BIR resumes audits, unveils stricter reform guidelines

The Bureau of Internal Revenue (BIR) on Jan. 27 formally lifted its tax audit suspension and launched a new audit framework aimed at improving transparency and taxpayer confidence, following months of internal review and stakeholder consultations.

Revenue Memorandum Circular (RMC) 8-2026, issued on Saturday, officially resumes all BIR tax audit and field operations that were previously suspended under RMC No. 107-2025 in November 2025.

The reinstatement is accompanied by Revenue Memorandum Order (RMO) 1-2026, which outlines revised audit policies, stricter control measures, and updated procedures designed to strengthen audit accountability and reduce abuse.

The circular takes immediate effect and covers the issuance of electronic Letters of Authority (eLAs), Mission Orders (MOs), and Tax Verification Notices (TVNs), the continuation of pending audit cases, and the resumption of audit-related enforcement, assessment, and collection activities. All audits moving forward are now subject to the new procedures under RMO 1-2026.

In a joint press conference, Finance Secretary Frederick Go and BIR Commissioner Charlito Martin R. Mendoza said the updated program addresses key concerns raised by the private sector during the suspension period.

“The BIR has designed concrete reforms to make audits fairer, more predictable, and more accountable. These changes align with the administration’s big, bold reforms to improve the ease of doing business and strengthen trust in government,” said Secretary Go.

Commissioner Mendoza noted that the moratorium allowed the Bureau to re-evaluate its processes and consult stakeholders from both government and industry.

“That review has now been completed. We are lifting the suspension because key reforms are in place. I thank the Technical Working Group on Assessment Integrity and Audit Reform for reviewing audit rules, processes, systems, and controls, and crafting the reforms for audit resumption. I also thank the Department of Finance, Senate members, and our private sector partners for their guidance and constructive input,” Mendoza said.

On Jan. 21, the BIR presented the revised audit framework to representatives from the BIR Partnership with Multisectoral Group (BIR-PMSG), a coalition of private-sector stakeholders. The reforms received strong support during the public-private consultation.

Key audit reforms under RMO 1-2026

Among the major changes under RMO 1-2026 are:

1. Clear audit authority – BIR clarified the use of audit instruments to reduce confusion, specifying appropriate usage for eLAs, MOs, and TVNs.
2. One eLA per taxpayer per year – Under a Single Instance Audit Framework, only one eLA will be issued per taxpayer per taxable year, covering all internal revenue tax types, including value-added tax (VAT), except in cases of fraud. Taxpayers may also request the consolidation of multiple eLAs into a single LOA.
3. Risk-based audit selection – Audits will now be selected through a data-driven, system-assisted process using risk-based criteria and anonymized taxpayer lists.
4. Abolition of audit task forces – All special task forces previously created to conduct audits have been dissolved, with their responsibilities reverted to regular BIR offices.
5. Closure of VAT audit units – The BIR has shut down its VAT Audit Sections (VATAS) and Large Taxpayers VAT Audit Units (LT-VAU) to streamline audit oversight.
6. Fair and proper assessments – Revenue officers are instructed not to issue unreasonable assessments. All audit notices must be based on unresolved issues and clearly state factual and legal justifications, including relevant laws and jurisprudence.
7. Standardized audit procedures – All audit engagements must use standard checklists and documentation. Minutes of all audit events must be signed by both the taxpayer and the revenue officer.
8. Flexible audit venue options – When dealing with voluminous records, taxpayers may request to adjust the manner or venue of the audit to minimize disruption or logistical burdens.

Reforms part of broader BIR DARES agenda

Mendoza emphasized that the audit overhaul forms a central component of the BIR’s five-point reform plan under its D.A.R.E.S. initiative, which he described as both a reform and a legacy effort.

“We deliberately framed BIR DARES not only as reform work, but as legacy work—work that is meant to endure beyond immediate fixes and beyond any single term of leadership,” Mendoza said. “These are reforms we intend to institutionalize, embed in systems and processes, and carry forward so that they last. Audit reform, therefore, is one pillar of a broader, lasting transformation.”

BIR D.A.R.E.S. stands for Digital and Data Transformation, Audit Reform and Accountability, Revenue Collection and Base Protection, Employee Empowerment and Welfare Promotion, and Service Excellence and Stakeholder Engagement.

The launch of the reformed audit program comes as the agency continues broader modernization efforts to improve taxpayer services, reduce red tape, and boost revenue collection for the national government.