Procedures to Write-Off Uncollectible Accounts

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BIR MEMORANDUM ORDER NO. 35-95: Procedures to Write-Off Uncollectible Accounts

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Title Supreme Court: 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

A

Scope and Covered Accounts Receivable

Uncollectible accounts receivable due to various reasons, including:
- Taxpayer deceased without distrainable/leviable assets.
- Taxpayer residing abroad without assets in the Philippines.
- Taxpayer declared insolvent or incapable of earning.
- Foreign nationals/corporations leaving after project completion without assets.
- Unknown whereabouts of taxpayer with no assets.
- Corporations dissolved with no responsible officers located.
- Accounts uncollected for 2 years after 3-year collection period.
- Accounts overtaken by prescription under Tax Code and court decisions.
- Taxpayers who availed prior tax amnesties certified by Tax Amnesty Implementation Office but not closed by ATCA.

Procedures for Writing-Off Uncollectible Accounts

Revenue Officer's Responsibilities:
- Obtain certifications from multiple Registries of Deeds or local Assessors regarding real properties owned.
- Secure bank certifications on deposits.
- Obtain death certificate if taxpayer deceased.
- Get certifications of last known address from supervisory agencies for professionals.
- Obtain Articles of Incorporation and latest financial statements for corporations.
- Conduct inquiries through Fieldman27s Affidavit of Uncollected Taxes.
- Prepare recommendation and ATCA with supporting documents.
- Forward case to Revenue District Officer via Collection Unit and Assistant Revenue District Officer.
Revenue District Officer's Responsibilities:
- Sign recommendation and ATCA, then forward to Assessment Division for approval.
Assessment Division's Responsibilities:
- Approve and forward docket to Administrative Division for filing/reference.
- Prepare Monthly List of Accounts Cancelled by ATCA (BIR Form No. 1247).
- Distribute the list to Deputy Commissioner for Operations, concerned Revenue District Officers, and retain a copy for filing.

Repealing Clause

The Order amends RMO 40-87 and other inconsistent issuances or provisions.

Effectivity

The Order takes effect immediately upon approval (October 20, 1995).

END