RMC No. 75-2018 — Highlights the mandatory statutory requirement and function of a Letter of Authority

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BURE AU O INTERNAL REVENUE NTYYYN SEP 0.5 2018 3:50P.u

RECORDS MGT. DIVISION September 5, 2018

Revenue Memorandum Circular No. 75- 20/ 8

Subject : The Mandatory Statutory Requirement and Function of a Letter of Authority .

To All Internal Revenue Officers and Others Concerned

Supreme Court in the case of " Medicard Philippines, Inc. vs. Commissioner of internal Revenue" (G.R. No. 222743, 05 April 2017) on the mandatory statutory This Circular is being issued to highlight the doctrinal rule enunciated by the

requirement of a Letter of Authority (LOA), for the guidance of all concerned) particularly internal revenue officers tasked with assessment and collection functions and review of disputed assessments.

The judicial ruling, invoking a specific statutory mandate, states that no assessments can be issued or no assessment functions or proceedings can be dene without the prior approval and authorization of the Commissioner of internal Revenue (CIR) or his duly authorized representative, through an LOA. The concept of an LOA is therefore clear and unequivocal . Any tax assessrnent issued without an LOA is a violation of the taxpayer's right to due process and is therefore "inescapably void.'

The Court further emphatically clarified that :

1. The circumstances contemplated under Section 6 of the Nationai

Internal revenue Code (NIRC) , as amended, "where the taxpayer may be assessed through best evidence obtainable , inventory taking or surveillance, among others, have nothing to do with the

to arrive at the correct amount of taxes. Hence uniess undertaken by LOA. These are simply methods of examining the taxpayer in order

the CIR himself or his duly authorized representatives, other tax agents may not validly conduct any of these kinds of examinations without prior authority."

2. A Letter Notice (LN) "is entirely different and serves a different

purpose than an LOA". It is not found in.the NIRC and is not an authority to conduct an audit or exarnination of the taxpayer leading to the issuance of deficiency assessments . Due process demands that after an L.N has served its purpose , the revenue officer should have properly secured an LoA before proceeding with the further examination and assessment of taxpayer

To help forestall any unnecessary controversy and to encourage due

observance of the judicial pronouncements, any examiner or revenue officer initiating

tax assessments ' or performing assessment functions without an LOA shall be

subject to appropriate administrative sanctions.

The provisions of any internal revenue issuance inconsistent herewith are

hereby repealed , amended or modified accordingly.

All internal revenue officials and employees concerned are hereby enjoined to

give this Circular as wide publicity as possible.

1aM Caesar r. dulay Commissioner of Internal Revenue

019 39 7

BUREAU OT INTERNAL REVENUE

NnNtYyn SEP 05,2018 3:50 PM: hgA

RECorDs MGt. DiVIsiON C Tc