1) The setting: what a Letter of Authority (LOA) actually does

A Letter of Authority (LOA) is the Bureau of Internal Revenue’s written authority directing named revenue officers to examine a taxpayer’s books, records, and other data for specific tax types and taxable periods. In practice, the LOA is the document that legitimizes a “regular” audit and sets the boundaries of what the examiners may look into.

Why it matters: Philippine jurisprudence has repeatedly treated an LOA as a critical due-process safeguard. An examination that strays beyond the LOA’s scope (wrong period, wrong tax type, wrong/unnamed officers) risks producing an assessment vulnerable to being voided.

Typical information contained in an LOA

Taxpayer name and registered address
Covered taxable year(s)/quarter(s)
Covered tax types (e.g., income tax, VAT/percentage tax, withholding taxes, DST)
Names (and sometimes designations) of the authorized revenue officer(s)
Issuing/approving BIR official (per delegation rules)
Date and reference details

Immediate practical effects of receiving an LOA

The taxpayer will usually receive written requests for documents (books of accounts, invoices/ORs, schedules, alphalists, bank statements, contracts, import/export docs, etc.).
The audit begins to move through an internal BIR workflow (case assignment, working papers, audit report drafting, review and approval layers).
Deadlines start to matter—but the most legally consequential deadlines are those tied to assessment (not to informal audit discussions).

2) Where the Notice of Discrepancy (NOD) fits—and why it may never arrive

A Notice of Discrepancy (NOD) is an administrative communication used in many audits to inform the taxpayer of the examiner’s initial findings and give an early chance to explain or reconcile issues before the BIR proceeds to formal assessment notices.

Key point: an NOD is generally not the assessment required by law

Under the National Internal Revenue Code (NIRC) and the assessment regulations (notably the rules implementing Section 228), the legally significant notices are typically:

Preliminary Assessment Notice (PAN) (where required), and
Final Assessment Notice / Formal Letter of Demand (FAN/FLD)

An NOD is commonly treated as a pre-assessment step meant to streamline or encourage early settlement—but it is not, by itself, the “assessment” that creates enforceable deficiency tax liability.

Why no NOD may be issued even after an LOA is served

The absence of an NOD can mean several different things, including:

No discrepancies were found worth pursuing
- The audit may be heading toward closure without a deficiency assessment.
Discrepancies exist, but the examiners are still building the case
- The BIR may still be validating third-party data (e.g., SLSP/relief-type matches, withholding tax cross-checks, industry benchmarks, bank deposits, import records) and has not finalized an initial list of issues.
The audit used a different pre-assessment communication
- Some cases use an “informal conference” notice or other invitations instead of (or before) an NOD.
The BIR proceeds directly to PAN (or even FAN in limited cases)
- Because the NOD is administrative rather than statutory, an examiner may skip it and move to the PAN (if a PAN is required) or proceed under exceptions where a PAN may be dispensed with.
Internal reassignment, review, or dormancy
- Cases can slow down due to officer reassignment, workload, supervisory review, or pending approval at multiple levels.

3) The audit roadmap: what happens after an LOA (and where “silence” can occur)

Even with no NOD, the audit usually follows a recognizable sequence:

Stage A — Document gathering and fieldwork

What to expect:

Written requests for submission (sometimes multiple rounds)
Reconciliations required (sales vs VAT declarations, purchases vs input tax, withholding tax schedules, ITR vs AFS, etc.)
Interviews and clarificatory meetings
Possible third-party confirmations

What “no NOD” can look like here:

Long gaps between requests
Verbal comments about issues without a formal NOD
Requests that narrow to specific accounts (e.g., “cash/AR,” “bank deposits,” “non-operating income,” “zero-rated sales support,” “WTAX expanded”)

Stage B — Preliminary findings and internal review

What to expect:

The revenue officer prepares working papers and drafts findings
Case goes through internal checks (group supervisor, division chief, review units, etc.)

What “no NOD” can look like here:

Months with no outward communication while the file is being written up or reviewed.

Stage C — Pre-assessment communication (optional/variable)

Possible outputs include:

NOD (if used)
Notice/Invitation for Informal Conference
Settlement discussions (sometimes proposed computations are shared informally)

Stage D — Formal assessment track (legally consequential)

This is where the rules under Section 228 and its implementing regulations dominate:

PAN (Preliminary Assessment Notice), when required
- Taxpayer is typically given a period to respond (commonly 15 days under the implementing rules).
FAN/FLD (Final Assessment Notice / Formal Letter of Demand)
- Taxpayer must protest within 30 days from receipt (request for reconsideration or reinvestigation).
- Supporting documents are typically submitted within a set period (commonly 60 days from filing of protest, depending on the chosen mode and the rules invoked).
BIR decision / FDDA (Final Decision on Disputed Assessment) or inaction
- The timeline for BIR action and the taxpayer’s remedy (administrative vs CTA) becomes critical.

What “no NOD” can look like here:

The first formal notice you receive after the LOA is a PAN (or in certain statutory exceptions, a FAN/FLD).

Stage E — Closure (if no assessment is pursued)

If the BIR decides not to assess, the case may be closed internally. Sometimes a taxpayer receives a closure/termination communication; sometimes the only “evidence” is the absence of further notices.

Important nuance: Lack of an NOD does not automatically mean closure.

4) What the absence of an NOD does—and does not—mean (legally and practically)

What it does not mean

It does not guarantee that no deficiency assessment will be issued.
It does not stop the BIR from issuing a PAN (if required) or a FAN/FLD later—so long as the assessment is issued within prescriptive periods and due process is observed.
It does not create finality by itself. Finality usually comes from:
- expiration of the assessment prescriptive period, or
- issuance of an assessment that becomes final due to failure to protest, or
- specific closure/termination actions paired with legal limits on reexamination (discussed below).

What it can mean in practice

The audit is still “in the kitchen” (internal processing).
The issues found are being validated.
The examiner is considering closure or minimal findings.
The BIR is positioning the case for a formal notice without an intermediate NOD.

5) Prescriptive periods: the single most important “clock” when there is no NOD

When an LOA has been served but no NOD is issued, many taxpayers focus on the audit’s pace. Legally, the more decisive question is whether the BIR can still issue a valid assessment within the period allowed by law.

General rule (ordinary cases)

The BIR generally has three (3) years to assess internal revenue taxes counted from the last day prescribed by law for filing the return (or the day the return was filed, if filed late), subject to exceptions and suspensions.

Longer period (exceptional cases)

A longer period (commonly ten (10) years) may apply in cases involving false or fraudulent returns with intent to evade tax, or failure to file a return, subject to statutory standards.

Suspension/extension issues to watch

Even if no NOD is issued, the assessment period may be affected by:

Requests for reinvestigation (which can suspend running in certain contexts)
The taxpayer’s unavailability or inability to be located (as contemplated by the Code)
Waivers of the statute of limitations (often requested by examiners)

Waivers: high-impact and often litigated

Taxpayers are sometimes asked to sign a waiver to extend the assessment period. In litigation, waivers are frequently attacked when they are defective (timing, authority, acceptance, dates, or failure to furnish a copy). Practically, a waiver can keep the exposure alive even when an audit seems stalled.

Bottom line: If nothing is being issued (no NOD, no PAN, no FAN), the assessment prescriptive period becomes the boundary between “pending exposure” and “time-barred exposure”—unless properly extended or suspended.

6) What you may receive instead of an NOD

If there is no NOD, the next formal or semi-formal communications may include:

A) Further requests for documents or reconciliations

Common examples:

Sales reconciliation: AFS vs ITR vs VAT returns vs Summary List of Sales
Purchases reconciliation: input VAT substantiation, SLSP matching, import entries
Withholding tax audit: expanded withholding vs alphalists vs expense accounts
Bank deposit analysis (especially if income underdeclaration is suspected)
Proof of zero-rating/exemption (for VAT)
Related-party schedules and transfer pricing support (where applicable)

B) Invitation/notice for informal conference

This is a pre-PAN step recognized in the assessment framework. It is meant to discuss proposed findings and allow explanations.

C) A Preliminary Assessment Notice (PAN)

If the BIR believes a deficiency exists and the case does not fall under statutory exceptions, the PAN is the formal notice that triggers the taxpayer’s right to respond.

What to expect in a PAN:

Facts, law, and computation of proposed deficiency
A deadline to reply (commonly 15 days under the implementing rules)
Instructions on where/how to submit the response

D) A Final Assessment Notice/Formal Letter of Demand (FAN/FLD)

A FAN/FLD is the assessment proper that becomes collectible if it becomes final.

What to expect in a FAN/FLD:

Final computations and demand to pay
Notice of the right to protest within 30 days
Attachments or summaries of bases for assessment

E) A closure/termination communication (less consistently issued)

In some cases, the taxpayer may receive a letter indicating the audit is terminated/closed or that no deficiency is being pursued. This is the cleanest practical indicator that the LOA-driven audit has ended—though the legal implications depend on context and timing.

7) Due process checkpoints when the first “real” notice arrives late

When there is no NOD and the case jumps to PAN or FAN, taxpayers typically scrutinize procedural regularity. Key checkpoints include:

A) LOA validity and scope

Was the LOA properly issued by an authorized official?
Were the revenue officers who examined the books named in the LOA?
Did the audit cover only the tax types and periods stated?
Was there an improper “expansion” without a new LOA?

Defects here can undermine the assessment.

B) PAN requirement and exceptions

A PAN is generally required before a FAN, except in specific situations recognized under the Code and regulations (commonly involving mathematical errors, discrepancies in withholding, taxes due per return, failure to file, etc.).

If a PAN is required but not issued, the assessment may be attacked for denial of due process.

C) Proper service and proof of receipt

Tax deadlines run from receipt, so:

Confirm who received the notice (authorized representative vs unauthorized person).
Keep envelopes, registry receipts, and/or proofs of personal service.
Track dates precisely.

D) Right to be informed of facts and law

The taxpayer must be informed of the factual and legal bases for the assessment. A conclusory demand without meaningful explanation can be challenged.

8) “Silence” after an LOA: practical expectations and risk management

When no NOD is issued and months pass, what typically happens is one of these:

Scenario 1 — Quiet closure

No further requests, no PAN, no FAN.
Internally the case may be tagged closed.

Risk: Sometimes the taxpayer assumes closure prematurely, only to receive a PAN/FAN later (still within the prescriptive period or supported by a waiver).

Scenario 2 — Sudden formal escalation

The first formal development after a long gap is a PAN or FAN/FLD.
This often happens near the end of the prescriptive period or after internal review delays.

Expectation: Short response windows; high pressure to produce documents quickly.

Scenario 3 — Reassignment and repeated requests

New examiner takes over and re-requests documents already submitted.
The case restarts operationally even if it is the same LOA.

Expectation: The taxpayer’s document trail and proof of submission become crucial.

Scenario 4 — Waiver-driven extension and prolonged exposure

Audit continues past the original prescriptive period because waivers were executed.
Notices may come much later.

Expectation: The waiver’s validity becomes a central issue if litigation arises.

9) Reexamination limits: can the BIR “come back” if no NOD was issued?

The Code contains protections against repeated examinations for the same taxable period, but these protections are often misunderstood. In general terms:

The BIR’s ability to reexamine the same year can be constrained once an examination has been made and an assessment has been issued, subject to statutory exceptions (e.g., fraud, irregularities, verification of withholding compliance, etc.).
If no assessment was issued and the prescriptive period has not yet lapsed (or was validly extended), the BIR may still attempt further action, often by issuing another authority or continuing under existing case handling—subject always to legal and procedural requirements.

Practical implication: The clearest “end” is either (a) a defensible closure plus passage of time beyond assessment prescription, or (b) the expiration of the assessment period without a valid extension/suspension.

10) What taxpayers should be ready for even without an NOD

Even if there is no NOD, the substantive issues that commonly drive assessments remain the same. Audits often focus on:

Income tax

Underdeclared sales/income (third-party matches, bank deposits, SLSP variances)
Disallowed deductions (substantiation issues, withholding tax compliance, timing)
Related-party transactions and allocation issues
Fringe benefits tax exposures (benefits treated as de minimis improperly, etc.)

VAT/Percentage tax

Output VAT underdeclaration
Input VAT disallowance (invalid VAT invoices/receipts, missing details, timing rules)
Zero-rated sales substantiation
Import VAT/documentation gaps

Withholding taxes

Non-withholding or under-withholding (EWT, FWT, compensation)
Mismatch between alphalists and declared expenses
“Disallowance of expense + deficiency EWT” double impact

Documentary Stamp Tax

Loan instruments, lease contracts, assignments, share issuances/transfers (depending on facts)

Expectation when no NOD: These issues may only be formally identified at the PAN stage, compressing the time to respond.

11) A realistic “what to expect” timeline (without assuming an NOD)

While every case differs, the pattern below is common:

LOA served → initial meeting/request for documents
Submission cycles (weeks to months)
Quiet period while examiners prepare working papers / supervisors review
Then either:
- Closure/termination (sometimes explicit, sometimes silent), or
- PAN (most common first formal escalation), or
- FAN/FLD (in cases where PAN is legally dispensable or where BIR takes that position)
If FAN/FLD is issued → 30-day protest window begins
If protested → documentary submissions and BIR decision track; possible CTA remedies

12) Core takeaways specific to “LOA but no NOD”

No NOD is not a clearance. It is simply the absence of one administrative step.
The first legally decisive notice may be the PAN or FAN/FLD, and deadlines can be tight.
The most important “watch item” during silence is the assessment prescriptive period and whether it has been extended/suspended (especially via waivers).
Any later assessment remains vulnerable to challenge if there are LOA defects, scope overreach, PAN/due-process violations, or insufficient statement of facts and law.
In practice, the taxpayer’s best protection is a disciplined record: complete submissions, proof of filing/receipt, and careful tracking of notice dates and statutory response periods.

13) Practical checklist during the “no NOD issued” period

Validate the LOA (tax types, periods, named officers, proper service).
Centralize audit submissions (with transmittal letters, receiving stamps, registry receipts).
Log every date of receipt of BIR communications.
Keep reconciliations ready (AFS ↔ ITR ↔ VAT/WT returns ↔ alphalists ↔ SLSP).
Treat waiver requests as high-stakes documents (authority, dates, acceptance, copy furnished).
Prepare for a PAN-first scenario (so supporting documents and explanations are not built from scratch under a short deadline).

Conclusion

After an LOA is served, the absence of a Notice of Discrepancy most often indicates either (a) an audit still under internal development and review, or (b) a case heading toward closure without formal deficiency findings. It does not, by itself, prevent the BIR from moving straight to statutory notices such as a Preliminary Assessment Notice or a Final Assessment Notice/Formal Letter of Demand, provided legal requirements and prescriptive periods are satisfied. In this “no NOD” window, the controlling realities are the LOA’s validity and scope, the prescriptive period for assessment (and any valid extensions or suspensions), and the taxpayer’s readiness to respond quickly and formally once a PAN or FAN/FLD is served.