Senators push full investigation as BIR examiners accused of pocketing LOA collections and harassing taxpayers

Senators are calling for a full investigation into allegations that Bureau of Internal Revenue examiners misused Letters of Authority to harass taxpayers and divert collections into their own pockets. The push follows multiple complaints accusing revenue personnel of using LOAs to pressure businesses into unofficial deals during audits.

Senator Erwin Tulfo said LOAs were turned into tools for corruption instead of legitimate audit instruments. He described the LOA as similar to a search warrant because it allows examiners broad access to business records. He said taxpayers reported being subjected to repeated audits and forced into arrangements that benefited the examiners. According to him, “Even if you already paid, you would still be given a LOA if the BIR doubted about the tax you paid.”

Tulfo said he received at least five complaints from businesses claiming they were instructed to pay reduced amounts while the remaining balance was pocketed. Other senators received similar reports. He cited cases where firms with tax liabilities of 150 million pesos were issued receipts for only 100 million pesos. He said, “For example, there were big companies with tax amounting to P150 million. But they were given a receipt showing they only paid P100 million. This is a source of corruption. The rest went to the pocket of the examiners.”

He also described another scheme involving discounted receipts. He said, “Kunwari po ang tax ay nasa P25 million ang babayaran mo… Sasabihing rereceibuhin kita ng P15 million, pero sa akin na ang five. So may discount na ako na 5 million.”

Senator JV Ejercito presented additional details, saying reports he received showed that some BIR officials allegedly kept 70 percent of LOA collections. He said projected LOA revenue should have reached 6 to 8 billion pesos but the actual remittance was only 2 to 3 billion pesos. According to him, “Because 70 percent of what is collected is not remitted, instead, it goes into people’s pockets. Only 30 percent is actually remitted.” He said the losses were significant. “From P6 billion, they raised only about P2 billion. It’s kind of sad everyone is doing their own schemes. I wish at least a larger amount was going to the government. Even if they took a small cut, it’s the other way around 70 percent is being grabbed, and only 30 percent is going to the government.”

Ejercito said he received reports involving revenue officers and regional directors, with complaints coming even from foreign business groups. He said, “They are weaponizing LOA for corruption.” He added that anyone involved must face consequences. “This is accountability. Even if they already resigned or replaced, I think they still have to be answerable for actions or inaction.”

As pressure mounted, the Bureau of Internal Revenue announced the immediate suspension of all field audits and issuance of LOAs and Mission Orders. The bureau ordered the halt under Revenue Memorandum Circular 107-2025. Commissioner Charlito Mendoza said, “I have ordered the immediate suspension of all field audits and related operations, including the issuance of Letters of Authority and Mission Orders, effective immediately. No Letter of Authority or Mission Order shall be created, printed, signed, or served during the suspension period.”

Finance Secretary Frederick Go said the government was responding directly to taxpayers who raised concerns about the abuse of LOAs. He said, “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.”

The bureau clarified that the suspension applies to all audit-related units except for urgent and legally mandated cases involving criminal investigations, fraud claims, or immediate action on verified intelligence. Mendoza said the action aims to restore discipline and protect taxpayers. “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.”

The bureau said it is now reviewing procedures, identifying vulnerabilities, and revising LOA protocols while integrating digital safeguards. Mendoza said the goal is to build predictable and transparent systems. “Our goal is to create processes that are predictable, evidence-based, technology-driven, and fair.”

He added that the bureau is under directive to improve service while meeting revenue goals. “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.”

Tulfo said the Senate inquiry must expose how the misuse permeated audit operations and identify those who enabled it. He said, “Ang problema din diyan, it’s extortion. May mga negosyante na pumapayag, yung talaga may mga atraso. Pero yung iba, taon-taon eh… bibisitahin ka na ng BIR.”