What to Do When You Receive a Letter of Authority (LOA) from the BIR
If you’ve received a Letter of Authority (LOA) from the Bureau of Internal Revenue (BIR), don’t ignore it—and don’t panic. This document signals the official start of a tax audit and requires a prompt and strategic response.
How you handle the following steps could mean the difference between a smooth resolution and costly tax assessments and penalties.
In this article, we’ll cover:
- What a BIR LOA means
- What steps to take immediately
- Common triggers for a BIR audit
- How to handle the process correctly
- How to protect your business
What Is a BIR Letter of Authority?
A Letter of Authority is a formal document issued by the BIR, granting designated revenue officers the legal authority to examine your tax records. Once served, the audit process is in motion.
What the BIR may review:
- Income Tax Returns (ITR)
- VAT and Percentage Tax filings
- Withholding tax returns (1601C, 0619E, etc.)
- Books of accounts, ORs, and invoices
- SLSP (Summary List of Sales/Purchases), Alphalists
The LOA includes the taxable period covered, the names of assigned examiners, and a 120-day validity period from the assignment date.
What To Do Right After Receiving a BIR LOA
1. Verify the LOA’s Validity and Scope
Check for:
- Correct TIN and business name
- Covered tax years
- Revenue officers assigned
- Signature of authorized BIR official
If there are errors or missing signatures, raise them immediately.
2. Start Organizing Your Tax and Accounting Records
Prepare the following:
- Books of accounts (manual or computerized)
- BIR-filed returns with payment confirmation
- ORs, sales invoices, and billing statements
- Form 2307s (EWT), 2316 (compensation), 1604CF
- SLSP, QAP, and other attachments
Ensure all documents are complete, traceable, and aligned with your filings.
3. Engage a Tax Professional or Advisor ASAP
Having an accountant or tax consultant review your records before turning them over to the BIR is crucial. They can:
- Spot inconsistencies before the BIR does
- Reconcile mismatched entries
- Provide representation during the audit
4. Know Your Rights and Responsibilities
While the BIR has the authority to audit, you are entitled to:
- A written list of requested documents
- Properly identified revenue officers
- Due process before assessments
- Enough time to respond to findings
5. Act Promptly—No Delays
Submit the requested documents and respond to communications within the prescribed period. Delays may result in compromise penalties or escalated investigations.
Common Red Flags That Trigger a BIR Audit
Knowing why you were flagged can help prevent future audits. Here are the most common audit triggers:
- Large discrepancies between ITR and VAT returns
- Unfiled or late-filed tax returns
- Mismatched 2307s or SLSP entries
- High input VAT claims with weak documentation
- Suspicious “loss” declarations over multiple years
- Third-party matching inconsistencies (e.g., suppliers or clients reporting different figures)
Third-party data matching has become a key BIR audit tool—ensure consistency across 2307s, SLSPs, and client filings.
How to Prepare for the Audit
Want to minimize findings and avoid unnecessary tax assessments? Follow these best practices:
✔ Conduct an internal tax health check
✔ Review past returns vs. books and sales records
✔ Reconcile Form 2307s with actual sales
✔ Secure and label all ORs, vouchers, and contracts
✔ Make sure SLSP and QAP match your returns
Need Help Handling a BIR Letter of Authority?
At UNA Tax & Accounting Services, we help business owners navigate BIR audits with confidence and clarity.
Our LOA & Audit Support Includes:
- Complete document review and preparation
- Reconciliation of tax filings and SLSP/2307
- Representation during BIR meetings
- Tax health check before submission
- Filing of corrections and responses to findings
Book Your FREE 15-Minute Consultation
Don’t risk costly mistakes or penalties. Let’s audit-proof your business today! Or email us at sales@una-acctg.com
