02/07/2026
1. How long do we need to keep original documents for BIR audit purposes?
Under Section 203 of the Tax Code and RR No. 5-2014, taxpayers are required to preserve their books of accounts and other accounting records (including original invoices, receipts, and vouchers) for a period of 10 years from the deadline for filing the return or from the date the return was actually filed, whichever is later.
Note: For the first 5 years, the hard copies must be strictly kept. For the remaining 5 years, electronic storage (scanned copies) may be allowed, provided they comply with BIR's electronic storage requirements.
2. Regarding po sa submission of documents, may time po ba na puwedeng soft copy ang i-submit?
Yes. Under RR No. 22-2020, during a BIR audit or investigation, taxpayers are explicitly permitted to submit scanned or soft copies of supporting documents via USB, DVD-R, or secure electronic channels, especially when physical transmission is difficult or if the volumes are immense. However, these scanned files must be high-resolution, readable, and accompanied by a notarized Certification of Authenticity stating that the electronic documents are faithful reproductions of the originals. The BIR still retains the right to look at the original hard copies for verification.
3. We received a Notice of Discrepancy, and we have not yet responded. Can we still request for extension to reply?
No. Under RR No. 22-2020, the Notice of Discrepancy (NOD) stage is strictly a 30-day discussion period from receipt of the notice to present your side and submit supporting documents. The rules do not grant or state an extension option for the NOD response phase. If you fail to respond or submit documents within the given period, the BIR will simply conclude the discussion and endorse the case for the issuance of a Preliminary Assessment Notice (PAN).
4. What remedies are available if my client cannot pay the deficiency taxes under a PAN at the soonest possible time?
Since the assessment is still at the PAN (Preliminary Assessment Notice) stage, the tax liability is not yet final, demandable, or executory.
File a Reply: You have 15 days from receipt of the PAN to file a written reply protesting the findings. This buys time to technically argue the merits of the assessment.
Compromise Settlement / Abatement: If the assessment moves to a Formal Letter of Demand (FLD/FAN) and the client eventually accepts the liability but genuinely lacks the funds, they can apply for a Compromise Settlement under Section 204 of the Tax Code based on "financial incapacity" (which usually requires paying 10% to 40% of the basic tax, subject to evaluation and approval by the BIR Evaluation Board). Alternatively, they can request an installment payment plan, though this is subject to strict BIR approval and legal interest.
5. We just received a FAN. From NOD to PAN, the assessment is the sameโwithout even considering the protest and supporting documents submitted. How should we approach this?
This is a common administrative hurdle. Do not panic, but act immediately because the clock is ticking:
File a Formal Administrative Protest: You must file a formal, written Protest Letter (either a Request for Reconsideration or a Request for Reinvestigation) within 30 days from the exact date you received the Final Assessment Notice (FAN) / Formal Letter of Demand (FLD).
Highlight Due Process Violations: In your protest, explicitly emphasize that the BIR failed to consider your previously submitted arguments and documents. Under Philippine jurisprudence (e.g., CIR v. Vivo), an assessment that completely ignores the taxpayerโs explanations violates the constitutional right to administrative due process and can render the assessment void.
Submit Supporting Documents: If you opt for a Request for Reinvestigation, you have 60 days from the filing of your protest letter to submit all newly relevant supporting documents.
6. Puwede po ba scanned copies ang ibigay na receipts? Tapos kung naka-manual books po kami, puwede ba kaming i-require o pilitin magbigay ng Excel file ng books? Pati nga rin po bank statements, hiningi sa amin.
Scanned Receipts: Yes, as discussed in Question 2, you can provide scanned receipts provided they are clear and authenticated, but the examiner can still ask to see the original manual booklets to cross-check.
Excel File for Manual Books: Technically, if you are registered under Manual Books of Accounts, you are only legally required to maintain and present those handwritten, stamped leather-bound books. The BIR cannot legally compel or penalize you for not having an Excel version if you aren't registered under Loose-leaf or Computerized Accounting Systems (CAS). However, keeping an internal Excel tracker makes audits significantly faster, and examiners appreciate itโjust ensure it matches your physical books perfectly if you choose to share it voluntarily.
Bank Statements: The BIR examiners routinely ask for bank statements to perform a "reconciliation of income" against your declared revenues. However, under the Law on Secrecy of Bank Deposits (R.A. No. 1405), the BIR cannot force your bank to surrender these records directly without your consent, unless there is a specific court order or a formal case of tax fraud. That said, during a standard audit, if you completely refuse to provide bank statements yourself, the examiner might use alternative "best evidence obtainable" methods to estimate and blow up your taxable income, so it is often strategically balanced or negotiated.
