The Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Order (RMO) 11-2026, dated May 12, 2026, prescribing a revised cost-to-collect threshold for accounts receivable and delinquent accounts (AR/DA) to guide collection enforcement prioritization.
Revised Cost-to-Collect Threshold
Under the new order, the cost-to-collect threshold for AR/DA that are final, executory, and demandable has been increased from P20,000 to P80,000. This updated threshold serves as the basis for determining when continued collection efforts may no longer be economically feasible and may support the write-off of such cases, in accordance with existing laws, rules, and procedures.
Application for Collection Enforcement
The revised threshold is applied in the evaluation of AR/DA for enforcement action. Accounts amounting to P80,000 and above may be subjected to continued collection efforts under existing procedures. Accounts below the threshold will be assessed to determine whether further action remains economically viable. If the cost of collection exceeds the expected recovery, the account may be considered for write-off, subject to applicable laws, rules, and procedures.
Effect on Taxpayers and Effectivity
The order clarifies that the threshold serves only as a guide in prioritizing enforcement activities and does not affect the finality or demandability of the underlying tax liabilities. Taxpayers' obligation to settle outstanding liabilities remains unchanged. All inconsistent rules are repealed or modified accordingly, and the order takes effect immediately.
Source: P&A Grant Thornton Certified Public Accountants
