EQUIPPED WITH MORE safeguards, the Bureau of Internal Revenue is resuming the issuance of Letters of Authority (LOAs) to investigate tax deficiencies, outright fraud and other tax evasion schemes usually involving big businesses.
The BIR suspended the LOA issuances late last year to prevent abuse during the Christmas holidays amid proliferation of abuse by no less than revenue officials and personnel, for which the business sector made recommendations.
DATA-DRIVEN LOA
Finance Secretary Frederick Go said the BIR’s resumption of LOA issuances will be more controlled and data-driven to prevent abuse.
“The BIR, after suspending the letters of authority last November 24, is now looking at the digitized, risk-based, data-driven audit system that minimizes discretion, strengthens accountability, and prevents arbitrary or abusive audits,” Go said during a briefing on the “Big, Bold Reforms” event for businesses at Shangri-la the Fort.
“Two of the clear goals when we resume are that we will reduce the number of departments authorized to issue letters of authority as well as reduce the number of letters of authority a taxpayer can receive in any given year,” he added.
EFFICIENT MECHANISM
LOAs are legal documents authorizing specific revenue officers to examine a taxpayer’s books and records for a defined period and specific taxes, marking the start of a formal audit or investigation, reported Bilyonaryo.
From January to November of the previous year, the revenue bureau collected P2.906 trillion, which translates to nearly nine percent higher than the P2.668 trillion reported in the same period in 2024.
The BIR’s 2025 collection target is P3.13 trillion, according to Revenue Memorandum Order No. 014-2025.
THE CALATA CASE
Similarly, the BIR was said to have failed to prove having properly notified Melvin Calata, brother of controversial businessman Joseph Calata of his alleged tax liability of P11.5 million.
In a January 14, 2026 ruling, the Court of Tax Appeals’ Second Division rejected BIR’s tax assessment and its accompanying Warrant of Distraint and/or Levy (WDL) issued against Melvin Calata.
Melvin, an officer of the now-delisted Calata Corp, said he never received BIR’s Formal Letter of Demand or Final Assessment Notice and only learned of the alleged liability when the enforcement warrant was served.
The CTA ruled that BIR failed to prove proper service of the assessment– a procedural lapse that makes collection legally impossible.
REGISTRY RECEIPT
BIR’s case rested on a registry return receipt bearing a nearly illegible signature that appeared to read “San Ignacio.” The BIR could not identify the signatory, establish any connection to Calata or show that the person was authorized to receive official tax notices, Bilyonaryo reported.
The court rebuked the BIR for “bypassing personal service without explanation, despite rules that allow service by registered mail only when personal delivery is not practicable.”
With the assessment void, CTA said the collection measure based on it could not stand. It cancelled the assessment notices, voided the WDL and barred the BIR from collecting the alleged tax liabilities.
DELISTED, ABSOLVED
“All told, considering that the WDL springs from an invalid assessment and that the same was improperly served upon petitioner, such warrant must necessarily be declared void and cannot be validly enforced against petitioner,” the decision penned by CTA Associate Justice Maria Rowena Modesto-San Pedro said.
Calata Corp. was delisted from the Philippine Stock Exchange in 2017 over repeated violations of trading and disclosure rules, which were affirmed by the Securities and Exchange Commission.