No LOA needed during reinvestigation of a taxpayer's protest

OUR National Internal Revenue Code, as amended (Tax Code), empowers the Commissioner of Internal Revenue (CIR) to conduct an assessment of the taxes paid by a taxpayer through the CIR's duly authorized representative armed with a validly issued Letter of Authority (LOA). The Supreme Court has consistently ruled that an assessment conducted without a valid LOA is void (Medicard Philippines Inc. v. CIR, GR 222743, April 5, 2017). In this regard, Section 13 of the Tax Code provides that a revenue officer (RO) assigned to perform assessment functions may, pursuant to a LOA issued by the revenue regional director, examine taxpayers within the district's jurisdiction in order to collect the correct amount of tax, or to recommend the assessment of any deficiency tax due.

A LOA is issued before an audit is commenced; it should also be issued when the RO assigned is transferred to another district office. In several decisions, the Supreme Court has held that the Bureau of Internal Revenue's (BIR) practice of reassigning ROs to continue a pending audit investigation without issuing a new LOA violates the taxpayer's right to due process. Thus, in the case of CIR v. McDonald's Philippines Realty Corp. (GR 242670, May 10, 2021), the Supreme Court held that the reassignment of the RO through a mere referral memorandum during the audit period before the BIR issued the Final Assessment Notice (FAN) is invalid. Also, in the case of Republic of the Philippines v. Robiegie, (GR 260261, Oct. 3, 2022), the Supreme Court invalidated the assessment when the reassignment was done before the issuance of the Preliminary Assessment Notice (PAN).