Bureau of Internal Revenue (BIR) Commissioner Charlito Mendoza announced a critical, immediate reform today, mandating that all Letters of Authority (LOAs), which formally initiate tax audits, must now receive personal clearance from the Commissioner’s office before issuance.
Commissioner Mendoza described the new policy as a necessary step to immediately strengthen oversight, eliminate discretionary enforcement, and restore public trust in the agency’s audit system. He announced a Senate Blue Ribbon Committee hearing on widespread allegations of abuse related to LOA issuance.
“All LOAs will be cleared by my office,” Commissioner Mendoza stated, emphasizing that this safeguard is designed to prevent arbitrary, repetitive, or overlapping audit orders, which have been a source of complaint among taxpayers.
The move is part of broader, long-term reforms, including aggressive digitalization of core processes, aimed at reducing human intervention and ensuring all audits are conducted with fairness, transparency, and predictability.
In his opening statement, Commissioner Mendoza stressed the paramount goal of rebuilding taxpayer confidence: “We must eliminate arbitrariness, remove repetitive or overlapping issuances, and establish near-time monitoring of ongoing audits… Rebuilding trust requires reform on both fronts: correcting how enforcement is carried out, and ensuring that rules and oversight mechanisms are clear, consistent, and transparent.”
The Commissioner also confirmed that the BIR has temporarily suspended the issuance of LOAs as the agency conducts a full review and modernization of its audit and enforcement processes. He underscored that the ultimate goal of the reforms is to increase voluntary compliance through fairness rather than fear of punitive action.
Finance Secretary Frederick Go attended the hearing and expressed his full guidance and support for Commissioner Mendoza’s efforts to implement these reforms, noting their importance in strengthening accountability and reducing discretionary enforcement within the BIR.
The initiative also received strong backing from the Senate. Senator Panfilo “Ping” Lacson, Chairman of the Blue Ribbon Committee, pledged to secure funding for the BIR’s digitalization plan, calling full digital transformation essential to curb corruption and limit human discretion in audit processes.
Senator Erwin Tulfo, Vice Chair of the committee, highlighted the gravity of the issue, noting that many business owners are afraid to report LOA misuse as an alleged extortion tool for fear of retaliation or being blacklisted.
Commissioner Mendoza has directed the Technical Working Group reviewing LOAs and other concerned BIR units to prepare all relevant data, audit histories, and investigation reports for succeeding Senate hearings.
