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Handling Letter Notices
Handling Letter Notices
One of the trending topics that generate interest among the players in the business world is the trouble-free resolution to Letter
Notices (LN) issuances. This is so true, both to taxpayers and the Bureau of Internal Revenue (BIR). For the taxpayers, these
LN issuances might be burdensome considering the voluminous documents they need to produce to respond to the LNs. For the
BIR, the LNs are a means of realizing the idealistic principle of good governance through speedy and proper collection of taxes.
In general, an LN informs a taxpayer of a discrepancy of sales/purchases for a particular taxable period, which discrepancy
arises from a matching system of the BIR. The LN supposedly gives detailed information as to the source or basis of the
discrepancy in the amount of sales/purchases.
Lately, the discrepancies pertain to the amount of sales/purchases reported by the recipient of the LN per its tax returns as
compared with the amount of purchases/sales of its customers/suppliers per the latters summary lists of purchases/sales or per
alphalists of payees. In brief, the LN results from the matching of the data available in the system of the BIR, gathered from the
LN recipient and its customers/suppliers.
As distinguished from a Letter of Authority (LA), an LN merely shows a discrepancy in sales/purchases but an LN may ripen to
an LA if not resolved in its initial phase. An LA, on the other hand, notifies the taxpayer that an officer of the BIR has been
authorized to examine, validate and scrutinize a taxpayers books and records in relation to his internal revenue tax liabilities for
a particular period. An LA may mature into a tax assessment where a Preliminary Assessment Notice and Final Assessment
Notice may be issued. In any case, an LN may be argued to have the effects of an LA in the sense that it prohibits a taxpayer to
amend its tax returns covering the period for which the LN was issued.
An LN recipient is given the opportunity to refute the discrepancy raised by the LN within the allowed period. Usually, the period
given to the recipient is 10 days within which to respond and to submit its supporting documents. It is likely, however, that a
different period will be provided depending on the specific office issuing the LN.
The recipient may submit its summary list of sales/purchases, sworn certification of its amount of sales/purchases, official
receipts/invoices or contracts and agreements evidencing the transaction, and other available documents to substantiate its
reported amount of sales/purchases. Thereafter, the BIR officer handling the LN should verify the correctness of these
supporting documents submitted by the LN recipient.