Court of Tax Appeals (CTA) Decisions Concerning the Issuance of Letters of Authority and Memorandum of Assignment (MOA) in Relation to Section 13 of the National Internal Revenue Code of 1997 (NIRC), as Amended

February 9, 2018 OPERATIONS MEMORANDUM NO. 2018-02-03 TO : All Regional Directors, Revenue District Officers, Internal Revenue Officers and Others Concerned RE : Court of Tax Appeals (CTA) Decisions Concerning the Issuance of Letters of Authority and Memorandum of Assignment (MOA) in Relation to Section 13 of the National Internal Revenue Code of 1997 (NIRC), as Amended Section 235 of the NIRC, as amended, provides that for income tax purposes, examination and inspection of the books and records shall be made only once in a taxable year, except in certain cases specifically mentioned under the aforesaid section of the NIRC. Thus, as a general policy, only one electronic Letter of Authority (eLA) is issued for each taxable year or period covering the audit/investigation of all internal revenue tax liabilities of the taxpayer, except when a specific tax type had been previously examined ( e.g. , audit of VAT liabilities under the VAT Audit Program, audit of VAT arising from claim for tax refund/Tax Credit Certificate). In line with the said provision, in the reassignment of cases to another Revenue Officer (RO) due to transfer to another office, retirement, resignation, etc., of the original RO handling the case, the Revenue District Officer (RDO) issues a Memorandum of Assignment (MOA) to the new RO for the continuation of the audit/investigation. We issue a MOA, using a pre-numbered accountable form in order to monitor and tract the reassignment of cases. However, in the recent decisions issued by the Court, there must be an authority in the form of an LA given to the RO, otherwise the examination or assessment is void ( McDonald's Philippine Realty Corporation vs. CIR , CTA Case No. 8655; Ithiel Corporation vs. CIR , CTA Case No. 8689; Strawberry Foods Corporation vs. CIR , CTA Case No. 8569). In view of the foregoing, the issuance of a MOA for reassignment of cases in the aforementioned instances shall be discontinued. However, before the RDO can request for the issuance for the replacement eLA, the previous eLA must be cancelled by the Regional Director. In requesting for the eLA replacement, aside from the name of the new RO/Group Supervisor (GS), the LOA No. of the cancelled eLA shall be encoded and the appropriate reason ( e.g. , resignation of the RO, retirement of the RO, transfer of the RO to another district office) must be selected from the "List of Reason for LOA replacement" that will be displayed in the "Electronic Letter of Authority Request Data Entry" screen. The said information is necessary so that the replacement eLA reassigning the case to another RO/GS will have a notation at the bottom of the new eLA as follows: "This is a replacement of Letter of Authority No. _____________ dated __________________ for the continuation of audit of herein tax liabilities for the taxable period from __________________ to __________________ arising from the reassignment of the case due to ____________________________________." For your information and guidance. (SGD.) ARNEL SD. GUBALLA Deputy Commissioner Operations Group