DISCHARGING UNCOLLECTIBLE AMOUNTS AND WRITE OFF PROCEDURES-NON-EMPLOYEE ACCOUNTS RECEIVABLES - 8293.5-OCT-2020

(New: 10/2020)

If all reasonable collection procedures do not result in payment, agencies/departments may request discharge from the accountability of uncollectable amounts from the State Controller’s Office (SCO). Agencies/departments will review the Accounts Receivables (AR), no less than quarterly, to identify receivables for discharge. Discharging the receivables relieves the agencies/departments from pursuing collections; however, it does not relieve the debtor from the obligation until the statute of limitations expires. Agencies/departments may continue to receive payments on the discharged debts.

Discharging ARs $500 and Under

Pursuant to Government Code section 12438, agencies/departments are not required to collect amounts of $500 or less if the collection efforts have been exhausted, and all reasonable collection procedures do not result in payment. However, this does not release the debtor from the debt owed to the state. The $500 limitation applies to the total of all amounts owed by the debtor, not to each invoice. Collection efforts must be in accordance with SAM section 8293. Agencies/departments are not required to submit the Discharge from Accountability form, STD.27 to the SCO for approval for amounts less than $500.

Discharging ARs Over $500

Agencies/departments are required to submit the STD. 27 to SCO to request discharge of debtor amounts over $500 owed to the state. Discharge from Accountability of uncollectible amounts of more than $10,000 will be filed separately from applications for amounts of $10,000 less. The $10,000 amount applies to the total of all amounts owed by the debtor, not to each invoice.

The application for discharge shall include:

1. Statement of the nature of the amount due
2. Name(s) of the person(s) liable
3. List of specific collection efforts made and estimated cost of further collection
4. Any other fact(s) supporting the request, including offset attempts (See SAM section 8293.4)
5. If the discharge from accountability is due to bankruptcy, the supporting documentation must include a copy of the court’s final discharge of the debtor and evidence that the specific department is included in the petition for bankruptcy.
6. Signature, phone number, printed name, and title of person completing the STD. 27
7. Signature, printed name, and title of manager authorizing the STD. 27

The individual authorizing the Application for Discharge from Accountability should be a manager of the accounting office.

When the application for discharge is submitted to the SCO, accounting entries maybe be required to defer the AR if the AR is outstanding in a general ledger account other than Account 1209900-Accounts Receivable-Other (Legacy Account 1319). If this is the case, entries are made to remove the receivable from the current receivable account and re-establish the receivable in the Account 1209900-Accounts Receivable-Other (Legacy Account 1319) with an offset to Account 1290000-Provision for Deferred Receivables.

 

Once the agency/department receives an approved discharge from accountability application from the SCO, an accounting entry is made to record the write-off of the receivable. See SAM 10509.

 

The California State Universities must refer to Education Code section 89750.5 for application limitations.