Business Mirror

Atty. Irwin C. Nidea, Jr. discusses the intricacies of a letter of authority and the manner of service that is allowed by law.

Letter of Authority

By: Atty. Irwin C. Nidea Jr.

The first love letter that a taxpayer receives from the BIR is a letter of authority (LA). It is the basis by which the power of the revenue examiners is anchored on.

Taxpayers must be aware that there are details in an LA that they must watch out for. First, an LA must only state a taxable year. It cannot cover an indefinite number of years. Second, an LA must be signed by the Commissioner, Regional Director or by a Assistant Commissioner/Head Revenue Executive Assistant of the Large Taxpayers Service. A Revenue District Officer (RDO) has no power to issue an LA. Third, an LA must be served within 30 days from the issuance date. If the LA is served beyond 30 days, it is void. Fourth, the LA must have no erasures or alternations. The LA will also be considered void if erasures or alterations are found.

A recent revenue issuance (RMC 110-2020), emphasized how an electronic Letter of Authority (eLA) must be served to the taxpayer. This was issued because it was observed by the Commissioner that revenue officers (RO) are not aware that aside from personal service, an LA may be served by substituted service or by mail.

If by per personal service, a copy of the eLA must be registered at the taxpayer’s registered or known address or wherever he may be found. A known address means a place other than the registered address where business activities of the party are conducted or his place of residence. It must also be noted that personal or substituted service of the eLA must be effected by the revenue officer assigned to the case. They are revenue officers whose names may be found in the eLA. But service may also be made by any BIR employee, as long as he is duly authorized for the purpose.

In case personal service is not possible, the eLA must be served either by substituted service or by mail. According to the RMC, substituted service can only be resorted to when the party is not present at the registered or known address. The eLA may be left at the taxpayer's registered address, with his clerk or with a person having charge thereof. If the known address is a place where business activities of the party are conducted, the eLA may be left with his clerk or with a person having charge thereof.

If the known address is the place of residence, substituted service can be made by leaving the eLA with a person of legal age who resides in that address. If no person is found in the taxpayer's registered or known address, the ROs concerned must bring a barangay official and two 2 disinterested witnesses to the address so that they may personally observe and attest to such absence. The original copy of the eLA shall be given to said barangay official. There is also a prescribed acknowledgement receipt that must be filled in. Should the taxpayer be found at his registered or known address or any other place but refuses to receive the eLA, the ROs concerned shall bring a barangay official and 2 disinterested witnesses in the presence of the party so that they may personally observe and attest to such act of refusal. The original copy of the eLA shall be given to said barangay official. Service by mail on the other hand, must be done by sending a copy of the eLA through registered mail with an instruction to the Postmaster to retum the mail to the sender after ten (10) days, if undelivered. It can also be done through a reputable professional courier service; or by ordinary mail, if no registry or reputable courier is available in the locality of the taxpayer.

An LA is the start of a long process of examination. If the BIR does not comply with the due process requirement laid down by law in its preparation and manner of service, BIR will be surprised that the courts will declare the whole assessment process void.