Congress urged to probe abuse of BIR audit powers

A LAWMAKER on Monday called for a congressional investigation into the Bureau of Internal Revenue’s (BIR) alleged abuse of its authority to examine taxpayers’ books, following complaints from business groups about irregular audit practices.

House Resolution No. 743 seeks a review of the BIR’s audit protocols, including its issuance of letters of authority (LoA) and mission orders.

The agency suspended LoAs in November after allegations that the process had been turned into a money-making scheme.

“Reports even suggest that up to 70% of collections tied to certain LoA audits may be diverted to private pockets instead of going to the National Treasury,” Deputy Speaker and Zambales Rep. Jefferson F. Khonghun, who filed the resolution, said in a statement.

Business groups have claimed that BIR personnel issued excessive or irregular LoAs, including orders covering taxable years that had been settled and fully paid, to pressure taxpayers for money.

Ad interim Finance Secretary Frederick D. Go resumed the issuance of LoAs in late January as the government seeks to raise revenue.

“Taxpayers have come forward with credible accounts of inflated assessments that are later negotiated down through unofficial ‘packages,’ clandestine payments via drop boxes, instructions to falsify receipts and even threats of retaliation or blacklisting for those who resist or expose these practices,” Mr. Khonghun said.

Government data show the Marcos administration issued 82,228 LoAs from January to Nov. 3 last year, almost double the number recorded in 2022.

“This is not tax enforcement — it is extortion disguised as enforcement,” Mr. Khonghun added.

The proposed congressional inquiry aims to review BIR procedures for issuing LoAs, assess the effectiveness of the audit system and recommend safeguards to prevent abuse of authority, according to the resolution.

Lawmakers are also expected to consider structural reforms, including tougher penalties for erring officials, to restore confidence in the tax system.

“We need a comprehensive review of audit protocols, issuance procedures, the real impact of recent reforms and stronger legislative and administrative protections for honest taxpayers,” Mr. Khonghun said.

Separately, senators have begun discussing the alleged misuse of LoAs, with the Senate Blue Ribbon Committee set to continue hearings on Tuesday.

Also on Monday, lawmakers filed a bill seeking to raise the ceiling for bonuses and incentives excluded from income tax to P150,000 from P90,000.

Proposals to reduce the income tax burden of ordinary wage and salary earners “are complementary to the demands of the labor sector and the masses for increased pay,” Party-list Reps. Antonio L. Tinio, Sarah Jane I. Elago and Renee Louise M. Co said in the explanatory note of House Bill No. 7661. — Kenneth Christiane L. Basilio