Taxpayers may refuse audit requests under new BIR rules

MANILA,  Philippines— Taxpayers may refuse tax audit requests that are not within the scope and limits of audit instruments such as letters of authority (LOAs) and mission orders, according to the Bureau of Internal  Revenue (BIR).

This is in line with Revenue Memorandum Order (RMO) No. 1-2026, which was explained in details by BIR Commissioner Charlie Mendoza during Tuesday’s hearing of  the Senate blue ribbon committee.

According to Mendoza, the new rules clarify the proper use of  the LOA, MO, and the Tax Verification Notice.

“By prescribing mandatory labels for these instruments, the Bureau provides taxpayers with explicit notice of the scope and limits of the authority being exercised,” he said.

“If a revenue officer requests something that is not within the scope stated in the audit instrument, the taxpayer has the right to refuse,” Mendoza pointed out in Filipino.

“In this way, we protect due process and ensure that the extent of audit authority is disclosed upfront,” Mendoza added.

Among the major reforms he presented during the hearing was the adoption of the Single-Instance Audit Framework, which he said would limit examinations to one LOA per taxpayer per year.

“Under this, there will no longer be simultaneous audits. Compliance becomes simpler and more organized because there is only one audit for a given year and a single submission of requirements,” said Mendoza.

The BIR also adopted risk-based and system-assisted audit selection,  where only taxpayers identified through anonymized, system-generated risk criteria may be subjected to regular audit, he explained.

Under this framework, the so-called “suki system,” or a perception of repeatedly selecting the same taxpayer, will now be eliminated,  the BIR chief said.

“Audit assignments are now anonymized. The identity of the taxpayer is concealed until the assignment process is completed,” he said.

“It is like the raffle of cases in court: the identities of the parties involved are not known until the assignment process is completed,” he said.

This, he said, would not only reduce opportunities for harassment or undue influence,  but it would also strengthen “due process and public trust in a system that is data-driven and risk-based.”

All audit-related task forces have also been dissolved,  according to Mendoza, although their  assessment functions are now returned to regular BIR offices “where clear lines of supervision and accountability exist.”

In November,  the BIR suspended all field audits and related operations following numerous complaints regarding its audit instruments such as LOAs and MOs.

But even with their new rules, Mendoza admitted that they a still face “bigger challenge,” which is the actual implementation of the new tax audit measures.

“We have to make sure that all our revenue  regions, our  unit in the national office should be able to implement this consistency and according to the letter of the rules at wala pong unnecessary exercise of discretion. So ang tutukan po namin dito sa mga daratign na araw ay ang actual implementation (So what we will focus on in the coming days is the actual implementation),” Mendoza said. /gsg