The BIR Audit Reset Starts Now: Key Changes and Reforms

1. One Audit Per Taxable Year or Single-Instance Audit Rule

As a general rule, taxpayers are now subject to audit only once per taxable year. Hence, this means:

• Multiple LOAs covering the same year will be automatically consolidated into a single Replacement eLA starting March 4, 2026
• Earlier LOAs will be deemed cancelled once consolidation occurs
• This seeks to address audit fatigue and repetitive document requests, benefiting both taxpayers and the BIR in processing.

The exception to this is regarding Fraud Cases, which will follow a separate process and will be subject to the respective investigative office; if the case involves a regional jurisdiction, it shall be referred to the concerned Revenue Region’s Regional Investigation Division (RID), while for those falling under the National jurisdiction, it will be referred to the National Investigation Division (NID).

2. Clear Audit Authorities — No More Guesswork

The BIR now mandates to clearly distinguish between audit notices, which are the following:

• Electronic Letter of Authority (eLA): shall bear the label “FULL EXAMINATION OF BOOKS OF ACCOUNTS AND OTHER ACCOUNTING RECORDS.”
• Mission Order (MO): shall have the name “VERIFICATION, SURVEILLANCE, MONITORING, AND INSPECTION ACTIVITIES ONLY – LIMITED AUTHORITY.” 
• Tax Verification Notice (TVN): shall have the name “VERIFICATION AUTHORITY – LIMITED SCOPE.”

Not every BIR notice means a full audit, as they are distinctively named — avoiding confusion and abuse of discretion, making taxpayers have clarity on the scope.

3. No More Conducting Audits in Coffee Shops, Restaurants, & Other Public Venues

Under RMO No. 1-2026, audits and assessments:

• Must be conducted only at BIR offices or the taxpayer’s registered business address
• Informal meetings in cafés and other public venues are strictly prohibited

This is implemented to avoid informal meetings, as the BIR Commissioner stated that most audits are conducted in public venues, which offer convenience to Revenue Officers rather than processing the tax audit itself.

4. Flexible Options for Voluminous Records

If a taxpayer’s records are extensive and voluminous in nature, they may select among the following options for the tax audit they are involved in:

• Certified photocopies may be submitted to the BIR Office conducting the audit, or
• The taxpayer may choose the venue of the audit within their business premises

Additionally, for document submissions to the BIR Office, originals may be requested only when necessary and within the scope of the audit. Hence, this minimizes operational disruption while maintaining compliance integrity.

5. Risk-Based, Data-Driven Audit Selection

As a rule, all taxpayers are considered potential subjects of audits and assessments. However, to ensure the integrity and objectivity of such selection, the audits will now be limited to taxpayers selected, which are:

• System-assisted
• Based on objective risk parameters (e.g., VAT discrepancies, losses, underreporting, etc.)
• Approved first by the Commissioner of Internal Revenue

Furthermore, an anonymized selection and assignment process will be implemented to ensure that revenue officers cannot pre-select targets or conceal the taxpayer’s identity.

6. Standardized Document Checklist

Revenue Officers are now mandated to follow a standardized checklist of documents when authorized to conduct an audit of a taxpayer. This will serve as the general reference for identifying, requesting, and evaluating documents important to the assessment.

Therefore, this means that:

• Discretionary requirements are not allowed
• Repetition and unnecessary request of documents are drastically reduced
• There is an improvement in due process as taxpayers will be well-informed of the required documents, and
• Audit trailing or tracing is enhanced

Ultimately, the RMO makes it clear that no audit will be considered valid if the checklist is not completed.

7. Stronger Officer Accountability and Enhancement with Technology

As the reforms require substantial changes to the processing of audits and assessments conducted by Revenue Officers, this clearly places the BIR in a position to improve LOAs and other notices necessary to carry out the mandate of the National Internal Revenue Code (NIRC). 

The reforms underscore that Revenue Officers will bear greater responsibility and must exercise due diligence when conducting taxpayer assessments, as outlined in the RMO. Officers who do not follow the guidelines will be subject to administrative, civil, and criminal liabilities.

Moreover, the BIR’s effort for better management regarding eLOA issuances, they have launched:

• An Online LOA Verifier via the REVIE chatbot
• An Audit Auditor Program to monitor revenue officers

Indeed, internal abuses and discretionary matters done by an officer will be subject to penalties and other consequences.