BIR Letter of Authority Explained – Updated 2025 Philippine Guide for Taxpayers

Receiving a Letter of Authority (LOA) from the Bureau of Internal Revenue (BIR) is often the first step in a tax assessment case. Many Filipino business owners and professionals are unaware of what an LOA truly signifies, what it must contain, and how it impacts their rights. This article—our first in a series on the BIR tax assessment process—explains the LOA stage, citing the latest statutory requirements, rules, and jurisprudence up to 2025.

What is a Letter of Authority?

An LOA is a written directive authorizing specific revenue officers to examine a taxpayer’s books and records for a defined taxable period. Without an LOA, any examination or assessment is null and void for violating due process. The LOA must be addressed to the officer who will conduct the audit, specify the taxes and period covered, and contain the signature of the appropriate approving authority.

Why an LOA is Mandatory

The National Internal Revenue Code (NIRC) empowers the BIR to assess and collect taxes, but it balances this authority by requiring an LOA before any books may be examined. The Supreme Court has consistently held that the BIR cannot extend its audit beyond the period covered by the LOA and that an assessment without an LOA is void. This safeguard prevents harassment and ensures audits are authorized by senior BIR officials.

Requirements for a Valid LOA

The BIR’s RMO 44-2010 and RMC 82-2022 set out the requisites of a valid LOA:

1. Proper approving official – LOAs must be signed by the Regional Director, Assistant Commissioner for Large Taxpayers Service, Deputy Commissioner for Legal and Inspection Group, or the Commissioner/authorized official for task forces.

2. Covers only one taxable year – Each LOA should cover a single taxable period, except in fraud or excise tax cases.

3. No manual alterations – The LOA must not contain handwritten changes, erasures, or insertions; any reassignment of officers requires a new or amended LOA.

4. Indicates the taxes covered – It should specify whether income tax, VAT, withholding, or other taxes are being audited.

5. Names of authorized revenue officers – Only the officers listed may conduct the audit. If a Group Supervisor or Revenue Officer is replaced, a new or amended LOA must be issued.

   
   
   
   

Cases Not Requiring an LOA

Two situations are exempt from the LOA requirement:

• Civil or criminal tax fraud cases investigated by the BIR’s Enforcement Services.

• Policy cases audited by Special Teams in the National Office.

Service and Validity of an LOA

The 30-Day Rule and Its Amendment

Previously, an LOA had to be served within 30 days from issuance; otherwise, it became null and void. This rule has been eased by RMC 82-2022, which allows service beyond 30 days as long as the audit is completed within 180 days (RDO cases) or 240 days (Large Taxpayer cases).

Service and Commencement of Audit

Once served, the LOA gives the assigned revenue officer 10 days to begin the examination. Upon receipt, the taxpayer is precluded from amending its tax return for that period.

120-Day Report and Revalidation

The examining officer has 120 days from receipt of the LOA to complete the audit and submit a report. If not finished, the LOA must be revalidated—either by issuing a new LOA or stamping “Revalidated on (date)” on the original.

180/240-Day Completion Period

For electronic LOAs (eLAs), audits must be completed within 180 days for RDO cases or 240 days for Large Taxpayer cases.

LOA vs. Letter Notice (LN)

Feature	Letter Notice	Letter of Authority
Purpose	Notifies taxpayer of discrepancies based on RELIEF data	Authorizes revenue officers to examine books
Validity period	No stated expiry	Valid only for the prescribed audit period
Audit power	No audit power	Grants power to examine books; must start within 10 days

An LN cannot substitute for an LOA. If no response is received to an LN within 60 days, it may be converted into an LOA.

Jurisprudence Highlights

• CIR v. Sony Philippines, Inc. (2010) – LOA cannot include “unverified prior years.”

• Medicare Philippines, Inc. v. CIR (2017) – Assessments without an LOA violate due process.

• CIR v. McDonald’s Realty Corp. (2021) – New/amended LOA required if officers are replaced.

• CIR v. Ithiel Corp. (2017) – Handwritten alterations invalidate LOA.

• CIR v. De La Salle University, Inc. (2016) – LOA must specify the taxable period.

Taxpayer Rights and Remedies

• Examine the LOA – Check accuracy of officers, taxable year, taxes covered, and signatures.

• Monitor deadlines – Track service date and audit timelines.

• Demand proper authority – Require a new LOA if officers are replaced.

• Document communications – Keep copies of all notices and correspondence.

• Avail of legal remedies – Raise defects during PAN/FAN protest and, if needed, in court.

Conclusion

The Letter of Authority stage is the foundation of any BIR tax audit. A valid LOA ensures that the audit is limited to a specific period, handled by authorized officers, and completed within defined timelines. Taxpayers should carefully review the LOA they receive, understand their rights under the law, and monitor compliance with procedural requirements.