BIR Lifts Audit Suspension, Launches Reformed Audit Program: What Taxpayers Need to Know Now

Yasser Aureada
17 minutes ago
4 min read

January 27, 2026 marks a major turning point for Philippine taxpayers.

The Bureau of Internal Revenue (BIR) has officially lifted the suspension on tax audits and field operations through Revenue Memorandum Circular (RMC) No. 8-2026, ending the pause imposed under RMC No. 107-2025 last November.

Effective immediately, all audit and enforcement activities are set to resume—but under a reformed, tighter, and more accountable audit framework.

This development is highly significant for all taxpayers, particularly those with pending or previously suspended Letters of Authority (LOAs).

Audit Operations Officially Resume

Under RMC No. 8-2026, the BIR has ordered the resumption of the following:

Issuance of Electronic Letters of Authority (eLAs), Mission Orders (MOs), and Tax Verification Notices (TVNs)
Continuation and completion of audit cases previously suspended
Enforcement, verification, assessment, and collection activities requiring field audits
Other audit and enforcement actions necessary to protect government revenue

All audits conducted after the lifting of the suspension must strictly comply with the new rules under Revenue Memorandum Order (RMO) No. 1-2026, which prescribes revised audit policies, controls, and procedures.

Why the Suspension Was Lifted

During a joint press conference of the Department of Finance (DOF) and the BIR, Finance Secretary Frederick Go explained that the suspension period was used to conduct a comprehensive review of audit practices and to consult with the private sector.

According to the DOF and BIR leadership, the new audit framework aims to make tax audits:

Fairer
More predictable
More transparent and accountable

BIR Commissioner Charlito Martin R. Mendoza emphasized that the suspension allowed the Bureau to reassess audit rules, processes, systems, and controls—leading to the rollout of concrete reforms now institutionalized under RMO No. 1-2026.

Key Audit Reforms Taxpayers Must Understand

The newly issued RMO No. 1-2026 introduces substantial safeguards and procedural reforms that directly affect how audits will be conducted moving forward.

1. Clear Audit Authority

Audit instruments are now clearly distinguished to avoid confusion:

eLA – for full audits
MO – for limited verification
TVN – for claims and refund verification

This ensures taxpayers clearly understand the scope and purpose of any audit notice received.

2. One LOA Per Taxpayer Per Year

As a general rule, the BIR shall issue only one eLA per taxpayer per taxable year, covering all internal revenue tax types, including VAT—except in fraud cases.

Taxpayers with multiple previously issued LOAs may now request consolidation into a single LOA, providing significant relief from overlapping audits.

3. Risk-Based, Data-Driven Audit Selection

Audit selection will now rely on system-assisted, risk-based criteria, generating anonymized lists of taxpayers for audit and reducing arbitrary or discretionary selections.

Annex A of RMO No. 1-2026 outlines audit selection criteria, including mandatory and priority cases such as:

Significant discrepancies in sales or income
VAT reporting inconsistencies
Refund claims
Drastic changes in tax behavior

4. Abolition of Audit Task Forces

Previously created audit task forces have been abolished. All audit and assessment functions are now returned to regular BIR offices to streamline accountability and authority.

5. Closure of VAT Audit Units

The VAT Audit Sections (VATAS) and Large Taxpayers VAT Audit Units (LT-VAU) have been shut down to rationalize audit authority and eliminate overlapping functions.

6. Stronger Protection Against Unreasonable Assessments

Revenue Officers are expressly prohibited from issuing unreasonable or unfounded assessments. All audit findings must:

Be limited to unresolved issues
Clearly state factual and legal bases
Cite applicable laws and jurisprudence

This reform directly addresses long-standing taxpayer concerns.

7. Mandatory Documentation and Audit Checklists

Auditors must now use standardized audit checklists, and all audit meetings or interactions must be properly documented.

Minutes of audit events must be signed by both the taxpayer and the Revenue Officer, reinforcing transparency and accountability.

8. Flexible Handling of Records

While audits may still be conducted at the taxpayer’s place of business or at the BIR office, taxpayers are now given reasonable options when records are voluminous or difficult to transport—helping minimize operational disruption.

Part of the BIR D.A.R.E.S. Reform Agenda

These audit reforms form part of the BIR’s D.A.R.E.S. Agenda, a five-point reform and legacy program focused on:

Digital and Data Transformation
Audit Reform and Accountability
Revenue Collection and Base Protection
Employee Empowerment and Welfare
Service Excellence and Stakeholder Engagement

Commissioner Mendoza stressed that audit reform is not a short-term fix but a long-term institutional transformation designed to rebuild trust between the BIR and taxpayers.

What This Means for Taxpayers with Pending LOAs

If you are a taxpayer with:

A previously suspended audit
A pending or newly issued LOA
Ongoing verification or assessment proceedings

You should immediately reassess your audit strategy in light of RMO No. 1-2026. The new rules provide stronger procedural protections, clearer audit scope, and improved avenues to challenge improper assessments.

Final Takeaway

The lifting of the audit suspension does not signal a return to “business as usual.” Instead, it marks the beginning of a reformed audit regime that emphasizes fairness, predictability, and accountability.

Taxpayers are strongly encouraged to stay informed, review their audit exposure, and assert their rights under the new rules.

Official References

Revenue Memorandum Circular No. 8-2026 – Resumption of Tax Audit and Field Operations
Revenue Memorandum Order No. 1-2026 – Revised Audit Policies and Procedures
RMO No. 1-2026, Annex A – Audit Selection Criteria
RMO No. 1-2026, Annex B – Audit Controls and Guidelines