How to Respond to a BIR Letter of Authority (LOA): A Step-by-Step Guide

If you have received a Letter of Authority (LOA) from the Bureau of Internal Revenue, it means your business or records have been selected for a tax audit. How you respond in the first days matters: a careful, well-documented response protects your rights, while a misstep can turn a routine audit into a costly assessment. Here is a step-by-step guide.

What Is a Letter of Authority?

A Letter of Authority is the official document that empowers specific BIR revenue officers to examine your books of accounts and accounting records for a particular taxable year. Without a valid LOA, a revenue officer has no authority to audit you. The LOA names the officers, the tax types, and the period covered.

Step 1: Verify That the LOA Is Valid

Before producing a single document, confirm the LOA is genuine and properly issued. Check that:

• It is signed by the authorized BIR official (generally the Regional Director or, in certain cases, the Commissioner or a Deputy Commissioner).

• It names the specific revenue officer(s) assigned. Only the officers named may examine you.

• It covers a single taxable year and clearly states the tax types involved.

• It is served within the period allowed and has not gone stale under BIR rules.

  
  

Step 2: Calendar Every Deadline Immediately

The audit moves on strict timelines. From the moment you are served, note the deadline to submit the documents requested and diarize follow-up dates. Missing a deadline can lead to a default assessment based on the BIR's own figures, which is far harder to dispute later.

Step 3: Organize and Submit Records Carefully

Respond to document requests completely but precisely. Submit what is asked for, properly labeled, with a transmittal letter and an acknowledgment copy. Keep a complete duplicate set of everything you hand over. Avoid volunteering records outside the scope of the LOA, and never submit originals without retaining certified copies.

Step 4: Understand the Assessment Stages

A BIR audit typically progresses through defined stages. Knowing where you are tells you what rights and deadlines apply:

• Letter of Authority (LOA) - the audit begins.

• Notice of Discrepancy and discussion - you address the examiner's initial findings.

• Preliminary Assessment Notice (PAN) - you generally have 15 days to reply.

• Formal Letter of Demand / Final Assessment Notice (FAN/FLD) - you generally have 30 days to file a protest.

• Final Decision on Disputed Assessment (FDDA) - the BIR's decision, which may be elevated to the Court of Tax Appeals.

  
  

Step 5: Get Professional Representation Early

The biggest mistakes happen early, before taxpayers seek help. Engaging a tax lawyer at the LOA stage, rather than after a FAN, preserves every procedural defense and often narrows the assessment before it hardens. A CPA-lawyer can speak to both the numbers and the law, which is decisive in audit defense.

Common Mistakes to Avoid

• Ignoring the LOA or assuming it will go away.

• Letting deadlines lapse, which can waive valuable defenses.

• Submitting records informally without acknowledgment copies.

• Negotiating findings without understanding the legal basis.

• Waiting until the Final Assessment Notice to consult counsel.

How Aureada CPA Law Firm Can Help

Our firm defends taxpayers through every stage of a BIR audit - from responding to the LOA, to protesting assessments, to litigation before the Court of Tax Appeals. Because we are both lawyers and CPAs, we engage the examiners on the figures and the law at once. If you have received an LOA, contact us for a confidential assessment review before your deadlines run.

This article is general information, not legal advice. Tax rules and BIR issuances change; consult counsel about your specific situation.