The Court of Tax Appeals (CTA) has declared anew that the Bureau of Internal Revenue (BIR) must issue a Letter of Authority (LA) to collect taxpayers' deficiency taxes.
This, was emphasized anew by the court en banc when it ruled in the case filed by the BIR against Yan An Cargo Corporation which operates in Manila and Bacolod.
In the decision, the court voided the BIR's multi-million-peso deficiency tax assessment against the company, arguing that the BIR did not issue LA to the cargo forwarding firm, but a mere Letter Notice (LN) informing the latter of the income and value-added tax liabilities allegedly incurred in 2010.
The full court explained that LN only informs concerned taxpayers of deficiency taxes, and must be converted, or changed into an LA to collect the back taxes as required by the Tax Code and implemented by Revenue Memorandum Order No. 32-2005.
"Clearly, an examination and assessment of a taxpayer requires the issuance of LA and not LN," said the decision penned by Presiding Justice Roman G. Del Rosario.