Policies and procedures in the issuance of ATCA
(Revenue Memorandum Order No. 33-2018, July 12, 2018)
This Tax Alert is issued to inform all concerned on the consolidated policies and guidelines in the issuance of Authority to Cancel Assessment (ATCA), pursuant to Revenue Memorandum Order No. 33-2018.
The policies on the issuance of the ATCA were issued to facilitate the updating and cleaning up of the BIR’s inventory of Accounts Receivables/Delinquent Accounts. The RMO establishes a write-off mechanism/criteria to purge tax arrears that are no longer collectible.
- The Authority to Cancel Assessment (ATCA) shall be issued as proof of cancellation of assessments with issued Final Assessment Notice (FAN)/Formal Letter of Demand (FLD) due to any of the following instances:
- The ATCA shall be issued on the difference between the amount as originally assessed per FAN/FLD and the reduced/cancelled assessment in the Final Decision on Disputed Assessment (FDDA). Thus, the FDDA includes only the reduced amount of assessment which the taxpayer will need to settle;
- Final approval of the application for compromise settlement and abatement or cancellation of penalties;
- Court decisions declaring with finality that the assessment is either reduced or declared “null and void” with finality as shown in the entry of judgement. For modified or amended assessments, the difference shall be settled by the taxpayer prior to issuance of ATCA;
- Final and executory judgement by the court that the amount due from the taxpayer is uncollectible due to insolvency;
- Taxpayer’s availment of tax amnesty;
- Approved condonation of assessment;
- Prescription of the government’s right to assess/collect the deficiency/delinquency taxes;
- Approved write-off of the delinquent accounts by the Commissioner of Internal Revenue (CIR) due to death of individual taxpayer with no distrainable assets, permanent cessation of business, dissolution, general partnership with deceased partners, delinquent accounts not exceeding P20,000 and wherein collection remedies have been fully exhausted; and
- Other meritorious cases as approved by the CIR.
- Tax Assessments with FLDS/FANs or AR/DAs referred to the appropriate Legal Divisions for issues involving questions of law, due process and/or alleged prescription of BIR’s right to assess/collect tax liabilities shall be resolved within 30 days. After resolution, dockets shall be returned to the originating office.
- Those recommended for write-off due to prescription shall be passed upon by both the Regional and National Committee on Prescribed cases for final approval of the CIR. Administrative sanctions may be filed against the revenue officers responsible for the prescription.
- Assessments with issued FAN/FLD and approved ATCA shall be removed from the AR/DA Inventory List. Updated inventory list shall be submitted to the Accounts Receivable Monitoring Division (ARMD) not later than 10th day of the month following the date of the approval of ATCA. Results on the validation of approved ATCA by the ARMD shall be submitted to the Collection Service within 25 working days from the set deadline of submission of AR Inventory List.
- Depending on the reason for cancellation of assessment and except on certain cases subject to approval by the CIR as discussed above, recommending approval for the issuance of ATCA shall now be under the Head of Office of Assessment Division, National Investigation Division, Regional Collection Division, ARMD, Large Taxpayers Collection Enforcement Division, or the National Committee on Prescribed Cases. This was previously under the Office of the Revenue District Officer.
On the other hand, approval of the ATCA shall be under the Regional Director, Assistant Commissioner, Enforcement Advocacy Service (EAS), or Assistant Commissioner LTS depending on the reason for cancellation of assessment.
The four copies of the ATCA will be distributed to the issuing office, the ARMD and the Collection Division with one copy going to the docket. There is no provision for an automatic copy for the taxpayer.