Can the BIR Audit a Company Twice for the Same Taxable Year? Section 235 and the 2026 Rules
Updated: 1 hour ago
Short answer: Generally, no. For income tax, the BIR may examine a taxpayer's books only once in a taxable year unless one of five exceptions applies, such as fraud or a reinvestigation the taxpayer requested (Section 235, NIRC). Since January 2026, BIR rules also generally allow only one electronic Letter of Authority (eLA) per taxpayer per taxable year, covering all taxes. But a second eLA for the same year is not always a second audit, because it may simply replace or consolidate an existing one.
What Section 235 says
Section 235 of the National Internal Revenue Code (NIRC) requires taxpayers to keep their books and accounting records and makes them subject to examination by BIR officers. For income tax purposes, that examination may be made "only once in a taxable year," except in five cases.
The Ease of Paying Taxes Act (Republic Act No. 11976) amended Section 235 in 2024, mainly to set a five-year period for keeping books, but kept the once-a-year rule and its exceptions.
The limit covers income tax only. On its own terms, it does not bar a separate examination for VAT or other taxes.
The five exceptions
The BIR may make another or separate examination of the same year's books when (Section 235, NIRC):
the Commissioner determines there was fraud, irregularity or mistakes;
the taxpayer requests a reinvestigation, usually in a protest asking the BIR to consider new or additional evidence (Section 228, NIRC);
it is verifying compliance with withholding tax rules;
it is verifying capital gains tax liabilities; or
the Commissioner is using the power under Section 5(B) to obtain information from third parties, for example when the BIR examines your records to check another taxpayer's tax.
The BIR should be able to say which exception applies. An income tax re-examination that fits none of them is open to challenge.
The 2026 single-instance rule
After suspending field audits in late 2025, the BIR resumed them under Revenue Memorandum Order (RMO) No. 1-2026, dated January 27, 2026. Its Single-Instance Audit Framework generally gives a taxpayer one eLA per taxable year covering all internal revenue taxes, including VAT. Overlapping eLAs for the same year are prohibited, and pending ones were consolidated.
The exceptions are narrow: one-time transactions, tax clearance requests, business closure or cancellation of registration, and fraud, where one eLA may cover several years. The order bars using these exceptions to fragment or get around the regular audit of a taxpayer's books.
RMO No. 22-2026, issued in August 2026, consolidates the audit rules and keeps the one-eLA rule. It limits each audit to the tax types and periods stated in the eLA, Tax Verification Notice (TVN) or Mission Order, and treats any audit without one of these as unauthorized.
This rule reaches all taxes, so it is broader than Section 235, but it rests on BIR orders, not on the statute.
When a second eLA is not a second audit
RMO No. 22-2026 still lets the BIR continue, reassign or consolidate an audit, including through a later eLA for the same year issued to continue the audit. Two kinds are common:
Replacement eLA. Issued when the original revenue officer or group supervisor cannot continue, when a report is returned for amendment, or for an approved reinvestigation. It cannot widen the original scope, period or tax types, and may be issued only while the period to assess is still open. The BIR should send a letter notice naming the original eLA.
Consolidated eLA. Merges two or more eLAs for the same taxpayer and year into one. The earlier eLAs are then treated as cancelled.
Revenue Memorandum Circular (RMC) No. 14-2026 adds that a replacement eLA issued because officers were reassigned is not a new audit authority and cannot add taxable periods. A letter questioning it does not suspend the audit.
Why the LOA itself matters
The Commissioner or a duly authorized representative authorizes examinations (Section 6(A), NIRC). Regional Directors issue LOAs within their regions (Section 10(c), NIRC), and revenue officers examine taxpayers under an LOA (Section 13, NIRC). The Supreme Court applies these rules strictly:
Without an LOA, the assessment is void, and a Letter Notice cannot take the LOA's place (Medicard Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 222743, April 5, 2017).
The BIR cannot assess a period the LOA does not cover. An LOA for "1997 and unverified prior years" did not support a VAT assessment based on early-1998 records (Commissioner of Internal Revenue v. Sony Philippines, Inc., G.R. No. 178697, November 17, 2010). BIR rules also say an LOA should cover no more than one taxable year (RMO No. 43-90).
Only the revenue officers named in the LOA may examine. A reassigned case needs a new LOA, or the assessment is void (Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp., G.R. No. 242670, May 10, 2021).
These cases are about the LOA, not Section 235, but they show that the Court holds the BIR to the authority written in its LOA. See also Received a BIR Letter of Authority? What to do next.
What to do if you receive a second eLA for the same year
Verify it. Use the LOA Verifier in the BIR's REVIE chatbot (RMC No. 5-2026).
Read it closely. An eLA must show your name and TIN, the taxable period, the tax types and the assigned officers (RMO No. 22-2026). Check who approved it and whether it replaces or consolidates an earlier eLA.
Compare it with the earlier audit. Gather the first eLA, notices, any termination letter and proof of payment. Was the first audit closed, assessed or still open?
Identify the basis. Is it a replacement, a consolidation or an exception? Also check whether the period to assess has run: generally three years from the deadline or actual filing, whichever is later, or ten years from discovery for a fraudulent return or non-filing, unless validly extended in writing (Sections 203 and 222, NIRC). See How far back can the BIR audit your business?
Object in writing. Ask the issuing office for the eLA's legal basis, explain why it appears to repeat an audit, and reserve your rights. The BIR will not entertain challenges to a replacement eLA if the original was valid and the taxpayer, periods and scope are unchanged (RMC No. 14-2026).
Cooperate within the scope. Do not ignore the eLA. Failing to submit records can lead to a subpoena duces tecum (an order to produce records), and defying it can lead to criminal charges (Section 266, NIRC; RMO No. 22-2026). You may decline requests outside the eLA's tax types and periods.
Preserve your remedies. Raise the objection in your replies to the Notice of Discrepancy and Preliminary Assessment Notice, and in your protest of the final assessment, due within 30 days of receipt (Section 228, NIRC; RR No. 12-99, as amended). If the protest is denied, or not acted on within 180 days after you submit documents, you may appeal to the Court of Tax Appeals within 30 days. In Fishwealth Canning Corp. v. Commissioner of Internal Revenue, G.R. No. 179343, January 21, 2010, the taxpayer objected that its 1999 records had already been examined, but the Court never reached that point because the appeal was late. A request to reconsider the denial did not stop the 30-day period.
Frequently asked questions
Can the BIR audit my company twice for the same taxable year?
Only in limited cases. Section 235 allows one income tax examination of your books per taxable year unless an exception applies, and BIR rules since 2026 generally allow one eLA per year for all taxes.
Does the once-a-year rule cover VAT?
Section 235 covers income tax only. The 2026 single-instance rule, however, brings VAT under the same eLA.
What is the reinvestigation exception?
A protest may ask for reconsideration or reinvestigation (Section 228, NIRC). A reinvestigation lets you present new or additional evidence, so the BIR may re-examine that year's records (Section 235, NIRC).
Is a Tax Verification Notice a second audit?
Not a full one. A TVN covers only the transaction or claim it names. To examine more, the BIR needs a separate eLA (RMC No. 14-2026).
Sources
National Internal Revenue Code of 1997, as amended, Sections 5(B), 6(A), 10(c), 13, 203, 222, 228, 235 and 266
Republic Act No. 11976 (Ease of Paying Taxes Act), Section 33
Revenue Memorandum Orders No. 1-2026 (January 27, 2026), as amended, No. 22-2026 (August 2026) and No. 43-90 (September 20, 1990)
Revenue Memorandum Circulars No. 5-2026 and No. 14-2026 (March 4, 2026)
Revenue Regulations No. 12-99, as amended
Medicard Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 222743, April 5, 2017
Commissioner of Internal Revenue v. Sony Philippines, Inc., G.R. No. 178697, November 17, 2010
Commissioner of Internal Revenue v. McDonald's Philippines Realty Corp., G.R. No. 242670, May 10, 2021
Fishwealth Canning Corp. v. Commissioner of Internal Revenue, G.R. No. 179343, January 21, 2010
Facing a BIR audit, assessment or tax dispute?
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This article is general information as of its publication date, not legal advice, and does not create a lawyer-client relationship. For advice on your situation, consult a lawyer.
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