House probe sought on alleged BIR abuse of audit authority

A resolution has been filed in the House of Representatives of the Philippines seeking a congressional inquiry into alleged abuses and the reported “weaponization” of Letters of Authority (LOAs) and Mission Orders (MOs) by officials and personnel of the Bureau of Internal Revenue.

Deputy Speaker Jefferson F. Khonghun, representative of the 1st District of Zambales, filed the resolution on Monday, directing the appropriate House committee to conduct a thorough inquiry, in aid of legislation, into reports of misuse, abuse, and alleged extortion linked to tax audits.

Khonghun said the proposed inquiry aims to strengthen safeguards against corruption, ensure fair and transparent tax administration, and protect taxpayers from harassment and extortion.

While acknowledging the BIR’s critical role in revenue collection, Khonghun said whistleblower testimonies, investigative reports, and taxpayer complaints point to serious irregularities in the use of LOAs and MOs.

Although the Senate of the Philippines has initiated hearings into the allegations, Khonghun stressed that the House must also exercise its oversight and legislative functions to ensure comprehensive reforms.

“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,” Khonghun said.

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

Khonghun said the alleged practices erode public trust, weaken investor confidence, and distort the business environment at a time when the government is seeking to attract sustainable investments.

The resolution also cited recent BIR reforms, including the suspension of audit operations in late 2025 under Revenue Memorandum Circular (RMC) No. 107-2025, which acknowledged problems such as fake LOAs, unauthorized audits, and inconsistent practices.

It also noted the introduction of the LOA Verifier under RMC No. 5-2026, which allows taxpayers to verify LOAs online through the BIR’s chatbot.

However, Khonghun said these measures are insufficient to dismantle entrenched extortion schemes.

“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,” he said.

The proposed inquiry seeks to review the integrity of LOA and MO issuance and audit protocols, assess the effectiveness of the audit suspension and LOA Verifier system, propose safeguards against abuse of authority, and recommend stronger penalties and accountability mechanisms.

Khonghun said the House must fulfill its constitutional duty to conduct independent oversight and enact reforms to restore confidence in the tax system.

“Every Filipino—whether a small business owner or a large investor—deserves a tax system that collects what is due to the State without becoming a tool for personal enrichment or intimidation. We owe it to our people to act decisively,” he said.