BIR PAN vs FAN: The Tax Assessment Due-Process Sequence and Your Response Deadlines

A BIR PAN (Preliminary Assessment Notice) is the Bureau of Internal Revenue’s proposed deficiency tax finding, giving the taxpayer 15 days to reply before the assessment becomes formal. A BIR FAN (Final Assessment Notice), paired with a Formal Letter of Demand (FLD), is the BIR’s formal demand for payment that follows the PAN stage. Confusing the two — or missing either deadline — can turn a disputable assessment into one that is final, executory, and demandable under Section 228 of the National Internal Revenue Code (NIRC).

This guide walks through the full due-process sequence a BIR deficiency assessment follows, from audit to protest, and where each taxpayer deadline falls. For how the audit itself starts, see What Is a BIR Letter of Authority and What Are Your Rights During an Audit?; for what happens once amounts are past due, see BIR Late Filing Penalties: Surcharge, Interest, and Compromise.

The full assessment sequence, step by step #

A BIR deficiency tax assessment follows a fixed due-process sequence set out in Revenue Regulations (RR) No. 12-99, as amended by RR No. 18-2013, RR No. 7-2018, and RR No. 22-2020. Skipping a mandatory step, or failing to observe a taxpayer’s reply period, can make the resulting assessment void. The sequence runs:

1. Letter of Authority (LOA) — the Revenue Officer’s authority to examine the taxpayer’s books
2. Notice of Discrepancy (NoD) — discrepancies found during audit are discussed with the taxpayer
3. Preliminary Assessment Notice (PAN) — the BIR’s proposed deficiency assessment, if discrepancies remain unresolved
4. Taxpayer reply to the PAN — within 15 days of receipt
5. Formal Letter of Demand / Final Assessment Notice (FLD/FAN) — issued after the reply is evaluated, or after the 15-day period lapses without a reply
6. Taxpayer protest of the FAN — within 30 days of receipt, under NIRC Section 228
7. CIR decision or inaction, followed by appeal to the Court of Tax Appeals (CTA) if needed

Notice of Discrepancy: the stage before the PAN #

A Notice of Discrepancy (NoD) is the document that starts the taxpayer-facing part of a BIR audit under RR No. 22-2020, which replaced the older Notice of Informal Conference. After the Revenue Officer completes the audit under a valid Letter of Authority, any discrepancies between the taxpayer’s returns and the BIR’s findings are reduced to writing and discussed with the taxpayer or their representative.

• The taxpayer must be able to present and explain their side within five (5) days from receipt of the NoD.
• If the taxpayer needs more time to gather documents, they may submit those documents not later than thirty (30) days from receipt of the NoD.
• Discrepancies not resolved at this stage move forward to a PAN, unless the case is closed with no deficiency found.

The Preliminary Assessment Notice (PAN) and the 15-day reply #

The PAN is the BIR’s written notice of a proposed deficiency assessment, showing in detail the facts, law, rules, regulations, or jurisprudence on which the proposed assessment is based, issued once discrepancies remain after the Notice of Discrepancy stage. Under RR No. 12-99, as amended, most deficiency assessments require a PAN before a final demand can issue; a small set of exceptions (such as a mathematical error appearing on the face of the return, or a discrepancy already admitted by the withholding agent) allow the BIR to skip straight to a FAN.

Once the taxpayer receives the PAN, the clock starts:

A PAN is not yet a collectible assessment — no protest is required at this stage, only a reply addressing the proposed findings.

The Final Assessment Notice (FAN) and Formal Letter of Demand (FLD) #

The FAN, together with the FLD, is the BIR’s formal and appealable assessment, issued after the PAN stage closes, and it is the document a taxpayer must actually protest to preserve their rights. The FLD/FAN must state the facts, law, rules and regulations, or jurisprudence on which the assessment is based; an FLD/FAN that fails this requirement is void under RR No. 12-99.

Receiving a FAN starts the taxpayer’s protest clock under NIRC Section 228:

1. File a written protest within 30 days from receipt of the FAN/FLD — either a request for reconsideration (re-evaluation based on existing records) or a request for reinvestigation (re-evaluation based on newly submitted evidence).
2. If reinvestigation is requested, submit all relevant supporting documents within 60 days from filing the protest. Failure to submit within 60 days renders the assessment final, executory, and demandable.
3. The Commissioner of Internal Revenue (CIR) has 180 days from submission of documents (or from filing the protest, if no reinvestigation is needed) to act on the protest.
4. If the CIR denies the protest, or the 180-day period lapses without action, the taxpayer has 30 days to appeal to the Court of Tax Appeals.

Missing the 30-day protest window on the FAN is the single most common way an otherwise disputable assessment becomes final and collectible — the BIR can then proceed to collection without further taxpayer recourse at the administrative level.

Worked example: responding to a PAN on time #

A retail corporation receives a PAN on March 3, 2026, proposing a deficiency income tax assessment of ₱850,000 (basic tax plus interest) after an audit under a Letter of Authority covering taxable year 2024. The company disputes part of the disallowed expense that drove the assessment.

Missing the March 18 reply deadline would not by itself void the assessment — the BIR would simply proceed to the FAN based on the original ₱850,000 finding, without the benefit of the company’s explanation that reduced it to ₱600,000.

Frequently asked questions #

What is the difference between a BIR PAN and a FAN? #

A Preliminary Assessment Notice (PAN) is the BIR’s proposed deficiency tax finding, issued so the taxpayer can respond before the assessment becomes final. A Final Assessment Notice (FAN), paired with a Formal Letter of Demand (FLD), is the BIR’s formal demand for payment issued after the PAN stage, and it is what the taxpayer must protest under Section 228 of the NIRC to avoid a final and collectible assessment.

How many days does a taxpayer have to reply to a PAN? #

A taxpayer has fifteen (15) days from receipt of the Preliminary Assessment Notice (PAN) to file a reply with supporting arguments and documents. If no reply is filed within 15 days, the BIR proceeds to issue the Formal Letter of Demand and Final Assessment Notice (FLD/FAN).

What is a Notice of Discrepancy and how is it different from a PAN? #

A Notice of Discrepancy (NoD) is issued under Revenue Regulations No. 22-2020 before the PAN stage, informing the taxpayer of discrepancies found during audit. The taxpayer must appear to present and explain their side within five (5) days of receipt (extendable to 30 days from receipt of the NoD if submitting additional documents). Only after the discrepancy discussion, if a deficiency remains, does the BIR issue the PAN.

How many days does a taxpayer have to protest a FAN? #

Under Section 228 of the National Internal Revenue Code, a taxpayer must file a written protest — either a request for reconsideration or a request for reinvestigation — within thirty (30) days from receipt of the Final Assessment Notice and Formal Letter of Demand. Failure to protest within 30 days makes the assessment final, executory, and demandable.

What happens if the BIR does not act on a protest within 180 days? #

If the protest is a request for reinvestigation, the taxpayer must submit all relevant supporting documents within 60 days from filing the protest. The Commissioner of Internal Revenue then has 180 days from submission of those documents (or from filing the protest, if no reinvestigation is needed) to decide. If the Commissioner denies the protest, or the 180-day period lapses without a decision, the taxpayer has 30 days to appeal to the Court of Tax Appeals.

Can a BIR assessment be void if there was no PAN? #

Yes. Revenue Regulations No. 12-99, as amended, makes the PAN stage a mandatory due-process step for most deficiency assessments. Skipping the PAN (except in the limited cases the regulations exempt, such as mathematical errors on the face of the return) denies the taxpayer the statutory opportunity to respond before a final demand, and courts have voided assessments issued without it.

Summary #

The BIR PAN vs FAN distinction comes down to timing and consequence: the PAN is a proposed finding with a 15-day reply window, and the FAN is a formal, appealable demand that starts a 30-day protest clock under NIRC Section 228. Every deadline in between — the 5-day and 30-day Notice of Discrepancy windows under RR No. 22-2020, the 15-day PAN reply, the 30-day protest, and the 60-day document submission for a reinvestigation — is a due-process right, not a formality, and missing any of them can make an otherwise disputable assessment final and collectible. Track your Letter of Authority audit rights and your late-filing exposure alongside this sequence so a discrepancy at the NoD stage never becomes a surprise at the FAN stage.