How to Handle a BIR Letter of Authority (LOA)
Receiving a BIR Letter of Authority means your business is subject to a tax audit. This guide walks you through the steps, best practices, and common pitfalls to avoid so you can stay compliant in the Philippines.
What you’ll learn in this BIR LOA guide
This BIR Letter of Authority (LOA) guide explains what an LOA is, what to do when you receive one, and how to prepare for a BIR tax audit in the Philippines while protecting your business.
For related BIR topics, you can also read our How to Check for Open BIR Cases, Basic Bookkeeping and Accounting Guide, and TRAIN Law Compliance Guide (RA 10963).
Keeping audit-ready books and receipts also helps when responding to an LOA. Our free BIR Book of Accounts Tool can support your day-to-day record keeping so documentation is easier to gather when BIR examines your returns.
Key Steps When You Receive a BIR LOA
Acknowledge and Verify the LOA
- Note the date and manner you received the LOA.
- Sign the acknowledgment receipt, but do not admit to any liability.
- Verify the authenticity of the LOA — check for correct taxpayer details, authorized signatory, and compliance with BIR’s official format requirements.
Understand the LOA Scope and Deadlines
- Check the taxable period and assigned BIR examiners named in the LOA.
- The LOA typically covers only one taxable year and should specify the type of taxes involved.
- The BIR officer generally has 120 days to complete the audit; you have only 10 days from receipt to respond or ask for an extension.
Prepare and Submit Required Documents
- Collect and organize tax returns, financial statements, ledgers, receipts, invoices, and other supporting documents as listed in the LOA.
- Maintain an inventory of all document submissions for reference.
- Submit the documents within the BIR’s specified period (usually 10–30 days). Provide partial submissions if necessary, clearly noting pending items.
Attend the Initial Conference and Clarify Audit Scope
- The BIR may invite you to discuss the audit’s focus. Attend with your accountant or business representative.
- Use this opportunity to clarify what records are needed and clear up any ambiguities.
Monitor Communication and Maintain Records
- Keep copies of all correspondence, submissions, and notices from the BIR.
- Track important timelines, such as submission dates and audit deadlines.
Best Practices for PH Businesses Handling BIR LOA
- Assign a dedicated compliance officer or engage a competent tax professional to oversee the process and represent your business.
- Never submit original documents unless specifically required—provide certified photocopies unless otherwise instructed.
- Respond to every BIR communication within the specified timeline; do not ignore discrepancies or notices.
- Double-check that any replacement or change of BIR officers assigned to your case is accompanied by a new or properly revalidated LOA, as required by law.
- If there are defects in the LOA or audit process (wrong coverage, unsigned, out-of-scope), raise them promptly and, if needed, consult a tax lawyer.
What You Should Avoid
- Do not panic or ignore the LOA—failure to respond can lead to automatic assessments or penalties.
- Do not tamper, alter, or falsify records.
- Avoid negotiating or settling issues without official documentation and proper legal or tax advice.
Final Reminder
Careful diligence, organization, and professional assistance are crucial to navigating a BIR LOA audit confidently and protecting your business from unnecessary penalties or disputes.