CM 101.4 - REPORTING AND HANDLING RETURNED/ DISHONORED CHECKS
The procedures in receiving, processing, monitoring and collecting returned/dishonored checks received are provided for under RMO No. 25-2001 and Bank Bulleting No. 2010-23. Dishonored checks received by the AABs shall be submitted to the RDO having jurisdiction over the receiving AAB branch and to the LTS/LTDO, as the case may be.
Penalties shall be imposed on the AABs for receiving checks which were dishonored due to the following reasons: (1) accommodation check; (2) stale check; (3) post-dated check; (4) unsigned check; and (5) out-of-town check. Checks which were dishonored due to “Account Closed” shall be forwarded to the Legal Division of the Regional Office or to the Legal Service of the National Office (for large and excise taxpayers) for filing of a court case against the taxpayer for violation of Batas Pambansa (B.P.) Blg. 22 (Anti-Bouncing Check Law). The corresponding tax return/form/declaration and other attachments or case docket should be immediately forwarded to the Collection Group for collection enforcement.
The AAB branch shall:
- Prepare the Report of Returned/Dishonored Checks (BIR Form No. 12.58) (Annex 100-1.9) in five (5) copies to be distributed to the following offices: original copy to RAD; duplicate copy to BTr; triplicate copy to AAB Head Office; quadruplicate copy to RDO/LTCED/LTDO; and quintuplicate copy for the AAB branch file copy;
- Submit to the RDO/LTCED/LTDO the quadruplicate copy of BIR Form No. 12.58, together with the original check, within fifteen (15) days from the date of receipt of the returned/dishonored check. Require the RDO to acknowledge in writing the receipt of their copy of BIR Form No. 12.58 on the four other copies of the said report;
- Submit immediately the duly acknowledge original, duplicate and triplicate copies of BIR Form No. 12.58 to the AAB-HO; and
- File the quintuplicate copy of the report for future reference.
The AAB-HO shall:
- Receive the duly acknowledged copies of BIR Form No. 12.58 from the AAB branch;
- Deduct from total remittance the amount of dishonored checks reported by the branches based on BIR Form No. 12.58 duly acknowledged by the RDO/LTCED/LTDO;
- Attach the copies of the duly acknowledged BIR Form No. 12.58 to the CRDC as follows: original copy of CRDC to the RAD; duplicate copy of the CRDC to the BTr; and retain the triplicate copy thereof for file; and
- Submit the CRDCs, together with the duly acknowledged copies of BIR Form No. 12.58 to the RAD and to the BTr.
The RAD shall:
- Receive from AAB-HO the CRDC, together with the duly acknowledged original copy of BIR Form No. 12.58;
- Prepare listing of all dishonored checks received and deducted from the bank’s remittances and record the same I the Bureau’s books of accounts;
- Receive the Monthly List of Dishonored Checks Received (Annex 100-1.10) submitted by the RDOs/LTCED/LTDO. Compare the dishonored checks as appearing in BIR Form No. 12.58 attached to the CRDC against the Monthly List of Dishonored checks received from the RDOs/LTCED/LTDOs;
- Receive from the RDO/LTCED/LTDO the Monthly List of Dishonored Checks Redeemed (BIR Form No. 12.61) (Annex 100-1.11);
- Validate if the redeemed checks reflected in the BIR Form No. 12.61 were included in the reported dishonored checks reflected in the Monthly List of Dishonored Checks Received. Coordinate with the concerned office (RDO/LTCED/LTDO) for noted discrepancy, if any;
- Record the redemption of dishonored checks in the Bureau’s books of accounts;
- Compute the corresponding penalties (Annex 100-1.12) to be imposed against the AABs for acceptance of accommodation check, stale check, postdated check, unsigned check, and out-of-town check as payment of any tax liability from taxpayers;
- Send Notification Letter to the concerned AAB, signed by the ACIR-CS for acceptance of check payment that were subsequently dishonored by the drawee-bank;
- Issue Demand Letter to AAB, if the request for waiver of penalties was denied by the MANCOM upon recommendation by the BAC, or if the AAB did not respond within ten (10) days from receipt of the Notification Letter;
- Prepare a letter/communication, for signature of the ACIR-CS, informing the AAB of the approval/denial of its request for waiver or cancellation of penalties for committed violations;
- Prepare PO, in duplicate copies for signature of the Chief of RAD, upon presentation of the demand letter and the payment for the penalties of the AAB;
- Forward to the GSD the copies of the PO for the issuance of Official Receipt (OR) for AAB’s payment of penalties imposed on violations committed; and
- Receive from the concerned AAB the photocopy of the OR issued by the GSD and manually tag the same in the case docket as proof of settlement of the assessed penalties against the AAB.
The RDO/LTCED/LTDO shall:
- Receive from the AAB branch the copies of BIR Form No. 12.58 together with the original dishonored checks;
- Check the correctness and completeness of all items reported in the BIR Form No. 12.58 against the original checks;
- Fill up completely the acknowledgement portion in BIR Form No. 12.58 and have it signed by the RDO/LTCED/LTDO Chiefs;
- Return the other copies of the report (3 copies, if the AAB branch is serving large taxpayers and 4 copies, if the AAB branch is servicing non-large taxpayers) to the AAB branch’s representative and retain the RDO/LTCED/LTDO copy of the report for file and future reference;
- Enter/Encode the dishonored check data into the CBR-ITS under RDO-based encoding (CBR Dishonored Check ADD Screen);
- Print the Notice of Dishonor;
- Assign the dishonored check case to a case officer;
- Send the Notice of Dishonor to the taxpayer;
- Compute the corresponding penalties for late payment, if the taxpayer agrees to redeem the dishonored check, and issue a Payment Form in three (3) copies specifying that only cash or cashier’s/manager’s checks shall be accepted to redeem the dishonored check (Refer to CM 303.1 TP Pays tax liability in Full, Chapter III of the Manual);
- Issue a collection letter based on recomputed collectible amount to the taxpayer, if the taxpayer does not redeem the dishonored check. In case the taxpayer responds to the collection letter, refer to step 9 above;
- Issue Warrant of Distraint and Levy and/or Garnishment/Notice of Tax Lien on taxpayer, if the taxpayer did not respond to the collection letter/did not redeem the dishonored check (Refer to CM 304.1 Warrant of Distraint and Levy, Chapter III of the Manual);
- Forward the dishonored check cases due to “Account Closed/ Insufficient Fund Account” to the Legal Division, thru the Collection Division of the Regional Office, for regular taxpayers under the RDO; or to the Legal Service thru the Prosecution Division, for large taxpayers under the LTS/LTDO;
- Prepare a progress/final report of action taken using the case notes facility of the Case Monitoring System (CMS);
- Print and submit to the RAD a Monthly List of Dishonored Checks Received within 15 days of the following month and attach copies of the dishonored checks;
- Print and submit to the RAD a Monthly List of Dishonored Checks Redeemed within 15 days of the following month, together with the photocopies of dishonored checks;
- Prepare and submit to the ACIR-CS, copy furnished the ACIR-LTS/ Regional Director/Legal Service a Monthly Status Report of Dishonored Checks Received; and
- Receive monthly progress report of dishonored check cases filed in court by the Legal Division/Prosecution Division.
The Revenue Data Center shall:
- Upload the dishonored check data into the ITS database; and
- Generate the necessary reports for dishonored check cases to be printed at the RDO/LTCED/LTDO level.
The Regional Collection Division/LTS shall:
- Receive from the RDO/LTCED/LTDO the Monthly Status Report on Dishonored Checks Received;
- Forward to the Regional Legal Division/Prosecution Division, NO the BIR Form No. 12.58 with original checks dishonored due to “Account Closed/Insufficient Fund Account” for filing of a case in court against the taxpayer;
- Monitor the status of dishonored check cases filed in court by the Regional Legal Division/Prosecution Division, NO; and
- Submit the validated RDO/LTCED/LTDO Monthly Status Report on Dishonored Checks to the Collection Service, thru the RAD.
The Regional Legal Division/Prosecution Division, NO shall:
- Receive from the Regional Collection Division/ACIR-LTS copy/ies of BIR Form No. 12.58, together with the original check/s;
- File a case in court against the taxpayer for violation of B.P. Blg. 22 (Anti-Bouncing Check Law); and
- Prepare and submit to the ACIR-CS, copy furnished the RDO/LTCED/LTDO and the Regional Office/ACIR-LTS, a monthly progress report on dishonored check cases filed in court.
The Collection Service/LTS shall:
- Receive from the Regional Collection Division/LTS the consolidated and validated RDO/LTCED/LTDO Monthly Status Reports on Dishonored Checks Received;
- Receive from the Regional Legal Division/Prosecution Division NO, thru the Legal Service, the Monthly Status Report on Dishonored Check Cases filed in Court; and
- Monitor the progress of resolutions/redemptions of dishonored checks received by the RDOs/LTCED/LTDOs and the Regional Lega Divisions/ Prosecution Division-Legal Service.