What to expect after lifting of audit suspension

On Jan. 27, the Bureau of Internal Revenue (BIR) officially announced the lifting of its audit freeze, signaling the resumption of full audit and enforcement activities with the issuance of Revenue Memorandum Order No. 001-2026.

As Valentine’s Day approaches, most people are looking forward to receiving love letters with chocolates and roses. In the world of tax, taxpayers should prepare their hearts, as the BIR may soon begin sending their version of “love letters” in the form of electronic Letters of Authority (eLAs), assessment notices, advisories, and audit‑related communications.

SINGLE-INSTANCE AUDIT FRAMEWORK
A key change accompanying the resumption of BIR audits is the single-instance audit framework. Under this policy, a taxpayer is subject to only one eLA per taxable year, covering all applicable internal revenue tax types, including Value-Added Tax (VAT).

However, a separate audit or verification authority may be issued for cases that are transactional, event-based, or terminal in nature.

REQUEST FOR NON-CONSOLIDATION OF VAT AUDIT CASES
Despite the single-instance audit framework, a taxpayer with multiple pending eLAs within the same taxable year may file a written request for non-consolidation with the RDO/OAS/LT Audit Divisions handling the eLA that covers all internal revenue tax types, except VAT. The request must indicate: (a) the name of the investigating office (e.g., VATAS/LTVAU); (b) the eLA serial number/audit case number; (c) the date of issuance; and (d) the tax type and taxable period covered by the eLA.

If no request is filed, the separate eLAs covering the same taxable year will automatically be consolidated.

SYSTEM-ASSISTED AUDIT SELECTION
Another key change is the introduction of the system-assisted taxpayer selection process. As a general rule, all taxpayers are generally considered for audit and assessment. However, the selection of taxpayers who will actually be audited will take place using defined criteria, subject to approval by the Commissioner of Internal Revenue. This new process is expected to ensure objectivity and integrity in the selection of taxpayers to be audited.

MANDATORY USE OF STANDARDIZED AUDIT CHECKLIST
The RMO also required BIR examiners to use a standardized checklist of documents. The checklist will be applied consistently and across all offices and audit cases. Additional documents may be requested only if directly relevant, reasonably necessary, within the authorized scope of the audit, and clearly explained and properly documented.

EXAMINATION OF VOLUMINOUS RECORDS
A recurring issue for the taxpayers is the submission of voluminous records, which can be costly and burdensome. In this regard, the RMO emphasized that taxpayers should be given reasonable options on the manner and venue of examination (either in the BIR office or in the taxpayer’s registered place of business). If the taxpayer chooses to have the examination conducted at his registered place of business, the taxpayer must provide a suitable area within the premises for the orderly examination of records.

KEY DATES IN RMO 001‑2026
While most people are busy setting dates for Valentine’s Day, taxpayers should also mark their calendars for these important compliance dates under RMO 001‑2026:

• Feb. 16 – deadline to request non‑consolidation of multiple pending eLAs.

• March 4 – automatic consolidation of all pending eLAs for the same taxpayer and year, except those with approved requests for non-consolidation of VAT audit cases.

• April 30 – last day of eLAs with approved request for non-consolidation of VAT audit cases to proceed independently

• May 4 – automatic consolidation of all pending eLAs with approved request for non-consolidation of VAT audit cases

• May 15 – winding-up operations of VATAS and LTVAU

TAKEAWAY
With the resumption of the full audit operations and the implementation of the Single‑Instance Audit Framework, the BIR will no longer issue multiple or overlapping eLAs covering the same taxpayer and taxable year. Further, taxpayers with pending eLAs must carefully assess whether consolidation works to their advantage and act promptly should they wish to request non‑consolidation, especially given the strict deadlines.

While the resumption of BIR audits may feel like a less romantic way to celebrate Valentine’s Day, it also encourages us taxpayers to sharpen our tax compliance practices as the BIR aims to ensure transparency, prevent misuse/abuse of audit authority, uphold due process, and promote fairness, responsibility and accountability in the conduct of tax audits moving forward.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

Pamela Angelica D. Sayco is a semi-senior from the Tax Advisory & Compliance practice area of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.