On Jan. 27, the Bureau of Internal Revenue (BIR) offpublicly announced the termination of its audit suspension, marking the resumption of full audit and enforcement activities through the issuance of Revenue Memorandum Order No. 001-2026.
As Valentine’s Day approaches, many people look forward to receiving love letters with chocolates and roses. In the tax world, taxpayers should prepare their hearts, as the BIR may soon start sending its kind of “love letters” in the form of electronic Letters of Authority (eLAs), audit notices, advisories, and audit-related communications.
ONE TIME FRAMES
A key change accompanying the resumption of BIR audits is the one-state audit framework. Under this policy, a taxpayer is subject to only one eLA per taxable year, covering all applicable internal revenue taxes, including Value-Added Tax (VAT).
However, a separate audit or certification authority may be issued for cases that are transactional, event-based, or terminal in nature.
REQUEST FOR EXCLUSION OF VAT CASES
Apart from the one-time audit framework, a taxpayer with multiple pending eLAs during the same taxable year may submit a written request for exemption to the RDO/OAS/LT Audit Divisions handling the eLA covering all types of internal revenue tax, excluding VAT. The application must indicate: (a) the name of the investigating office (eg VATAS/LTVAU); (b) ELA product number/study case number; (c) the date of issue; and (d) the type of tax and the taxable period covered by the ELA.
If no application is submitted, different eLAs covering the same tax year will be automatically merged.
PROGRAM-ASSISTED RESEARCH SELECTION
Another important change is the introduction of the taxpayer selection system. As a general rule, all taxpayers are generally considered to be audited and audited. However, the selection of taxpayers who will actually be assessed will be made using a prescribed method, subject to the approval of the Commissioner of Internal Revenue. This new system is expected to ensure fairness and integrity in the selection of taxpayers to be audited.
POWERFUL USE OF MEASUREMENT CHECKLIST
The RMO also required BIR examiners to use a standard document checklist. The checklist will be used consistently and across all offices and audit cases. Additional documentation may only be requested if it is specifically appropriate, reasonably necessary, within the authorized scope of the audit, and clearly defined and documented.
EXAMINATION OF SENIOR RECORDS
An ongoing problem for taxpayers is the filing of large records, which can be expensive and burdensome. In this regard, the RMO emphasized that taxpayers should be given appropriate options in the manner and place of the examination (either at the BIR office or at the taxpayer’s registered place of business). If the taxpayer chooses to have the audit conducted at its registered place of business, the taxpayer must provide a suitable place within the premises for the systematic examination of the records.
KEY DATES IN RMO 001-2026
While many people are busy setting dates for Valentine’s Day, taxpayers should also mark their calendars with these important compliance dates under RMO 001-2026:
• February 16 – deadline for opting out of multiple pending eLAs.
• March 4 – automatic consolidation of all pending eLAs of the same taxpayer for the year, except for those with approved requests for exemption from VAT audit cases.
• April 30 – last date for eLAs with an approved request for non-combination of VAT audit cases to proceed independently
• May 4 – automatic consolidation of all pending eLAs with approved request for non-confirmation of VAT assessment cases
• May 15 – closure of VATAS and LTVAU operations
TAKE AWAY
With the resumption of full audit operations and the implementation of the Single Audit Framework, the BIR will no longer issue multiple or overlapping eLAs covering the same taxpayer and taxable year. In addition, taxpayers with pending eLAs should carefully assess whether consolidation is beneficial to them and act quickly if they wish to request non-consolidation, especially given the tight deadline.
Although the resumption of BIR audits may sound like a less romantic way to celebrate Valentine’s Day, it also encourages us taxpayers to strengthen our tax compliance procedures as the BIR aims to ensure transparency, prevent abuse/abuse of audit authorities, uphold due process, and promote fairness, responsibility and accountability in the conduct of tax audits going forward.
Let’s Talk Tax is P&A Grant Thornton’s weekly newspaper column which aims to inform the public about various tax developments. This article is not intended to replace the advice of qualified professionals.
Pamela Angelica D. Sayco is an executive from the Tax Advisory & Compliance practice area of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.
at grantthornton@ph.gt.com
