What Is a BIR Notice of Discrepancy? The Due-Process Step Before a PAN

A BIR Notice of Discrepancy (NoD) is a written notice the Bureau of Internal Revenue issues when a Revenue Officer’s audit finds a taxpayer liable for deficiency taxes. It is not yet a tax assessment — it is a due-process step, introduced by Revenue Regulations (RR) No. 22-2020, that gives the taxpayer a chance to discuss and explain the discrepancies with the examiner before the BIR moves on to a Preliminary Assessment Notice (PAN).

This guide is a companion to BIR PAN vs FAN: The Tax Assessment Due-Process Sequence and Your Response Deadlines, which covers the full sequence from audit to protest. For how a BIR audit is authorized in the first place, see What Is a BIR Letter Notice (LN) and How Is It Different From a Letter of Authority (LOA)?.

What replaced the old Notice of Informal Conference #

On September 15, 2020, the BIR released Revenue Regulations No. 22-2020, which amended the due-process requirements for issuing a deficiency tax assessment and replaced the Notice of Informal Conference (NIC) with the Notice of Discrepancy (NoD). Before this change, an audit that turned up a deficiency finding triggered an NIC, an informal meeting between the taxpayer and the examiner. RR No. 22-2020 amended Section 3 of RR No. 12-99, as earlier amended by RR No. 18-2013 and RR No. 7-2018, to formalize this step under the NoD name and template instead.

Revenue Regulations No. 22-2020 provides:

“the taxpayer shall be informed, in writing, by the Revenue District Office or by the Assessment Division/Regional Investigation Division, as the case may be (in the case of Revenue Regional Offices) or by the Chief of Division concerned (in the case of the BIR National Office) of the discrepancy or discrepancies in the taxpayer’s payment of his internal revenue taxes, for the purpose of the ‘Discussion of Discrepancy’”

The NoD is issued once a Revenue Officer’s initial report of investigation shows the taxpayer liable for deficiency taxes. Like the NIC it replaced, the NoD is not itself an assessment — its purpose is to let the examiner and the taxpayer reconcile the finding informally before the BIR commits to a formal written assessment, which is meant to reduce disputes that later end up litigated at the Court of Tax Appeals over due-process defects.

The Discussion of Discrepancy timeline — what happens in those 5 (and up to 30) days #

Once a taxpayer receives the NoD, Annex A of RR No. 22-2020 gives them five (5) days from receipt to appear and discuss the discrepancy findings with the examiner, a step the regulation calls the “Discussion of Discrepancy.” If the taxpayer needs more time to pull together supporting documents, they may still submit those after the discussion takes place, provided the submission is not later than thirty (30) days from receipt of the NoD.

• Day 0 — Taxpayer (or authorized representative) receives the Notice of Discrepancy.
• Within 5 days — Taxpayer appears for the Discussion of Discrepancy and presents their initial explanation.
• Up to 30 days — Taxpayer may submit additional supporting documents after the discussion, if more time was needed to compile them.
• After 30 days — The window for further documentary submission on the NoD closes, and the BIR moves to the next step of the assessment sequence.

This window is where a taxpayer’s records actually matter: invoices, official receipts, contracts, and reconciliation workpapers presented at this stage can narrow or eliminate a discrepancy before it is ever written into a PAN.

What happens if you don’t respond #

Failing to appear on the scheduled Discussion of Discrepancy date, without giving the BIR prior notice, is treated the same way non-appearance was treated under the old Notice of Informal Conference rule — as a waiver of the taxpayer’s right to that discussion. If the taxpayer does not show up and has not notified the BIR in advance, the examiner is not required to wait; the case simply moves forward to the next step in the assessment sequence based on the BIR’s existing findings.

That has a practical consequence: whatever explanation, reconciliation, or supporting document the taxpayer might have offered at the Discussion of Discrepancy stage is lost, and the deficiency finding carries forward into the PAN calculation unadjusted. A taxpayer who cannot make the scheduled date should contact the assigned Revenue District Office, Assessment Division, or Regional Investigation Division before the date, rather than after — the waiver is triggered by failing to appear without prior notice, not by asking for a reasonable accommodation in advance.

Where the Notice of Discrepancy fits in the full BIR assessment sequence #

The Notice of Discrepancy is the first taxpayer-facing step in a BIR deficiency assessment, sitting between the audit itself and the Preliminary Assessment Notice (PAN). Only if a deficiency remains after the Discussion of Discrepancy does the BIR issue a PAN; from there, the sequence follows the same due-process chain described in BIR PAN vs FAN.

An NoD that is fully resolved at the Discussion of Discrepancy stage — because the taxpayer’s documentation clears the finding — can end the matter there, with no PAN issued at all. That makes the NoD stage the cheapest and least formal point in the whole sequence to resolve a discrepancy, before it becomes a written assessment with its own reply and protest deadlines.

Frequently asked questions #

What is a BIR Notice of Discrepancy? #

A BIR Notice of Discrepancy (NoD) is a written notice issued when a Revenue Officer’s audit finds a taxpayer liable for deficiency taxes. It is not itself an assessment — it is a due-process step, introduced by Revenue Regulations No. 22-2020, that gives the taxpayer an opportunity to present and explain their side on the discrepancies found before the BIR moves on to a Preliminary Assessment Notice (PAN).

What replaced the Notice of Informal Conference? #

The Notice of Discrepancy replaced the Notice of Informal Conference (NIC). The Bureau of Internal Revenue made this change through Revenue Regulations No. 22-2020, released on September 15, 2020, which amended the due-process requirements in RR No. 12-99 (as previously amended by RR No. 18-2013 and RR No. 7-2018) for issuing a deficiency tax assessment.

How many days do I have to respond to a Notice of Discrepancy? #

A taxpayer generally has five (5) days from receipt of the Notice of Discrepancy to appear and discuss the findings with the examiner. If more time is needed to gather supporting documents, those documents may still be submitted after the discussion, but not later than thirty (30) days from receipt of the Notice of Discrepancy.

What happens if I miss the discussion date on a Notice of Discrepancy? #

Failing to appear on the scheduled discussion date, without prior notice to the Bureau of Internal Revenue, is treated as a waiver of the taxpayer’s right to a Discussion of Discrepancy. The BIR then proceeds to the next step in the assessment sequence based on its existing findings, without the benefit of the taxpayer’s explanation.

Does a Notice of Discrepancy come before or after a PAN? #

A Notice of Discrepancy comes before a Preliminary Assessment Notice (PAN). The sequence runs Notice of Discrepancy, then Discussion of Discrepancy, then PAN (if a deficiency remains), then a taxpayer reply within 15 days, then a Formal Assessment Notice/Final Assessment Notice (FAN) if the BIR proceeds, then a taxpayer protest within 30 days, and finally a Final Decision on Disputed Assessment (FDDA) if the dispute continues.

Summary #

A BIR Notice of Discrepancy is the due-process step RR No. 22-2020 put in place of the old Notice of Informal Conference: a written notice of an examiner’s deficiency findings, followed by a Discussion of Discrepancy that a taxpayer must attend within 5 days of receipt (with up to 30 days to submit further documents), on pain of waiving that right entirely if they fail to appear without prior notice. It sits at the very start of the taxpayer-facing assessment sequence — before the PAN, the FAN, and any eventual FDDA — which makes it the earliest and least formal point at which a taxpayer’s own records can resolve a discrepancy before it becomes a written assessment. For the deadlines that follow once a PAN is actually issued, see BIR PAN vs FAN; for how a BIR audit is authorized before it ever reaches the NoD stage, see BIR Letter Notice vs Letter of Authority.