The audit process begins when a taxpayer who has been chosen for audit receives a Letter of Authority.

A letter of authority submitted to a revenue officer is necessary by law before a taxpayer can be
examined. While a Letter Notice is not required by law, it serves the only goal of informing the taxpayer
that the BIR has discovered a discrepancy in his tax data.

A letter of authority is only valid for 30 days from the date of issue, but a Letter Notice is not limited in
any way.

A letter of authority authorizes a Revenue Officer to review and evaluate a Taxpayer's books of accounts
and other accounting records in order to ascertain the Taxpayer's true internal revenue tax liabilities. It
must be served on the appropriate Taxpayer within thirty (30) days of its issuance date, or it will be null
and void. Unless the Letter of Authority is revalidated, the Taxpayer has the right to deny service of this.

A Pre-Assessment Notice is a communication issued by the Regional Assessment Division, or any other
pertinent BIR Office, advising a taxpayer who has been audited of the Revenue Officer's findings after
the findings have been reviewed. If the Taxpayer disagrees with the findings, he has fifteen (15) days
from the date of receipt to file a written reply opposing the proposed assessment.

A Notice of Assessment is a declaration of deficiency taxes sent to a taxpayer who fails to react to a Pre-
Assessment Notice within the timeframe specified, or whose response to the Pre-Assessment Notice is
determined to be without merit. The Taxpayer is notified of this fact in the Notice of Assessment, and
the Revenue Officer performing the audit is required to produce an investigation report. The facts, the
legislation, rules and regulations, or jurisprudence on which the assessment is based must be stated in
the formal letter of demand, or the formal letter of demand and the notice of assessment will be void.