In the Philippine tax jurisdiction, the power of the Bureau of Internal Revenue (BIR) to examine a taxpayer’s books of accounts is a fundamental exercise of the state’s power of taxation. However, this power is not absolute. To protect taxpayers from undue harassment and to ensure administrative efficiency, the National Internal Revenue Code (NIRC), as amended, and various revenue issuances establish strict rules regarding the frequency of audits within a single taxable year.

I. The General Rule: One Audit Per Taxable Year

The foundational principle governing the frequency of tax audits is found in Section 10 of the NIRC. It explicitly mandates that the examination and inspection of a taxpayer’s books of accounts and other accounting records shall be made only once in a taxable year.

This "One-Audit-Rule" is designed to prevent repetitive and vexatious investigations that could disrupt a taxpayer’s business operations. Once the BIR has conducted an audit for a particular year and issued a termination letter or a closing brief, that period is generally considered "closed" for further examination.

II. Exceptions to the Single Audit Rule

While the general rule prohibits multiple audits, the law provides specific instances where the Commissioner of Internal Revenue (CIR) may authorize a second (or subsequent) examination of the same taxable year:

Fraud, Irregularity, or Mistakes: If there is reasonable ground to believe that the taxpayer committed fraud, or if there are patent irregularities or clerical errors in the previous audit.
Request by the Taxpayer: When the taxpayer themselves requests a reinvestigation or a re-examination of their records.
Verification of Compliance with Withholding Tax: If the subsequent audit is specifically for the purpose of verifying compliance with withholding tax laws, which may be treated distinctly from income tax audits.
Split Jurisdiction: When different tax types (e.g., VAT vs. Income Tax) are handled by different offices, although modern BIR policy aims to consolidate these into one Letter of Authority (LOA).
Audit of Capital Gains Tax/Transfer Taxes: Examinations related to specific transactions (like the sale of real property) generally do not preclude a general audit of the taxpayer’s business income for that same year.

III. The Necessity of a Letter of Authority (LOA)

For any audit—whether it is the first or a subsequent one—a valid Letter of Authority (LOA) is indispensable.

Jurisdictional Requirement: The LOA is the jurisdictional basis for the BIR's audit power. Without it, any assessment resulting from an examination is void ab initio (from the beginning).
Specific Coverage: The LOA must clearly state the taxable year and the specific tax types being audited.
Re-issuance for New Audits: If the BIR intends to perform a second audit under the exceptions mentioned above, a new LOA must be issued specifically authorizing that subsequent examination. A previous LOA cannot be "reused" once the initial audit is concluded.

IV. Relevant Revenue Issuances and Jurisprudence

The BIR further clarifies these rules through Revenue Memorandum Orders (RMOs). Currently, the BIR emphasizes "holistic" audits. RMOs often dictate that a single LOA should cover all internal revenue taxes for a specific year to avoid the necessity of multiple visits.

Jurisprudence (Supreme Court Rulings): The Supreme Court has consistently held that the BIR must strictly follow the procedural requirements of the NIRC. In cases where the BIR attempted to assess a taxpayer for a second time without a new LOA or without proving the existence of an exception (like fraud), the courts have nullified the resulting assessments. The burden of proof lies with the BIR to justify why a second audit is necessary.

V. Summary of Taxpayer Rights

Taxpayers should be aware of the following protections regarding audit frequency:

Right to Object: If a Revenue Officer (RO) attempts to examine books for a year that has already been audited, the taxpayer has the right to demand the new LOA and the legal justification for the re-examination.
Termination Documentation: Always secure a Termination Letter or a Notice of Discrepancy (and eventually a Final Assessment Notice or a Letter of Termination) to formally mark the end of an audit cycle.
Prescription Period: Even within the rules of frequency, the BIR must conduct its audit within the three-year prescriptive period (or ten years in cases of fraud).

VI. Conclusion

The "One-Audit-Rule" serves as a vital check and balance in the Philippine tax system. While the BIR possesses broad investigatory powers, the requirement for a single annual examination—absent specific legal exceptions—ensures a degree of finality and predictability for taxpayers. Compliance with the requirement of a valid LOA remains the most critical safeguard against unauthorized or repetitive tax investigations.