The 2026 Guide for Taxpayers With Pending LOAs

What the New BIR Audit Rules Mean for You

If you have a pending Letter of Authority (LOA) from the Bureau of Internal Revenue (BIR), 2026 is not a year to wait and see.

The BIR has officially lifted the suspension of tax audits and rolled out a reformed audit framework that will directly affect how your audit proceeds, how broad it becomes, and how much risk you may be exposed to.

This guide is written for taxpayers with pending LOAs—business owners, executives, professionals, and corporations—who want to understand what changed, what the BIR can now do, and what you should do next.

BIR Audits Are Back in 2026 — But Under New Rules

On January 27, 2026, the BIR formally resumed all tax audit and field operations that were suspended in late 2025. This includes:

• Continuation of previously suspended audits

• Issuance of new electronic Letters of Authority (eLAs)

• Resumption of audit, assessment, and enforcement activities

However, audits are no longer conducted under the old system.

All audits moving forward must now comply with new audit rules under RMO No. 1-2026, which significantly change how LOAs work, how audits are structured, and how taxpayers are protected.

If You Have a Pending LOA, Here’s What Changed

1. Only One LOA Per Taxpayer Per Year

Under the new Single-Instance Audit Framework, the BIR is now limited to issuing only one LOA per taxpayer per taxable year, covering all tax types, including VAT.

This means:

• Multiple LOAs for the same year are no longer the norm

• Fragmented or overlapping audits are discouraged

• The BIR must consolidate its audit authority

Why this matters:If you currently have multiple LOAs, expect them to be merged into one consolidated audit—which can be good or bad depending on how prepared you are.

This is where legal strategy matters, not just accounting.

2. Mandatory Consolidation of Pending LOAs

For taxpayers with several pending LOAs covering the same taxable year, the BIR will now consolidate those LOAs into a single replacement LOA.

This consolidated LOA becomes the sole authority for the audit.

What many taxpayers miss:A consolidated LOA often means:

• Broader audit scope

• Multiple tax issues reviewed at once

• Faster movement toward assessment

Handled correctly, consolidation can limit exposure.Handled poorly, it can multiply risk.

3. Audits Are Now Risk-Based and Data-Driven

The BIR’s 2026 audit program is no longer random.

Audits are selected using system-assisted, risk-based criteria, focusing on red flags such as:

• Revenue and VAT inconsistencies

• Significant underdeclarations

• One-time or unusual transactions

• Claims of incentives, exemptions, or refunds

• Intelligence or third-party data

What this means for you:

If you already have a pending LOA, expect the audit to focus on specific risk areas, not a casual review.

This is where a CPA-law firm adds value: identifying where the real exposure is before the BIR formalizes it in an assessment.

4. Stronger Audit Controls — and Stronger Taxpayer Rights

The new rules also impose tighter controls on Revenue Officers:

• Standardized audit checklists for document requests

• No unreasonable or unsupported assessments

• Clear distinction between a Notice of Discrepancy (not yet an assessment) and an actual assessment

• Mandatory documentation of audit meetings

• Audit scope strictly limited to what the LOA authorizes

Revenue Officers who violate these rules may now face administrative, civil, or criminal liability.

This is critical:

Many assessments are won or lost not on tax rates, but on procedure.

Why Pending LOAs Require Immediate Legal and Tax Review

Taxpayers often assume:

“Let’s wait and see what the BIR finds.”

In 2026, that approach is dangerous.

Once audits resume:

• Suspended cases move quickly

• Consolidated LOAs expand scope

• Risk-based findings are harder to unwind

• Assessments become more defensible for the BIR

A CPA-law firm brings a unique advantage:

• Accountants identify exposure and reconcile data

• Lawyers protect rights, control scope, and prepare defenses

This combination is crucial before assessments are issued, not after.

What You Should Do Now (2026 Action Plan)

If you have a pending LOA:

Review All Existing LOAs

Identify:

• How many LOAs you have

• Which taxable years and tax types they cover

• Whether consolidation will apply

Prepare an Audit-Ready File

Organize:

• Books of accounts

• VAT and withholding records

• Contracts and schedules

• Supporting invoices and receipts

Identify High-Risk Areas Early

This allows issues to be:

• Clarified

• Properly explained

• Strategically handled before escalation

Get Professional Audit Defense Early

The best outcomes happen before a PAN or FAN is issued.

Final Thought: 2026 Is Not the Year to Face a BIR Audit Alone

The lifting of the audit suspension signals a reset year for tax enforcement.

If you have a pending LOA, the question is no longer if your audit will move—but how prepared you are when it does.

A proactive review now can:

• Limit audit scope

• Reduce exposure

• Prevent unnecessary assessments

• Save time, money, and stress

Need Help With a Pending LOA?

Our CPA-law firm assists taxpayers with:

• LOA review and consolidation strategy

• Audit readiness and document preparation

• BIR audit defense and negotiations

• Assessment challenges and tax litigation

If you have a pending LOA, now is the time to act.

For a confidential 2026 LOA and BIR audit review, contact us today.