Ending the Hunt

For years, the Letter of Authority (LOA) has functioned less as a tool for revenue collection and more as a license to hunt.

The recent decision by Finance Secretary Frederick D. Go and BIR Commissioner Charlito Martin R. Mendoza to suspend all field audits and LOAs under Revenue Memorandum Circular No. 107-2025 is a welcome, albeit overdue, tourniquet on a bleeding wound.

However, a pause is not a cure.

Unless this suspension leads to a fundamental dismantling of the predatory culture within the Bureau of Internal Revenue (BIR), the extortion will simply resume once the spotlight fades.

The context of this suspension is damning. Senator Erwin Tulfo’s recent dressing down of the agency during Senate budget deliberations exposed what many business owners have whispered for decades.

Tulfo branded the BIR the “second most corrupt agency,” drawing a chilling parallel to the flood control scams of the DPWH. His assessment reveals a systemic rot in Philippine governance: regulatory tools designed for the public good – whether building infrastructure or collecting taxes – are frequently repurposed as private revenue streams for entrenched bureaucrats.

When an LOA becomes a weapon to “make money” rather than a mechanism to ensure compliance, the government ceases to be a regulator and becomes a racketeer.

The immediate impact of this suspension cannot be overstated for the Micro, Small, and Medium Enterprises (MSMEs) that form the backbone of the Philippine economy. For a small business owner, the arrival of an examiner is often a psychological and financial terror event. As noted in the reports, examiners frequently dig through years of records – even when payments are complete – forcing taxpayers to “settle” just to make the harassment stop.

This predatory behavior stifles economic recovery. A bakery or a tech startup operating on thin margins cannot afford the time or the “facilitation fees” often demanded to make an audit go away. By halting these operations, the government has granted the private sector a moment to breathe. It signals that the state acknowledges the difference between tax collection and extortion.

However, relief is temporary; accountability must be permanent. Commissioner Mendoza is new to his post, and this suspension offers him a clean slate. But as Senator Tulfo suggested, a “reshuffle” of non-performing regional directors is necessary. If the suspension is lifted without removing the personnel who weaponized the LOAs, the integrity of the bureau remains compromised. The “bad apples” argument is often used to deflect from systemic failure, but in this case, specific individuals have allegedly enriched themselves at the public’s expense. The promised internal consultations must yield more than just new protocols; they must yield administrative cases against those who abused their power.

Ultimately, the solution lies in removing the human element that makes corruption possible. Commissioner Mendoza’s proposal for a “Technical Working Group” to implement digital safeguards is the correct path forward. We must move toward the “Faceless Audit.”

In a modern economy, tax assessment should be a matter of math, not negotiation. It should be evidence-based and data-driven, utilizing benchmarking and third-party data matching. If a computer algorithm flags a discrepancy, it is an objective finding; if a field officer with broad discretionary power flags it, it is an opening for a bribe. Minimizing face-to-face contact between the examiner and the taxpayer is the only realistic way to “protect taxpayer rights” as Secretary Go promised.

The BIR has a mandate to collect taxes to fund the nation, a task that requires the cooperation of the public. But cooperation requires trust.

By suspending the LOAs, the government has stopped the hunt. Now, they must disarm the hunters.