Letter of Authority for Tax Audit
Updated June 13, 2026
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Definition
A Letter of Authority (LOA) is an official document issued by the Bureau of Internal Revenue (BIR) that authorizes its revenue officers to examine, investigate, or audit a taxpayer's books of accounts, records, and other documents for tax assessment purposes.
The Letter of Authority is the BIR's written authorization for a revenue officer to examine a taxpayer. Under Section 13 of the Tax Code, a revenue officer assigned to perform assessment functions may examine taxpayers within the district "pursuant to a Letter of Authority issued by the Revenue Regional Director". Section 6(A) gives the Commissioner, or a duly authorized representative, the power to authorize the examination of any taxpayer and the assessment of the correct tax. The LOA names the taxpayer, the taxable period and taxes covered, and the revenue officer or officers authorized to conduct the examination. A revenue officer who is not named in an LOA has no authority to examine the taxpayer's books. Taxpayers are expected to cooperate and produce the records requested.
Detailed explanation
What is a Letter of Authority?
A Letter of Authority (LOA) is the document issued by the Bureau of Internal Revenue (BIR) that authorizes named revenue officers to examine a taxpayer's books of accounts and records for specific taxes and periods. Under NIRC §13, a revenue officer assigned to perform assessment functions may examine taxpayers within the district pursuant to a Letter of Authority issued by the Revenue Regional Director.
Legal Basis
NIRC §6(A) allows the Commissioner, or a duly authorized representative, to authorize the examination of any taxpayer and the assessment of the correct amount of tax, even where no return was filed. NIRC §13 ties the revenue officer's authority to examine to an LOA. The LOA states the taxpayer's name, the taxes and taxable period covered, and the officers authorized to conduct the examination.
Purposes of an Examination
An LOA may cover a regular audit of one or more taxes for a given year, or an examination focused on particular transactions or issues. In each case, the officers may examine only the taxes and periods the LOA covers.
Taxpayer Rights Upon Receipt of an LOA
A taxpayer who receives an LOA may: (1) verify the LOA and the identity of the officer with the issuing BIR office; (2) be represented by a CPA, lawyer or other authorized representative; (3) ask for reasonable time to gather the documents requested; (4) discuss preliminary findings with the officer; and (5) protest and appeal any assessment under NIRC §228.
Examination Process Under an LOA
Once an LOA is served, the revenue officer may: (1) request the taxpayer to produce books, records and documents; (2) interview the taxpayer or its representatives; (3) examine invoices, bank records and other supporting documents; (4) verify transactions with third parties; and (5) prepare a report of findings.
Assessment and Protest
If the BIR finds a deficiency, it must first notify the taxpayer of its findings through a preliminary assessment notice (PAN), except in the cases listed in NIRC §228, such as mathematical errors or a discrepancy between tax withheld and tax remitted. It then issues the formal letter of demand and final assessment notice (FLD/FAN), which must state the law and facts on which the assessment is based; otherwise the assessment is void. The taxpayer may protest within 30 days from receipt and must submit supporting documents within 60 days from filing the protest. If the protest is denied, or not acted upon within 180 days from submission of documents, the taxpayer may appeal to the Court of Tax Appeals within 30 days (NIRC §228).
Period to Assess
The BIR must assess within three years after the last day prescribed for filing the return, or from the date of filing if the return was filed late (NIRC §203). For a false or fraudulent return with intent to evade tax, or a failure to file, the tax may be assessed within ten years after discovery of the falsity, fraud or omission (NIRC §222).
Why it matters
A Letter of Authority is the legal basis for a BIR field audit. Knowing what an LOA is lets you check that the officer who visits you is authorized and that the examination stays within the taxes and periods stated. It also helps you prepare for what follows an audit: a preliminary assessment notice, a formal assessment, and your right to protest and appeal.
How it works
BIR Issues the LOA
The Revenue Regional Director (or another BIR official with authority) issues an LOA naming the taxpayer, the taxable period and taxes covered, and the revenue officer assigned. The taxpayer receives a copy and can verify it with the issuing BIR office.
Taxpayer Prepares Documents
The taxpayer gathers the books of accounts, invoices, bank records and other documents the revenue officer requests. The taxpayer may be represented by a CPA or lawyer during the examination.
Revenue Officer Conducts Examination
The assigned officer reviews the records, asks questions and checks transactions. The taxpayer may discuss preliminary findings with the officer before any notice is issued.
BIR Issues Assessment or Closes Audit
If the BIR finds a deficiency, it first issues a preliminary assessment notice (PAN), then a formal letter of demand and final assessment notice (FLD/FAN). The taxpayer may protest the formal assessment within 30 days from receipt (NIRC §228). If no deficiency is found, the examination is closed.
Examples
Small Business Owner Audited for Three Years
Juan dela Cruz, owner of a retail store in Manila, receives an LOA covering his 2023 income tax and percentage tax. The revenue officer requests his sales invoices, purchase invoices and bank statements, and Juan's CPA assists him. The BIR finds ₱500,000 of unreported sales and issues a PAN, then a formal assessment. Juan files a protest within 30 days from receipt of the formal assessment (NIRC §228).
Freelancer Subject to Lifestyle Audit
Maria Santos, a freelance graphic designer, receives an LOA after the BIR notices that she bought a ₱3,000,000 condominium while reporting only ₱800,000 in annual income. The officer requests bank statements, client contracts and proof of her sources of funds. Maria shows that the down payment came from an inheritance on which estate tax was paid, and no deficiency is assessed.
Corporation Undergoing Special Audit
ABC Corporation receives an LOA covering its income tax, and the examination focuses on its transactions with a related company in Singapore. The BIR examines intercompany invoices, contracts and pricing data and proposes ₱2,000,000 in additional income tax. ABC protests the formal assessment with the BIR within 30 days, and may appeal to the Court of Tax Appeals if the protest is denied or not acted upon within 180 days after it submits its supporting documents (NIRC §228).
Assessment Without a Preliminary Notice
Roberto Fernandez, a contractor, receives an LOA for his withholding taxes. The examination shows that the taxes he withheld from his workers' pay were not all remitted. Because the finding is a discrepancy between tax withheld and tax remitted, NIRC §228 allows the BIR to issue the formal assessment without first sending a preliminary assessment notice.
Employee with Side Income Audited
Anna Reyes, a bank employee earning ₱600,000 a year, receives an LOA after the BIR learns she earned ₱400,000 from freelance work she did not declare. The officer requests her freelance contracts and bank deposits. Anna pays the deficiency income tax with the 25% surcharge and 12% interest a year (NIRC §248, §249).
Common misconceptions
- Myth: A BIR revenue officer can examine my records without an LOA.
- Fact: A field examination needs an LOA. Under NIRC §13, a revenue officer examines taxpayers pursuant to a Letter of Authority issued by the Revenue Regional Director. If the officer cannot show an LOA naming him or her, you may decline the examination and verify with the BIR.
- Myth: Once I receive an LOA, I must immediately hand over all my documents.
- Myth: An LOA means the BIR has already decided I owe taxes.
- Fact: No. An LOA only authorizes an examination. The BIR may find no deficiency, a partial deficiency or a larger one depending on the results (NIRC §228).
- Myth: I cannot appeal or protest findings if I receive an LOA.
- Fact: You keep full protest and appeal rights. You may protest the formal assessment within 30 days from receipt, and appeal a denial, or inaction for 180 days, to the Court of Tax Appeals within 30 days (NIRC §228).
Questions people ask
What should I do if I receive an LOA from the BIR?
First, verify that the LOA is genuine and that the officer who presents it is the one named in it, by checking with the issuing BIR office. Second, gather your books, records and supporting documents. Third, consider engaging a CPA or tax lawyer to represent you. Fourth, respond to document requests within the time given. Ignoring the LOA can lead to an assessment based on the best evidence the BIR can obtain.
Can I refuse to cooperate with a BIR examination under an LOA?
You cannot refuse a properly authorized examination, but you may be represented, ask for reasonable time to gather documents, and discuss the findings with the officer. If records are not produced, the BIR may assess on the best evidence obtainable (NIRC §6(B)), and neglecting a summons to produce books or furnish information is a crime under NIRC §266.
How long does a BIR examination under an LOA typically take?
The length depends on the scope and complexity of the audit. The BIR must assess within three years after the last day for filing the return, or from the actual filing date if the return was filed late (NIRC §203). For a false or fraudulent return or a failure to file, the period is ten years from discovery (NIRC §222).
What happens after the BIR completes its examination?
If no deficiency is found, the examination is closed. If deficiencies are found, the BIR issues a preliminary assessment notice (PAN), which you may answer, and then a formal letter of demand and final assessment notice (FLD/FAN). You may protest the formal assessment within 30 days from receipt and must submit supporting documents within 60 days from filing the protest. If the protest is denied, or not acted upon within 180 days from submission of documents, you may appeal to the Court of Tax Appeals within 30 days (NIRC §228).
Can the BIR examine my records without my knowledge or consent?
A field examination of your books needs an LOA naming the officer (NIRC §13). The BIR may also review the returns you filed and the information it receives from third parties without visiting you, and it may write to ask you to explain discrepancies. Any deficiency assessment must still follow the notice and protest rules of NIRC §228.
What if I disagree with the BIR's findings in the LOA examination?
You may protest the formal letter of demand and final assessment notice (FLD/FAN) within 30 days from receipt. If the BIR denies the protest, or does not act on it within 180 days from submission of your documents, you may appeal to the Court of Tax Appeals within 30 days from receipt of the denial or from the end of the 180 days (NIRC §228).
Can I request a copy of the LOA before the examination begins?
Yes. The revenue officer should present the LOA, and you may keep a copy and verify it with the issuing BIR office, including the name of the officer it authorizes.
Is a preliminary assessment notice always required after an LOA examination?
No. NIRC §228 lists cases where the BIR may skip the preliminary notice, such as a mathematical error on the face of the return or a discrepancy between tax withheld and tax remitted by a withholding agent. The taxpayer can still protest the formal assessment.
In practice
- LOAs are issued for specific taxpayers, taxes and periods; an officer may examine only what the LOA covers.
- A taxpayer who receives an LOA should consult a CPA or tax lawyer early so records are organized before the officer's requests arrive.
- Taxpayers should keep copies of every letter, document request and transmittal exchanged during the audit, with dates of receipt.
- The 30-day period to protest a formal assessment runs from receipt, so taxpayers should record the date each BIR notice is received (NIRC §228).
- Failing to produce records when required can lead to an assessment based on the best evidence obtainable (NIRC §6(B)).
Next steps
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Sources & References (1)
Primary sources and the laws, regulations, and official issuances this page relies on. Links open the recorded source documents or references.
- Bureau of Internal Revenue. “BIR: audit/assessment authority (Letter of Authority), NIRC §6/§13.” bir.gov.ph. Bureau of Internal Revenue, Audit / Assessment procedures. Source checked .