthen internal discipline, and ensure the integrity of our audit processes,” Mendoza said.

He said the BIR takes all complaints seriously and that “any misuse of authority, harassment, or irregularity has no place in the Bureau.”

To lead the reforms, Mendoza ordered the creation of a technical working group on LOA and MO integrity and audit reforms, which will identify vulnerabilities, revise protocols, and implement digital safeguards for a more transparent audit system.

“Our goal is to create processes that are predictable, evidence-based, technology-driven, and fair,” he said.

He added that these systems aim to protect taxpayers while allowing the agency to carry out its mandate efficiently.

The announcement follows allegations raised by Sen. Erwin Tulfo during Senate budget deliberations, where he claimed some BIR officials have exploited LOAs for personal gain, including targeting small and single-proprietor businesses.

“They are using that letter of authority to make money,” Tulfo said in Filipino.

He compared the issue to alleged anomalies in the Department of Public Works and Highways (DPWH), saying, “If the DPWH has flood control projects, the BIR has what they call the LOA.”

Tulfo said business owners complained that examiners dig through years of documents despite complete payments and records, forcing taxpayers to settle to avoid prolonged disputes.

He urged a “reshuffle” of nonperforming regional directors and called the BIR “the second most corrupt agency” after the DPWH.

“I believe the President probably put you there because he trusts you, and we also believe that you can do something about it,” Tulfo told Mendoza.

Mendoza reaffirmed President Ferdinand Marcos Jr.’s directive for the BIR to strengthen revenue collection and taxpayer service, particularly for workers and small businesses.

“The overarching directive of the President when I assumed office is to ensure efficient and fair revenue collections,” he said.