[Ask the Tax Whiz] Are you being audited regularly by the BIR?

I am currently being audited by the Bureau of Internal Revenue. How does the BIR choose a company to be audited? Are there any criteria? Or are they just issuing a letter of authority (LOA) randomly?

All taxpayers are possible candidates for audit of the bureau. An audit program is prepared, setting selection criteria and priority taxpayers who will be subject to audit and investigation. An audit includes, but is not limited to, the following cases:

1. Mandatory cases – These include taxpayers who are claiming a tax refund or tax credit certificate or those requesting for tax clearance.
2. Priority cases – These are based on the tax returns to be audited following a specific selection code and also depending on the industry of the business.
3. Other priority cases – These may be identified by the regional director or assistant commissioner, Large Taxpayers Service (ACIR-LTS).

The revenue district office (RDO) and regional director/Large Taxpayers Division (LTD), Large Taxpayer Assistance Division (LTAD), and ACIR-LTS are equally responsible for ensuring that only those who match the selection criteria are selected for issuance of electronic letters of authority or eLAs. Otherwise, they would be subject to administrative sanctions.

I have been listed as a Taxpayer Account Management Program (TAMP) taxpayer this year. What are the chances that the BIR will issue an LOA for my business?

Being a TAMP taxpayer is included in the criteria for priority cases of the BIR when it comes to audits. Pursuant to Revenue Memorandum Circular No. 19-2015, the tax returns to be selected for priority and other priority cases, for regional tax cases, shall consist of 60% TAMP and 40% non-TAMP taxpayers of the RDO.

I have been audited by the BIR for the last two years. Can they issue another LOA for the third straight year? Is that allowed? What would be their basis for the issuance of three consecutive LOAs?

Yes, that is allowed, but the RDO/LTD/LTAD shall encode right away the requested audit of the subject taxpayer in eLAMS/eTIS-CMS, which would be approved by the regional director or assistant commissioner who heads the investigating office. The selection code would depend on the reason why the taxpayer has been selected.

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– Rappler.com

Mon Abrea, CPA, MBA, is the co-chair of the Paying Taxes-EODB Task Force. With the TaxWhizPH mobile app as his brainchild, he was recognized as one of the Outstanding Young Persons of the World, an Asia CEO Young Leader, and one of the Ten Outstanding Young Men of the Philippines because of his tax advocacy and expertise. Currently, he is the chairman and CEO of the Asian Consulting Group and trustee of the Center for Strategic Reforms of the Philippines – the advocacy partner of the Bureau of Internal Revenue, Department of Trade and Industry, and Anti-Red Tape Authority on ease of doing business and tax reform. Visit www.acg.ph for more information or email him at mon@acg.ph and download the TaxWhizPH app for free if you have tax questions.