JV slams ‘culture of corruption’ in BIR amid LOA abuse claims

Senator Joseph Victor “JV” Ejercito raised serious concerns over alleged widespread corruption within the Bureau of Internal Revenue (BIR), describing a “culture of corruption” that is reportedly victimizing taxpayers through harassment, coercion, and extortion.

During a Senate inquiry conducted by the Blue Ribbon Committee on Thursday, Ejercito said his office has received numerous complaints that certain BIR personnel are abusing the Letter of Authority (LOA), a formal legal document allowing tax officials to examine a taxpayer’s records and determine liabilities, for personal gain.

“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 shortchanged because tax collection has become a money-making scheme for some,” Ejercito said.

He expressed particular embarrassment that complaints have been lodged by foreign diplomats and members of the American and European Chambers of Commerce regarding these practices.

According to the senator, the alleged scheme involves issuing multiple LOAs to a single taxpayer within a taxable year or across successive years, often coupled with inflated tax assessments that have no proper basis.

“One report detailed how a BIR examiner in the City of Manila offered to settle the LOA for a ‘P400,000 all-in’ amount. When the taxpayer refused, the examiner issued an assessment of P13 million, despite the business’ gross sales being only P12 million. No supporting documents or reasonable computations were provided,” Ejercito said.

Other reports describe a recurring cycle in which taxpayers are forced to pay bribes under the guise of compromise settlements, leaving them fearful of reporting abuses for fear of retaliation. 

Ejercito cited cases in Quezon City, Laoag, and Bulacan, illustrating that both small business owners and corporations have been targeted.

He also referenced a so-called “70/30 scheme,” in which the majority of payments allegedly go directly into the pockets of BIR personnel, with only a small portion officially remitted to the government.

“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,” the senator said.

Ejercito urged the Blue Ribbon Committee to investigate these allegations thoroughly, emphasizing that taxpayers should not live in fear of harassment or extortion from the very agency tasked with collecting government revenues.

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

The senator’s statements follow ongoing scrutiny of government agencies’ accountability and transparency, with the BIR repeatedly highlighted for reform efforts in recent years.