Reinvestigation of Tax Cases on the Ground of Fraud, Irregularity or Mistake

July 1, 1977 REVENUE MEMORANDUM ORDER NO. 27-77 SUBJECT : Reinvestigation of Tax Cases on the Ground of Fraud, Irregularity or Mistake TO : The Chiefs of the Investigating Divisions in the Central Office, and Others Concerned Under Section 337 of the Tax Code, there can be no reinvestigation of a tax case unless the Commissioner is convinced that there has been fraud, irregularity or mistake in the original investigation thereof. It is, therefore, very essential to establish a prima facie case of fraud, irregularity or mistake before a letter of authority for reinvestigation can be issued; otherwise, the taxpayer could rightfully refuse to give access to his books of accounts and records, and the Bureau would just be embarrassed if it should have nothing to lean on except hearsay evidence, suspicion, presumptions, unverified allegations (i.e., not sworn) or, worse, mere allegations in anonymous letters. In order to avoid needlessly inconveniencing taxpayers thru the issuance of letters of authority for reinvestigation and to avoid BIR embarrassment as well, you should see to it that in every case of requested reinvestigation, there is sufficient evidence (sworn statements, authentic documents or the like) establishing at least a prima facie case of fraud, irregularity or mistake. Kindly relay the foregoing to all your examiners. EFREN I. PLANA Acting Commissioner TAN-P4519-F2828-A-8