Smarter News Now
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting
No Result
View All Result
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
  • Top News
  • Economy News
  • Forex News
  • Investing News
  • Stock News
  • Politics News
  • Editor’s Pick
No Result
View All Result
Smarter News Now
No Result
View All Result
Home Investing News

Audit notice: No point in delaying the inevitable

by
July 20, 2022
in Investing News
0
Audit notice: No point in delaying the inevitable
0
SHARES
9
VIEWS
Share on FacebookShare on Twitter

I can only imagine the worry that taxpayers feel when they receive a Letter of Authority (LoA) from the Bureau of Internal Revenue (BIR). “Should we accept this?” “Is this valid?” “Does this mean we are not paying our taxes right?” These are just some of the usual questions we receive from taxpayers when a BIR revenue officer comes knocking on their door with an LoA.

An LoA represents the authority given to the named BIR revenue officers to perform assessment functions to ensure the collection of the correct amount of tax. It is a required document before any audit and assessment takes place.

Recently, the BIR issued Revenue Memorandum Circular (RMC) No. 82-2022, which removed the requirement for the BIR to serve the LoA to the taxpayer within 30 days from issuance.

In effect, a taxpayer can no longer refuse the service of an LoA or question its validity, in case the document is served beyond 30 days. However, the RMC also clarified that the deletion of the 30-day requirement from the BIR’s Updated Handbook on Audit Procedures and Techniques should not be an excuse for the concerned revenue officer to delay its service.

According to the circular, an LoA that remains unserved, or has been served beyond 30 days from the date of issuance, remains valid and enforceable, provided that the prescribed period to complete the audit process has not yet expired.

Previously, Revenue Audit Memorandum Order (RAMO) No. 1-2000 required that the LoA be served within 30 days; otherwise, it becomes null and void. Service or presentation may be performed via 1) personal service, 2) substituted service, or 3) service via mail.

An exception to the 30-day requirement is when the LoA has been revalidated by the BIR, which effectively extends the period within which the revenue officer must submit the report of investigation. In several cases, the Court of Tax Appeals has ruled in favor of taxpayers by declaring the assessments as invalid when the LoA was served beyond the 30-day period, since the revenue officers, in the first place, did not have the authority to conduct the tax audit. The principle is thus well-established that, in the absence of a valid LoA, the resulting assessment against the taxpayer is null and void.

Tax audits are heavily bound by a set of rules, with some cases ultimately decided one way or another by technicalities. What happens then, when the other party can set and change the regulations?

With the recent circular, the period for LoA service to the taxpayer appears to matter no longer. With the 30-day requirement provided in a previous RAMO by the BIR, the new rule (or lack thereof) seems anchored on RAMO No. 1-2020, except without the 30-day service period.

Generally, the entire audit process must be completed within 180 days from the issuance of the LoA for cases at Revenue District Offices or 240 days for those handled by the Large Taxpayer Service. This process covers the examination of the taxpayer’s books and records by the revenue officer until a report of investigation is submitted to the higher authorities to issue a deficiency tax assessment. Non-observance of the 180/240-day period by the revenue officers would constitute gross neglect of duty, subject to appropriate administrative sanctions.

One cannot help but question the purpose of the deletion of the 30-day requirement, even though the circular points out that the LoA’s immediate service is in the government’s best interest.

Perhaps the circular was issued by the BIR in light of the recent suspension of the service of any written orders to audit taxpayers as of May 30 until further notice, which may have resulted in LoAs not being served by revenue officers. Notably, RMC No. 82-2022 was dated June 28, a day before the lapse of the 30-day service period for LoAs issued on May 30.

However, the suspension of tax audits in May could soon be lifted with the BIR’s new leadership in place. Such policy shifts from the tax authorities are not unusual. Remember when the BIR relaxed its requirements for a valid waiver of the Statute of Limitations for issuing tax assessments, leaving the taxpayers little to no room to challenge the validity of waivers and resulting assessments?

Whatever may be the reason for the circular, it is clear that timelines are put in place to observe due process, which is a crucial factor in BIR tax audits. The Supreme Court has held that in exercising power to assess and collect taxes, the BIR has the commensurate duty to uphold a taxpayer’s fundamental right to due process. The BIR’s authority must be understood to take effect only after it issues and serves an LoA to the taxpayer.

Tax audits by the BIR are, as they say, inevitable. And like in most things, there is no point in delaying them.

If the revenue officer is given a strict timeframe to complete his audit, the taxpayer should be notified as soon as possible, through the service of the LoA. With or without the 30-day requirement, it is in the best interest of both the taxpayer and the BIR that the LoA is served immediately, in order to commence and complete the tax audit in a timely manner and avoid the additional stress of unnecessary rush during an investigation.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Denned Miguel Pinza is a senior associate at the Tax Services Department of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 8845-2728

denned.miguel.v.pinza@pwc.com

ShareTweetPin

Related Posts

Stocks decline on profit taking, recession fears
Investing News

Stocks decline on profit taking, recession fears

August 23, 2022
Peso climbs vs dollar as RTB offer starts
Investing News

Peso climbs vs dollar as RTB offer starts

August 23, 2022
PNR cancels bids for 3 projects after finding them ‘non-feasible’
Investing News

PNR cancels bids for 3 projects after finding them ‘non-feasible’

August 23, 2022
Senate grills Rodriguez on approval procedures for sugar import order
Investing News

Senate grills Rodriguez on approval procedures for sugar import order

August 23, 2022
Trade dep’t expecting sugar price monitoring report by Friday
Investing News

Trade dep’t expecting sugar price monitoring report by Friday

August 23, 2022
Fisherfolk seek halt to reclamation on municipal fisheries
Investing News

Fisherfolk seek halt to reclamation on municipal fisheries

August 23, 2022
Next Post
PESO Act amendment seeks to add entrepreneurship assistance services

PESO Act amendment seeks to add entrepreneurship assistance services

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Email Address *
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!
 

Recommended

H ow to Win Friends and Influence People using Substrata

H ow to Win Friends and Influence People using Substrata

August 14, 2022
8 Reasons Why Your Online Business Should Have Its Own Digital Wallet

8 Reasons Why Your Online Business Should Have Its Own Digital Wallet

July 4, 2022
2022’s Top Rated South African Casinos with the Biggest Sign-Up Bonuses: Free No Deposit Bonus Analysis

2022’s Top Rated South African Casinos with the Biggest Sign-Up Bonuses: Free No Deposit Bonus Analysis

August 8, 2022
ABS-CBN Corporation announces schedule of annual stockholders’ meeting

ABS-CBN Corporation announces schedule of annual stockholders’ meeting

June 1, 2022
ADB commits to supporting PHL climate, infra efforts

ADB commits to supporting PHL climate, infra efforts

August 10, 2022
Join #EdenLevelUpChallenge on TikTok with the Creamy Taste and Smooth Texture of the NEW Eden Cream Cheese

Join #EdenLevelUpChallenge on TikTok with the Creamy Taste and Smooth Texture of the NEW Eden Cream Cheese

July 6, 2022
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
  • Email Whitelisting

Copyright © 2022 SmarterNewsNow.
All Rights Reserved.

Disclaimer: SmarterNewsNow.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

No Result
View All Result
  • About Us
  • Contact Us
  • Email Whitelisting
  • Home
  • Privacy Policy
  • Terms & Conditions
  • Thank You

Copyright © 2020 SmarterNewsNow. All Rights Reserved.