Title
Procedures to Write-Off Uncollectible Accounts
Law
Bir Memorandum Order No. 35-95
Decision Date
Oct 20, 1995
BIR Memorandum Order No. 35-95 establishes procedures for writing off uncollectible accounts receivable, detailing criteria for taxpayer insolvency, death, or inability to pay, and outlining the necessary documentation and approval processes for cancellation.
accounts receivable
write
off procedures

Objectives and monitoring coverage

  • The order prescribes procedures and guidelines for the proper disposition of accounts receivable.
  • The order requires accurate monitoring of the movement of accounts receivable as provided for under the Bureau of Internal Revenue Manual (BIRM), particularly Section 200.
  • The order delineates the functions in the cancellation and disposition of accounts receivable.

Accounts covered for write-off

  • The order covers accounts receivable that could no longer be collected for the reasons enumerated in the order.
  • Write-off coverage includes cases where the taxpayer is deceased, leaving no distrainable and leviable assets.
  • Write-off coverage includes cases where the taxpayer is residing abroad with no distrainable and leviable assets in the Philippines.
  • Write-off coverage includes cases where the taxpayer is declared insolvent by the court or is found incapable of earning a living upon verification.
  • Write-off coverage includes cases where the taxpayer is a foreign national who came as a consultant or a foreign corporation that completed a project and left, leaving no distrainable and leviable assets.
  • Write-off coverage includes cases where the taxpayer’s whereabouts (individual or corporation) is unknown and there are no distrainable and leviable assets.
  • Write-off coverage includes cases where the taxpayer is a corporation that has been dissolved, its subscribed shares of stock have been paid, and responsible officers can no longer be located.
  • Write-off coverage includes cases where the accounts receivable remain uncollected for two (2) years after the lapse of the three (3) year mandatory period to collect.
  • Write-off coverage includes cases where the accounts receivable have been overtaken by prescription under the Tax Code and court decisions.
  • Write-off coverage includes cases where the taxpayer availed of previous tax amnesties certified by the Tax Amnesty Implementation Office, but not closed by ATCA.

Core write-off procedures by office

  • The prescribed steps apply for every case declared uncollectible and recommended to be written-off.
  • The Revenue Officer secures required documents and completes mandated affidavits and recommendations before forwarding the docket.
  • The Revenue District Officer forwards the docket for approval pursuant to RMO 37-94 after signing the recommendation and the ATCA.
  • The Assessment Division forwards the approved docket to the Administrative Division for file and future reference and prepares the required monthly list.

Revenue Officer requirements and actions

  • If the taxpayer is an individual, the Revenue Officer must secure:
    • Certification from at least three (3) different Registers of Deeds or the Provincial, City or Municipal Assessors where the taxpayer is believed to own real properties in cases where the taxpayer is deceased, abroad, and/or the taxpayer’s whereabouts is unknown.
    • Certification from at least three (3) banks within the vicinity of the taxpayer’s residence where the taxpayer is known to have bank deposits.
    • A copy of the taxpayer’s death certificate if the taxpayer is deceased.
    • A certification for the taxpayer’s last known address from the Professional Regulations Commission, the Supreme Court, and other pertinent government and non-government agencies supervising the taxpayer’s profession if the taxpayer is unknown and is a Professional.
  • If the taxpayer is a corporation that has been dissolved or has ceased operations, the Revenue Officer must secure:
    • A copy of the Articles of Incorporation.
    • The latest financial statement from the Securities and Exchange Commission.
  • The Revenue Officer must perform appropriate tasks tied to the questions in the Fieldman’s Affidavit of Uncollected Taxes for individuals or corporations.
  • The Revenue Officer must prepare a recommendation and an ATCA, with the duly accomplished Fieldman’s Affidavit of Uncollected Taxes forming part of the accounts receivables docket.
  • The Revenue Officer must forward the case to the Revenue District Officer for signature through the Head, Collection Unit and the Assistant Revenue District Officer.

Revenue District Officer and Assessment Division steps

  • The Revenue District Officer must forward the docket to the Assessment Division for approval pursuant to RMO 37-94 after signing the recommendation and the ATCA.
  • The Assessment Division must forward the docket with the approved recommendation and ATCA to the Administrative Division for file and future reference.
  • The Assessment Division must prepare a Monthly List of Accounts Cancelled by ATCA using BIR Form No. 1247 under this order.
  • The Monthly List of Accounts Cancelled by ATCA must be duly signed by the Chief of the Assessment Division and distributed as follows:
    • Original and Duplicate — to the Deputy Commissioner for Operations thru ACIR Collection, Attention: The Chief, Collection Programs Division.
    • Triplicate — to the Revenue District Officers concerned to update their inventory.
    • Quadruplicate — file.

Repealing and conflict rule

  • Repealing Clause: BIR Memorandum Order No. 35-95 amends RMO 40-87 and all other existing issuances or portions thereof inconsistent with the order.

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