The Bureau of Internal Revenue (BIR) releases a clarification addressing the 30-day submission time from the date of issuance of the electronic Letter of Authority (eLA), along with many issues and regarding its service in their Revenue Memorandum Circular (RMC) 82-2022.
This RMC was issued on June 30, 2022 and follows Revenue Audit Memorandum Order (RAMO) No. 1-2000, which was amended by RAMO No. 1-2020, thereby deleting the provision in Item No. Vlll 2.3 of RAMO No. 1-2000, which states that:
- Serving of eLA
- “On the first opportunity of the RO to have a personal contact with the taxpayer, he should present the eLA together with the checklist of requirements. The eLA should only be served by the RO assigned to the case. He should have the proper identification card and should be in uniform. However, the service of eLA may likewise be done in other manners as prescribed in existing policies.”
- “An eLA authorizes or empowers a designated RO to examine, verify and scrutinize a taxpayer's books and records in relation to his internal revenue tax liabilities for a particular period.
- Request for Accounting Records
"Xxx... xxx... xxx..."
The RMC further clarifies that the statement above had already been amended by RAMO No. 1-2022, thus removing the following quote which reads:
“2.3 A Letter of Authority must be served or presented to the taxpayer within 30 days from its release date of issue, otherwise; it becomes null and void unless revalidated. The taxpayer has all the right to refuse its service if presented beyond the 30-day period depending on the policy set by top management. Revalidation is done by issuing a new Letter of Authority or just simply stamping the words ‘Revalidated on _______‘ on the face of the copy of the Letter of Authority issued”
In the decision made by the Court of Tax Appeals (CTA) in the case of Dakay Construction and Development Corporation vs. Commissioner of Internal Revenue (CTA EB No. 1294), which Decision is anchored on the above quoted provision, the CTA-En Banc ruled that:
“The Letter of Authority no longer has any force or effect having been served on the petitioner beyond the prescribed 30-day period. The assessment conducted by the Revenue Officers was already unauthorized, because there is no valid LOA covering it.”
While the RMC does not specifically establish the timeline for the “service of eLA”, it does encourage the government to serve eLAs to the taxpayers as soon as its issuance/assignment. It mandates that all concerned Revenue Officers (ROs) are duty bound to serve the eLA to taxpayers as soon as possible. Additionally, the removal of the 30-day period to serve the eLA will not be taken as an excuse for taxpayers to refuse its validity or question its validity.
This expediency is important since the entire audit process needs to be completed within a period of 180 days for RDO cases/240 days for LT cases from the date of issuance of eLA. The RMC further emphasized this timely submission by considering those non-compliant with the timeline as being grossly negligent of their duties, and in turn becoming subject to grave offense. This will be done to appropriate administrative sanctions following the policies of Revenue Memorandum Order No. 53-2010.