This holiday season brings us more than gifts and surprises — it brings a break from Bureau of Internal Revenue (BIR) field audits and creates hope for a clearer, smarter, and better tax system for everyone.
On Nov. 24, the BIR issued Revenue Memorandum Circular (RMC) No. 107-2025 establishes all ongoing audits and related field activities, including the issuance of Letters of Authority (LoAs), Mission Orders (MOs), and the examination and verification of taxpayers’ books of account, records, and other scenes clearly defined in related definitions. Section IV of RMC. The suspension will remain in effect until the CIR issues an order to lift it.
While many taxpayers welcomed this as an early Christmas present, questions quickly arose about the scope of the suspension and its exceptions. For clarification, the BIR issued RMC No. 109-2025 on Dec. 12, provides detailed instructions.
ACTIVITIES COVERED BY SUSPENSION
Suspension applies to:
• Field activities under the LoA or MO involving communication or face-to-face meetings with taxpayers and visits to taxpayers’ premises such as book inspections, verification records, and audit-related visits;
• Issuance of a Subpoena Duces Tecum (SDT) related to an audit or investigation other than the cases under this exception mentioned;
• Conducting Tax Mapping/Tax Compliance Verification Drive (TCVD), which involves verifying taxpayer compliance with basic administrative rules and collecting data to issue a potential LoA.
OUT OF STOP
Certain functions remain active, including:
• Cases decided within six months from Nov. 24, including audits under LoA covering multiple types of taxes where one is close to prescription;
• Processing and verification of real estate tax returns, donor’s tax returns, capital gains tax returns, and withholding tax returns on the sale of real properties or shares of stock, as well as documentary stamp tax returns related to what are described as ONETT cases;
• Requests for tax exemptions from taxpayers due to retirement or closure of business involving the sale of gross receipts or receipts exceeding P1,000,000.00 or net assets exceeding P3,000,000.00, which require a mandatory audit to verify outstanding debts and ensure that all tax obligations are paid prior to issuance;
• LoAs or MOs required for active criminal investigations carried out by duly authorized units through verified intelligence reports, cross-sector referrals, third-party data verification, or risk assessment anomalies, requiring immediate audit action due to possible tax fraud;
• Refund or Tax Credit Certificate (TCC) applications where the issuance of a LoA is required by law — such as Income Tax, VAT, and Excise Tax — to ensure compliance with statutory reporting deadlines under the Tax Code, as amended;
• Other matters or concerns where deadlines are set by law – other than those mandated by executive orders – and deadlines under the Commissioner’s orders.
ACTIVITIES IN PROGRESS
In addition to the above exceptions, the BIR clarified that the following activities may continue and are not covered by the suspension:
• Responses to audit notices issued prior to suspension, allowing taxpayers to pay delinquent taxes, file an answer or protest within the statutory deadline, or submit supporting documents for reinvestigation;
• Payments from payments or agreements concluded before suspension, to continue without further approval as long as they are supported by the Agreement Form (QF-06-01-2024) signed by the relevant BIR officials and the taxpayer or authorized representative before the RMC operation;
• Letters of collection, guarantees of impairment or tax, permits to fix things, notices of confiscation, and similar letters to enforce the collection of delinquent accounts, including letters sent by third parties such as the LRA, the Register of Deeds, or the Property Inspector to confirm the seizure of property of delinquent taxpayers, as this is part of the collection process of the last collected IR. — not part of the audit itself;
• Sending or issuing reminder letters for open cases that include filing and tracking required schedules such as SLS, SLSPL, alphalist, and inventory list, to ensure compliance with filing and reporting requirements;
• Voluntary payment of known delinquent taxes during the suspension period by completing the Income Payment Form and paying the agreed amount, or any agreed payment schedule before the suspension continues without further authorization.
The suspension of BIR audits is a welcome wind for taxpayers – but it is not just a freeze. Suspension only applies to field operations. Taxpayers are still required to file returns, pay taxes due, and follow regular statutory schedules. Understanding these nuances ensures that taxpayers stay on track and avoid surprises in the new year.
EXPECTATIONS OF PAYERS AFTER APPOINTMENT
Taxpayers are looking forward to measures that will make audits more efficient, transparent, and balanced. Many are hoping for a risk-based approach, where audit efforts are focused on areas or profiles that present a high risk of compliance. Currently, some taxpayers have received multiple LoAs in succession, creating operational challenges. In addition to managing an audit, taxpayers need sufficient time to review and improve their internal systems, procedures, and controls based on previous audit findings. A risk-based approach can help ensure that resources are used effectively and minimize unnecessary disruption to those with a strong compliance record. This would also help to simplify audit procedures, allow taxpayers breathing room to strengthen compliance, and reduce these repeat cases.
Taxpayers also appreciate the clarity and consistency of audit findings. There is a growing expectation that assessments are well-founded and comply with applicable tax laws and regulations, avoiding figures that may appear excessive. Strengthening internal review and verification processes can help ensure accuracy and fairness, fostering greater confidence in the audit process. This development will not only facilitate compliance but will also enhance the cooperative relationship between taxpayers and the BIR going forward.
As we enter a new year, transparency and collaboration remain key to a strong tax environment. The suspension of audits provides a timely respite, but it also opens the door to meaningful improvements in audit processes – balancing law enforcement with fairness and efficiency. By adopting risk-based strategies and strengthening quality control, the BIR can continue to build trust and transparency, while taxpayers can look forward to a system that supports compliance without undue stress. After all, the best gift for both parties is a tax structure that works best for everyone.
Let’s Talk Tax is P&A Grant Thornton’s weekly newspaper column which aims to inform the public about various tax developments. This article is not intended to replace the advice of qualified professionals.
Via Marie Angela M. Valdez is an associate from the Tax Advisory & Compliance practice area of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.
at grantthornton@ph.gt.com
