FOR THE LONGEST time, the Bureau of Internal Revenue (BIR) has been notoriously famous for corruption, but not under my watch, says newly-appointed Commissioner Charlito Mendoza who cited the urgent need to cleanse the agency of crooks in the guise of civil servants.
Immediately after being sworn in, Mendoza buckled down to work. His first agenda — listen to the taxpayers, from whom he was able to uncover what looks more like an “institutionalized scheme” embarking on the so-called Letters of Authority (LOA) issued by the bureau.
Under the law which created the BIR, the agency’s mandate is to assess and collect all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties, and fines connected therewith, including the execution of judgments in tax cases resolved by judiciary or the Court of Tax Appeals.
AGAINST ALL ODDS
In a press briefing held at the Department of Finance (DOF), Mendoza announced the immediate suspension of all field audits and related operations of the BIR.
“I have ordered the immediate suspension of all field audits and related operations, including the issuance of Letters of Authority (LOA) and Mission Orders (MO), effective immediately, in accordance with Revenue Memorandum Circular 107-2025. No Letter of Authority or Mission Order shall be created, printed, signed, or served during the suspension period,” the new BIR chief said.
Only in his first week in office, Mendoza dared to do what his predecessors didn’t — to see things from the perspective of the Filipino taxpayers who have been profusely bleeding for who knows how long.
TALL, TOUGH ORDER
When he was appointed to take the helm of the BIR, Mendoza knew only too well that being “bright” would not be enough in an agency where corruption has become a norm.
To start with, Mendoza convened the bureau’s key units in an earnest effort to gain a thorough understanding of existing audit operations — and identify long-standing issues adversely affecting taxpayers, and the government revenue collection.
Hence, the suspension in the issuance of LOAs and MOs.
“This is in response to the concerns raised by the taxpayers regarding the issuance of Letters of Authority and Mission Orders. We hear the people, we hear your concerns, and are immediately acting on them. The people deserve better.”
COLLECT AND PROTECT
Under the law and subsequent legislations covering the BIR, the agency’s top mandate is to protect taxpayers from irregular, untimely, or intrusive audits and to strengthen internal discipline by limiting discretionary field operations — if only to guarantee a fair, transparent, and efficient tax system that promotes compliance and fosters trust among taxpayers.
While LOAs are deemed as the BIR’s primary legal document authorizing revenue officers to examine a taxpayer’s books and records, the same system has evolved to become a scheme that saw the government at the losing end.
The same principle applies in the issuance of MOs, which authorizes designated BIR personnel to conduct surveillance, verification, site inspections, and other limited fact-finding activities.
Unlike LOA, an MO does not authorize audits, examination of books of account, or the issuance of assessments.
ENTICING CORRUPTION
For one, LOA was designed to give revenue officers the legal right to examine a taxpayer’s books and records. Over the years, LOA documents have been used not to strengthen compliance but to intimidate businesses and line pockets.
The most common abuse comes in the form of “settlements.” When LOA is served, taxpayers are often given choices: settle the case quietly with a bribe or prepare for an inflated assessment.
It doesn’t take businessmen to become rocket scientists to know what would be best for their investments — cave in, by paying up. Problem solved, but not for long as the practice becomes a never-ending cycle of “give and take.”
And yet, not one BIR Commissioner in the past dared to break the cycle of corruption which adversely affected revenue collection from where the government is drawing funds to defray universal healthcare, free education, farm-to-market roads, and many other basic services.
SUSPENSION COVERAGE
The temporary suspension applies to all BIR offices involved in audit and field operations, including the Large Taxpayers Service, Revenue Regions and District Offices, Assessment Divisions, VAT Audit Units, and Intelligence and Special Audit Units.
Interestingly, the suspension comes with exemptions which include urgent or legally mandated cases such as active criminal investigations, one-time transactions, audits prescribing within six months, refund claims that require audits, or immediate action on taxpayers flagged by verified intelligence.
“This suspension is necessary to protect taxpayer rights, strengthen internal discipline, and ensure the integrity of our audit processes. We take every complaint seriously, and any misuse of authority, harassment, or irregularity has no place in the Bureau,” Mendoza emphasized.
INTEGRITY AND REFORM
The BIR chief likewise ordered the creation of a Technical Working Group on LOA and Mission Order Integrity and Audit Reforms to lead the transformation efforts.
Mendoza’s marching order to the group — evaluate existing procedures, identify operational and systemic vulnerabilities, recommend revised LOA protocols, and integrate digital safeguards and uniform audit standards.
“Our goal is to create processes that are predictable, evidence-based, technology-driven, and fair,” an obviously ecstatic Mendoza said even as he reiterated that these systems are meant to protect taxpayers while helping the Bureau perform its mandate efficiently.
“I cannot overemphasize President Ferdinand Marcos, Jr.’s directive for the BIR to continue meeting revenue targets while strengthening service delivery for workers, small business owners, and all taxpayers who rely on predictable and transparent audit processes.”
“The overarching directive of the President when I assumed office is to ensure efficient and fair revenue collections,” he quipped.