BIR rolls out reforms to curb LOA-linked extortion

MANILA, Philippines — Following complaints from taxpayers, the Bureau of Internal Revenue (BIR) said it is now implementing reforms to combat extortion and abuse involving letters of authority (LOA).

Speaking at the Senate blue ribbon panel’s hearing on Thursday, BIR Commissioner Charlito Martin Mendoza enumerated the reforms they are implementing to curb alleged LOA money-making schemes perpetrated by some personnel.

According to Mendoza, after issuing a directive suspending the issuance of LOAs and mission orders, as well as the continuation of pending field audits, the BIR also ordered the creation of a technical working group composed of senior officials to review existing processes and protocols and develop a more streamlined, predictable, and transparent system for conducting field audits.

READ: 70% of LOA collections pocketed, only 30% remitted to gov’t — Ejercito

“We have also directed all concerned units of the BIR to submit an inventory of all pending letters of authority so we will know exactly where these LOAs are and what their respective statuses are,” Mendoza said.

“As I mentioned earlier, one reform we are looking at is the need for checks and balances in the issuance of LOAs. Right now, Regional Directors have absolute discretion to issue LOAs — absolute in the sense that it is no longer subject to the approval of the commissioner,” he added.

Moving forward, Mendoza said he intends to require that before Regional Directors can recommend the issuance of LOAs, these must first be cleared by the Office of the Commissioner or Deputy Commissioner.

“They should provide justification for why they want to audit a particular taxpayer, what the initial findings are, and what the legal and factual basis is for the issuance of an LOA,” Mendoza said.

“Secondly, we aim to limit, as much as possible, the number of LOAs received by taxpayers — not to stop audits altogether, but to integrate them with the regular units of the BIR,” he added.

Lastly, Mendoza said he has ordered the creation of an online portal — currently being developed — where the status of ongoing LOAs can be monitored.

Earlier, Senators Erwin Tulfo and JV Ejercito bared that BIR officials were allegedly involved in money-making schemes through letters of authority.

Ejercito specifically claimed these officials pocketed 70 percent of collections, with only 30 percent remitted to the government. /jpv