Clarification on suspension of audit activities

THE Bureau of Internal Revenue (BIR), through its Revenue Memorandum Circular (RMC) No. 85-2016, clarifies issues surrounding RMC No. 70-2016 and RMC No. 75-2016, which ordered the suspension of all BIR field audit and other related operations until further notice.

The processing of request/application for tax refund/tax credit certificates (TCC) is not covered by the suspension. However, the Letter of Authority (LOA) to be issued shall cover only the specific tax type which is requested for refund/TCC.

Issued Letter Notices (LNs) covering taxable year 2013 are covered by the suspension. However, LNs covering taxable year 2013 with corresponding “open” LOAs issued prior to July 1, 2016 are not covered by the suspension of investigation. If there is an on-going tax audit or investigation under an electronic Letter of Authority (eLA) before the LN assignment, the LN shall not be considered closed but shall be consolidated with the eLA.

Note that an LN merely shows a discrepancy in sales/ purchases but it may ripen to an LOA if not resolved in its initial phase. LOA, on the other hand, notifies the taxpayer that an officer of the BIR has been authorized to examine, validate and scrutinize a taxpayer’s books and records in relation to his internal revenue tax liabilities for a particular period. Once issued an LN or LOA, the taxpayer is prohibited to amend its tax returns covering the period for which the LN or LOA was issued.