Senators on Thursday zeroed in on what they described as a deeply rooted pattern of corruption inside the Bureau of Internal Revenue, with allegations that some personnel were weaponizing Letters of Authority (LoA) to harass, coerce, and extort money from taxpayers.

Senator Joseph Victor “JV” Ejercito, citing numerous complaints reaching his office, said a “culture of corruption” has taken hold in the agency, victimizing both small businesses and large corporations. 

He said the reports reflected a scheme in which certain BIR examiners issued multiple LoAs to the same taxpayer within a year or across successive years, followed by inflated or baseless assessments designed to pressure the taxpayer into paying an under-the-table “settlement.”

“We recognize the crucial role of the BIR in funding government programs. However, based on the information we have gathered, it appears that the government is being short-changed because tax collection has become a money-making scheme for some,” Ejercito said during the Senate Blue Ribbon Committee inquiry. 

“Whether large or small, taxpayers are being coerced. The LoA, an instrument meant to ensure lawful tax compliance, is being weaponized for corruption and extortion,” he added.

Ejercito cited a case in Manila where a BIR examiner allegedly offered to settle a taxpayer’s LoA for a “P400,000 all-in” payment. When the taxpayer refused, the examiner issued a P13-million assessment — higher than the business’s reported gross sales of P12 million and allegedly without supporting documents. 

Similar complaints surfaced in Quezon City, Laoag City and Bulacan. Some reports described a “70/30 scheme,” in which 70 percent of payments went directly into the pockets of BIR personnel while only 30 percent went to government coffers.

The senator said even foreign diplomats and members of the American and European Chambers of Commerce had raised concerns about harassment by BIR personnel, calling the situation “embarrassing for the country.”

He urged the Blue Ribbon Committee to investigate the matter thoroughly, saying taxpayers should not live in fear of “questionable demands in exchange for the withdrawal or softening of tax investigations.” 

He added, “We have to stop this culture of corruption that is now plaguing the country.”

As allegations of extortion mounted, Senate President Vicente Sotto III pressed the BIR to establish a public verification system for LoAs, saying taxpayers currently have no way to confirm the authenticity of the document without visiting a BIR office. 

“If a taxpayer doubts the LoA is authentic or official, they still have to go to your office. It takes time. Shouldn’t business owners also be able to check it?” Sotto asked.

A BIR official confirmed that only internal personnel have access to the agency’s system, forcing taxpayers to rely on examiners presenting the document.

Sotto said preventive systems — not just after-the-fact investigations — are essential to curb abuse. 

“An ounce of prevention is better than a pound of cure. If you have a system, create one that allows business owners to verify whether an LoA is legitimate. That would help a lot,” he said.