BIR ‘resumes’ notorious LOAs; but were they ever stopped?
BIR on Jan. 27 resumed issuing Letters of Authority. Meaning, agency crooks can again freely extort huge sums from taxpayers.
In truth, LOAs never were suspended last Nov. 24. The two-month ceasefire from examination of taxpayers’ books was a farce.
From Nov. 25-Jan. 26, revenue officers and group supervisors continued to fire off LOAs – although antedated. The antedating to, say, Nov. 12 or 13 or 14, 2025 made it look like the LOAs were signed and mailed well before the ceasefire. But receiving it on, say, Jan. 7 or 8 or 9, 2026 sent the same chilling effect.
Businessmen received LOAs in mid-December 2025 to mid-January 2026. They knew the drill: contact ASAP the signatories, negotiate and fulfill the deal. Pay a small percentage of the tax due over the counter and get an official receipt. Pay also a bigger amount under the table for the promise of not being bothered for at least a year. Or else face higher demands when LOAs formally restart.
In short, BIR extorters still had a very merry Christmas and prosperous new year. All that time, food and commodity prices soared. But business was down because of political uncertainties caused by the P1.7-trillion flood works scandal.
Public outcry against government corruption prompted BIR chairman Charlito Mendoza to suspend LOAs. This is not to say he was part of smoke screening. Still he must know that a few weeks’ shakeup won’t clean the ranks. He must fire and jail the extorters – starting with those with highest political connections.
Fierceness will show that Mendoza means business. Otherwise, it would seem that he suspended LOAs only to make Bongbong Marcos’ admin look clean.
To recall, top BBM appointees were linked in November 2025 to the flood works scam. That led to dismissal of Executive Secretary Lucas Bersamin, Budget Sec. Amenah Pangandaman, Public Works Sec. Manuel Bonoan with USecs Roberto Bernardo and Catalina Cabral, Malacañang USec Trygve Olaivar, Presidential Legislative Liaison Officer Adrian Bersamin and Special Envoy to China Maynard Ngu.
Spared, however, were then-Finance Sec. now ES Ralph Recto and Justice USec Jojo Cadiz. Given their exposed ties to crooked contractors, their retention in the Cabinet makes them look untouchable.
In restoring LOAs last week, Mendoza said that district officers and group supervisors will still sign. That’s tantamount to retaining the same hitmen.
He supposedly will reform the LOA system as advised by victimized businessmen:
• Only one LOA per year per businessman, consolidating in a single letter all obligations owed by an individual or business;
• Abolish the VAT Audit Section and other task forces, transferring their powers to regional offices and dedicated units, like Large Taxpayers Service;
• Launch an LOA verifier website where taxpayers can confirm the authenticity of an audit order.
Good luck to Mendoza with his reforms. Before appointment as BIR chief on Nov. 13, he was finance usec for Revenue Operations, overseeing BIR and Customs. Moved with him as BIR Deputy Commissioner is former Customs Dep. Com Vener Baquiran.
Citing BIR data, Mendoza said tax collections from LOAs comprise only three percent of revenue yearly, while 97 percent comes from voluntary compliance.
But of course! That’s precisely because LOAs – as extortion modus – involve settlement of small amount, say 10 percent, over the counter, and larger grease money, 40 percent, under the table. The taxpayer is incentivized to save 50 percent of the tax due.
BIR targets to collect P3.58 trillion this 2026. Meaning, three percent of that or P107 billion will fall under the LOA racket.
LOA is the BIR version of the “pasalubong” and “pabaon” that once plagued AFP finance. New bosses are greeted and old ones sent off with huge sums of dirty money.
Do the Anti-Money Laundering Council and ombudsman know what kind of personal aircraft BIR and Customs officers fly?
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