DoF orders suspension of BIR field audits

By Tracy Cabrera 

MALATE, Manila — Amidst reports of a ‘money-making scheme’ involving the issuance of audit documents, the Department of Finance (DoF) has ordered the suspension of all Bureau of Internal Revenue (BIR) field audits as a necessary step toward a systemic overhaul of the agency’s audit operations.

In an official announcement, finance secretary Frederick Go disclosed that the halt on field audits covers the issuance and implementation of letters of authority (LOAs) and mission orders (MOs), which grant revenue officers the power to examine taxpayers’ books and conduct field inspections.

For his part, BIR commissioner Charlito Martin Mendoza cited that  “the suspension was issued after extensive internal consultations . . . to ensure full alignment with national priorities on good governance, taxpayer protection, and efficient revenue administration.” 

A resolution was filed recently before the Senate calling for an inquiry into alleged extortion and unauthorized collections involving some BIR personnel. Some are said to be “benefiting financially” from arranging tax audits or exploiting LOAs and MOs and the claim has revived long-standing concerns about corruption and arbitrary enforcement within the agency.

In reaction, Senator Erwin Tulfo urged the Senate Blue Ribbon Committee to investigate alleged extortion by BIR personnel, who were said to be pressuring small businesses into paying discounted amounts to avoid inflated assessments.

Tulfo claimed that BIR personnel were using using fake LOAs and misusing MOs.

Go, during the inquiry replied: “We hear your concerns and are immediately acting on them.

“All taxpayers shall be treated with the highest degree of professionalism, courtesy, and adherence to the rule of law.”

In agreement, Mendoza clarified that no LOA or MO should be “created, printed, signed or served” during the suspension. All ongoing field audits were also suspended, except for cases legally required to continue.

Go explained that the freeze on BIR’s audit operations applies across the entire organization, including the Large Taxpayers Service, regional and district offices, assessment units, value-added tax audit units and intelligence and special audit teams.

“Only a narrow set of cases can proceed, such as active criminal investigations, one-time transactions, audits set to prescribe within six months, refund claims requiring audit and action on taxpayers flagged by verified intelligence,” the finance chief pointed out. 

“Any misuse of authority, harassment or irregularity has no place in the Bureau,” Mendoza added while saying that he had already ordered the creation of a technical working group that will look into LOA and MO integrity and audit reforms.

“Our goal is to create processes that are predictable, evidence-based, technology-driven, and fair. These systems are meant to protect taxpayers while helping the bureau perform its mandate efficiently,” he asserted.