BIR Notice of Discrepancy (NOD): What It Means and What to Do Next
Updated: 3 days ago
Short answer: A BIR Notice of Discrepancy (NOD) tells you that the revenue officers auditing you found possible deficiency taxes. It is not an assessment and not a bill. It opens a "discussion of discrepancy." The notice usually asks you to explain your side within five days, the discussion must end within 30 days from your receipt of the NOD, and you may submit documents until then. You may pay any finding you accept. Findings that stay unresolved move on to a Preliminary Assessment Notice (PAN).
What is a BIR Notice of Discrepancy?
The BIR sends an NOD when, during an audit, the revenue officer finds that you may owe deficiency taxes, meaning tax you underpaid. The BIR office handling your audit issues it, based on the officer's initial report of findings (RR No. 12-99, as amended by RR No. 22-2020). That regulation, issued in September 2020, replaced the old Notice of Informal Conference with the NOD.
An NOD is not:
An assessment or a bill. The proposed assessment comes later, in the PAN. The assessment itself is the Formal Letter of Demand and Final Assessment Notice (FLD/FAN), and the 30-day period to protest runs only from it (Section 228, NIRC).
An audit authority. It reports the results of an examination. Audits and verifications may be done only under a valid electronic Letter of Authority (eLA), Tax Verification Notice (TVN) or Mission Order (Sections 6(A) and 13, NIRC; RMO No. 22-2026).
Where does the NOD fit in a BIR audit?
The BIR serves an eLA, and you submit your records.
The revenue officers examine the records and report their initial findings.
You receive the NOD and take part in the discussion of discrepancy.
Findings that remain go into a PAN (15 days from receipt to reply), then the FLD/FAN (30 days from receipt to protest).
For the full sequence, see our BIR tax audit process guide.
How does the discussion of discrepancy work?
Note the date you received the NOD. The periods below run from it.
Five days to present your side. The standard NOD form asks you to present and explain your side within five days from receipt (NOD form under RR No. 22-2020). Check your notice for its own dates.
A 30-day limit. The discussion may not go beyond 30 days from your receipt of the NOD (RR No. 22-2020).
Documents. Bring your documents to the discussion. If you need more time, you may submit them afterward, but still within the 30 days (RR No. 22-2020).
Attendance. If you cannot attend on the scheduled date, tell the BIR in advance. Failing to appear without prior notice is treated as a waiver of the discussion (NOD form under RR No. 22-2020).
Minutes. The discussion is recorded in minutes signed by you or your authorized representative and by the assigned revenue officer and group supervisor. Any refusal to sign is noted in the minutes (RMO No. 22-2026).
Read the minutes before you sign. Check that they list each finding you dispute, your explanation and the documents you gave.
Under the BIR's 2026 audit rules, later assessment notices should cover only the issues still unresolved after the discussion (RMO No. 1-2026). Every finding you clear now is one less issue in the PAN.
What should you submit?
Each NOD lists different findings, so a copied sample rarely fits. A good written reply usually has:
The NOD's number and date, the eLA number, the taxable period, and your date of receipt.
A separate answer to each finding: accepted, or disputed with reasons.
Reconciliations, meaning schedules that show how the BIR's figures, your returns and your books connect.
Supporting documents, such as invoices, contracts, ledgers and certificates of tax withheld.
The law or BIR rule you rely on, if the issue is legal and not just factual.
A list of attachments, and proof that the BIR received them.
If someone attends for you, give that person written authority.
Can you pay the findings you accept?
Yes. Under the rules, findings that remain after the discussion and are not paid go on to a PAN (RR No. 22-2020). You may pay the items you accept and dispute the rest.
Paying early does not erase interest. Deficiency interest runs from the date the tax was due until you pay or the BIR issues its demand, whichever comes first (Section 249(B), NIRC; RR No. 21-2018). Paying a finding you accept stops that interest from growing.
Get the computation in writing, and give the revenue officer a copy of your proof of payment. If you pay all the findings, or there are none, the BIR closes the case with a Termination Letter (RMO No. 22-2026).
What happens after the NOD?
If findings remain after the discussion, the investigating office must send (endorse) your case for a PAN within 10 days from the end of the discussion (RR No. 22-2020).
The PAN states the proposed deficiency and the facts and law behind it. If you do not reply within 15 days from receipt, you are in default and the FLD/FAN follows (Section 228, NIRC; RR No. 12-99, as amended). See Preliminary Assessment Notice: What should a taxpayer do? and How to protest a BIR Final Assessment Notice.
How is an NOD different from a Letter Notice, a TVN or a PAN?
Letter Notice: tells you that the BIR's data matching found a mismatch between your returns and third-party information. It does not authorize an audit. The Supreme Court voided an assessment made with a Letter Notice but no LOA, holding that a Letter Notice is not an LOA (Medicard Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 222743, April 5, 2017).
TVN: lets officers verify only the transaction or claim it names. If they find wider issues, they need a separate eLA before going further (RMC No. 14-2026).
NOD: reports the officers' initial findings after an examination and invites you to discuss them.
PAN: the proposed assessment, stating its facts and legal basis. You reply within 15 days.
If you receive an NOD but were never served an eLA or TVN, ask in writing under what authority your records were examined. Raise the issue again in your PAN reply and FAN protest. See BIR Letter of Authority (LOA) explained.
Frequently asked questions
Is a Notice of Discrepancy an assessment?
No. It lists possible deficiencies so you can explain them. The 30-day protest period runs only from the FLD/FAN (Section 228, NIRC).
How many days do I have to respond to an NOD?
The notice usually asks you to present your side within five days from receipt. The discussion must end, and your documents must be in, within 30 days from receipt (RR No. 22-2020).
What happens if I ignore an NOD?
You lose the chance to clear findings before the PAN. Missing the discussion without prior notice counts as a waiver, the case moves to a PAN, and interest keeps running.
Why did I receive an NOD?
The officers examining your records found items they believe you underdeclared or wrongly claimed. On how the BIR picks whom to audit, see What triggers a BIR audit?
Sources
National Internal Revenue Code of 1997, as amended, Sections 6(A), 13, 228 and 249(B)
Revenue Regulations No. 12-99, as amended by RR No. 18-2013, RR No. 7-2018 and RR No. 22-2020 (September 15, 2020)
Revenue Regulations No. 21-2018 (September 14, 2018)
Revenue Memorandum Orders No. 1-2026 (January 27, 2026) and No. 22-2026 (August 2026)
Revenue Memorandum Circular No. 14-2026 (March 4, 2026)
Medicard Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 222743, April 5, 2017
Facing a BIR audit, assessment or tax dispute?
Aureada CPA Law Firm's CPA-lawyers handle BIR audits, assessment protests, refund claims and Court of Tax Appeals cases from our Makati and Lucena offices. See our tax services.
You can also email info@aureadalaw.com or call (02) 8812-9990.
Related guides
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.
Comments