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BIR slaps penalties on tax officials who break new audit rules
BIR slaps penalties on tax officials who break new audit rules
Fraud exempted from single-instance audit policy
By Derco Rosal
At A Glance
- Any tax official or employee caught violating or evading the new tax rules guiding the resumption of controversial tax audits faces penalties ranging from administrative to criminal.
Tax officials or employees who violate the new rules governing the resumption of tax audits will face penalties ranging from administrative sanctions to criminal charges, the Bureau of Internal Revenue (BIR) said.
Under the first revenue memorandum order (RMO) it issued this year, the BIR warned that penalties may stack up depending on the number and severity of violations.
“A BIR official or employee who violates, circumvents, or fails to comply with the provisions of this RMO shall be subject to the appropriate administrative, civil, and criminal liabilities,” the RMO issued by BIR Commissioner Charlito Martin R. Mendoza on Jan. 27 stated.
The new rules revise how tax audits are started, conducted, and assessed, with the goal of improving transparency and preventing abuse of audit authority.
In general, the BIR now limits tax audits to one electronic letter of authority (eLA) per taxpayer per year, covering all taxes, including the 12-percent value-added tax (VAT). This is meant to prevent repeated or overlapping audits of the same taxpayer.
However, the BIR clarified that fraud cases are an exception. In cases involving suspected fraud, a single audit authority may cover several years to track continuing or repeated transactions.
“In fraud cases, one eLA may cover several years…” the memorandum order said.
The BIR may also issue separate audit authorities for special cases, such as one-time high-value transactions, business closures, or cancellations that require tax clearance.
Despite these exceptions, the country’s biggest tax-collection agency stressed that they should not be used “to fragment, bypass, or circumvent the regular audit of books of accounts” for recurring taxes.
If signs of fraud or irregularities are found, the case will be referred to the BIR’s investigation units for further action.
The BIR also announced that starting March 4, 2026, all ongoing audits covering the same taxpayer and tax year will be consolidated into a single audit.
In addition, VAT audit units handling regular and large taxpayers have been ordered to suspend operations until May 15, 2026.