MANILA, Philippines – Bureau of Internal Revenue (BIR) Commissioner Charlito Mendoza said all letters of authority (LOAs) will now require his approval before they are issued as part of ongoing audit reforms to prevent its misuse.

Mendoza disclosed this to the Senate blue ribbon committee hearing on Thursday, December 11.

Prior to the announcement, LOAs – which usually signal the start of a tax audit – were issued at the regional level.

“Right now po, when it comes to the issuance of letters of authority by the regional directors, meron po silang absolute authority to issue letters of authority. And hindi na po ito umaakyat sa Commissioner for approval or prior clearance,” he said.

(Right now, the regional directors have absolute authority to issue letters of authority, and this is not escalated to the Commissioner for approval or prior clearance.)

Mendoza also said that the BIR plans to limit the number of LOAs that taxpayers can receive to prevent its misuse.

“These improvements, many of which can be enabled with the help of an integrated digital system, will reinforce the checks and balances between enforcement and oversight,” he said.

The BIR originally suspended field audit operations following several reports that LOAs were used to extort bribes from businessmen and other taxpayers. Senators JV Ejercito and Erwin Tulfo claimed that BIR personnel kept as much as 70% from these collections.

Despite its current misuse, former BIR commissioner Kim Henares said that LOAs remain an essential tool for effective collection, citing a study that found the BIR failed to collect P1 trillion in taxes due to tax evasion and related concerns.

She said her office strictly monitored the issuance of LOAs during her term, and limiting its issuance was part of her audit plan. – Rappler.com