Revised cost-to-collect threshold for accounts receivable/delinquent accounts (AR/DA) for enforcement prioritisation

The Bureau of Internal Revenue (BIR), through Revenue Memorandum Order (RMO) No. 11-2026 dated 12 May 2026, prescribes the revised cost-to-collect threshold for accounts receivable and delinquent accounts (AR/DA) for purposes of collection enforcement prioritisation. 

Revised cost-to-collect threshold

Under the Order, the cost-to-collect threshold for AR/DA that are final, executory and demandable is increased from P20,000 to P80,000. The updated threshold provides 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

In this context, 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, while those below the threshold may be assessed to determine whether further action remains economically viable. Where the cost of collection is determined to exceed 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. Accordingly, the obligation of taxpayers 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 All inconsistent rules are repealed or modified accordingly, and the Order takes effect immediately.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

P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd

As published in SunStar Cebu, dated 10 June 2026