DISCHARGING UNCOLLECTIBLE AMOUNTS AND WRITE OFF PROCEDURES-NON-EMPLOYEE ACCOUNTS RECEIVABLE - 8293.5
Agencies/Departments may pursue collections until the statute of limitations expires. If all reasonable collection procedures do not result in payment, agencies/departments may request discharge from the accountability of uncollectable amounts due from private entities from the State Controller’s Office (SCO). Agencies/Departments will review the accounts receivable (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. 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. For collection best practices and procedures, see SAM Section 8293. The $500 limitation applies to the total of all amounts owed by the debtor, not to each invoice. Agencies/Departments are not required to submit an Application for 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 the SCO to request discharge of debtor amounts over $500 owed to the state. Discharge from accountability of uncollectible amounts of more than $12,500 will be filed separately from applications for amounts of $12,500 or less. The $12,500 amount applies to the total of all amounts owed by the debtor, not to each invoice. A manager of the accounting office should authorize the STD 27.
The STD 27 shall include:
- Agency/Department’s information.
- Debtor’s name and claim amount.
- Statement of the nature of the amount due.
- List of specific collection efforts made and estimated cost of further collection.
- Any other fact(s) supporting the request, including offset attempts. For information on offset procedures, see SAM Section 8293.4.
- 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 agency/department is included in the petition for bankruptcy.
- Signature, email address, phone number, printed name, and title of the person completing the STD 27.
- Signature, email address, phone number, printed name, and title of the manager authorizing the STD 27.
Upon submission of the STD 27 to the SCO, agencies/departments will defer the AR if the AR is recorded in an account other than Account No. 1209900, (Legacy Account No. 1319) Accounts Receivable-Other. The agency/department will remove the receivable from the current receivable account and re-establish it in Account No. 1209900, (Legacy Account No. 1319) Accounts Receivable-Other with an offset to Account No. 1290000, (Legacy Account No. 1600) Provision for Deferred Receivables.
The agency/department will record an accounting entry to write off the receivable after the SCO approves the STD 27. For information on how to record the write-off of accounts receivable, see SAM Section 10509.
The California State Universities must refer to Education Code section 89750.5 for application limitations.