Pointers and Guidelines in the Proper Implementation of GAO General Circular No. 110 dated October 10, 1968, Re Dishonored Checks

July 8, 1969 REVENUE MEMORANDUM ORDER NO. 28-69 SUBJECT : Pointers and Guidelines in the Proper Implementation of GAO General Circular No. 110 dated October 10, 1968, Re Dishonored Checks TO : All BIR Collecting Officers This Order supplements and clarifies the procedure prescribed by GAO General Circular No. 110, which supersedes GAO Memorandum Circular No. 469 dated August 13, 1962 regarding the handling of dishonored checks. cdtech The following action shall be taken by the BIR collecting officer upon receipt of a dishonored check and the Treasury debit voucher from the National Treasury: 1. Cancel his file copy of the Revenue Official Receipt. 2. Issue the "Notice of Dishonor" to the drawer. 3. Record the cancellation of the official receipt in his cashbook by a negative debit entry therein, and the return of the check by the National Treasury by a negative credit entry (See paragraph 10 (a) of GAO General Circular No. 110). Upon settlement of the dishonored check by the taxpayer, the BIR collecting officer shall take the following action: 1. Issue a Revenue Official Receipt for the amount received, including the fine or penalty arising from delayed payment. 2. Return the dishonored check to the taxpayer in exchange for the official receipt issued therefor, or for a sworn statement or affidavit of the loss thereof. The return of dishonored checks by the National Treasury and the subsequent settlements thereof by the taxpayers shall be recorded in the Report of Collections (BIR Form No. 12.31) of the BIR collecting officers as follows: 1. The cancellation of the file copy of the Revenue Official Receipt covering the dishonored check shall be recorded on the last sheet of the report of collections below the totals, by means of a negative debit entry on the 70-4 column and a negative credit entry on the proper income column, with proper notation of the required explanation. 2. The Revenue Official Receipt issued to acknowledge the settlement of a dishonored check shall be recorded in the report of collections in the usual manner. However, an asterisk shall be placed opposite the line on which the official receipt is indicated and a corresponding footnote shall be placed on the last page of the report just below the totals. (Refer to the penultimate paragraph of item 11 of GAO General Circular No. 110). 3. In the "Account-Current" of the report of collections, the net collections (after deducting the dishonored checks) shall be entered in line 2 thereof (Collection per this report). There being an "Other debits" (Line 3) in the Account-Current of the BIR Form No. 12.31, the total dishonored checks shall be recorded therein as heretofore instead of being shown as negative entries in the deposits (remittances) section of the Account-Current pursuant to the last sentence of the last paragraph of item 10 (a) of GAO General Circular No. 110. In submitting the accounting copy of the Report of Collections to the Accounting Division, the BIR collecting officers must attach the following documents: 1. The triplicate copy of the Notice of Dishonor. 2. The triplicate copy of the Report of Dishonored Checks. 3. The cancelled official receipts covering the dishonored checks or the sworn statements or affidavits of the loss thereof upon settlement of the dishonored checks by the taxpayer. 4. The certified true copies of the Validated Remittance Advices. GAO General Circular No. 110 took effect November 1, 1968. Collecting Officers should therefore take note of this out-off date in determining the procedure to observe the handling the dishonored checks returned to them by the National Treasury. It is emphasized that checks which were dishonored prior to November 1, 1968 form part of the cash on hand of the collecting officer. Checks dishonored on or after November 1, 1968 do not form part of the collecting officer's cash on hand but the procedures outlined in brief by this Order must be strictly observed. Unsettled dishonored checks returned by the National Treasury on or after November 1, 1968 but which have not been recorded and adjusted in accordance with this Order will have to be adjusted to conform thereto. The adjustment could be effected by simply determining the outstanding unsettled dishonored checks received on or after November 1, 1968 as of a given date. Then cancel the file copies of the corresponding official receipts and record the cancellations by means of negative debit entries in the cashbook, and negative debit entries on the 70-4 column and negative credit entries on the proper income columns of the current Report of Collections (BIR Form No. 12.31). Thereafter the requirements and procedures prescribed by GAO General Circular No. 110 should be followed. All concerned are hereby directed to implement the provisions of this Order immediately. MISAEL P. VERA Commissioner of Internal Revenue