A valid demand is essential to the validity of a Bureau of Internal Revenue (BIR) assessment of deficiency taxes against a taxpayer. This demand is ordinarily expressed in a formal letter of demand (FLD), which is issued and delivered with a final assessment notice (FAN). Without a valid FLD, the assessment is invalidated for violating the taxpayer’s right to due process.

An FLD calls on the taxpayer to pay its deficiency tax or taxes. As provided under BIR Revenue Regulations 12-99, an FLD should contain the demand for payment of deficiency taxes, as well as a clear statement of the amount demanded and the prescribed period within which those taxes should be paid. As soon as the FAN and FLD are served to the taxpayer, it is obliged to pay the assessed and demanded amount.