Chapter 3.25
UNCOLLECTIBLE ACCOUNTS RECEIVABLE AND LATE PAYMENTS

Sections:

3.25.010    Purpose.

3.25.020    Definitions.

3.25.030    Policies and procedures.

3.25.040    Charge off of uncollectible fees, penalties or interest.

3.25.050    Penalty for late payments of permit and license fees and other miscellaneous monies owed.

3.25.060    Responsibilities.

3.25.010 Purpose.

Skykomish has nontax accounts receivable resulting from its daily operations. Some of these receivables are with governmental organizations and others are with private individuals and businesses. Some of these receivables become delinquent from time to time. However, the delinquent receivables from private sources are most likely to become uncollectible and can be considered for write off as bad debts. To establish uniform guidelines for determining delinquent accounts receivable which should be considered as bad debts and written off. Also, to provide a fair representation of accounts receivable in Skykomish’s financial statements.

Some situations which may result in writing off uncollectible receivables include:

(1) Getting delinquent accounts receivable back from the collection agency as uncollectible.

(2) Losing in a litigation involving accounts receivable.

(3) A debtor filing for bankruptcy and the bankruptcy court has determined that we would get little or nothing on the receivable.

(4) Being advised by the prosecuting attorney’s office that it would not be productive to sue a debtor. (Res. 199, 2004)

3.25.020 Definitions.

(1) “Accounts receivable” includes all nontax debts owed to Skykomish by the private sector and by other governments.

(2) “Aged trial balance of accounts receivable” means a schedule classifying the balances of all accounts receivables according to varying lengths of time the accounts are past due. (Res. 199, 2004)

3.25.030 Policies and procedures.

(1) The clerk-treasurer shall prepare and review an aged trial balance of the accounts receivable as often as necessary, but at least annually at year end, in order to determine if any delinquent receivables should be written off as bad debts.

(2) The clerk-treasurer shall send requests to the Skykomish town council to write off receivables as bad debts. The request shall be supported by sufficient evidence of uncollectibility. At the very minimum, the request should contain the following information:

(a) Account description such as name, service date, amount, invoice number (where applicable), and so on;

(b) Justification for the write-off request and evidence of collection efforts made;

(c) Origination of the debt or type of service rendered.

(3) For write-off requests up to $100.00, sufficient evidence of uncollectibility shall include records of telephone calls, copies of correspondence between the town and the debtor, or record of a collection agency’s inability to collect the debt.

(4) For accounts over $100.00, sufficient evidence would include copies of documents indicating court action (whether small claims or district court), or justification for an absence of court action, or attempts by a collection agency to collect on the debt.

(5) Additionally, for accounts greater than $1,000, evidence must exist indicating that all available and lawful means by which the debt may be collected have been pursued.

(6) A write off of uncollectible accounts receivable from the town’s accounting records does not constitute forgiveness of the debt and it is still payable by the debtor.

(7) The clerk-treasurer shall prepare the journal entries necessary to record the write off and maintain records of accounts written off in accordance with state records retention rules. (Res. 199, 2004)

3.25.040 Charge off of uncollectible fees, penalties or interest.

The council may charge off any fee, penalty, or interest that is owed by a taxpayer, if the council reasonably ascertains that the cost of collecting such amounts would be greater than the total amount that is owed or likely to be collected from the taxpayer. (Res. 199, 2004)

3.25.050 Penalty for late payments of permit and license fees and other miscellaneous monies owed.

If payment of any fee or tax due under this chapter is not received by the clerk-treasurer on or before the day it becomes due, there shall be added a penalty in interest as follows:

(1) One to 30 days’ delinquency, 10 percent with a minimum penalty of $5.00;

(2) Thirty-one to 60 days’ delinquency, 15 percent with a minimum penalty of $10.00;

(3) Sixty-one or more days’ delinquency, 20 percent with a minimum penalty of $25.00.

All taxes and fees uncollected at the end of 90 days shall be sent to the town’s collection agency. Any fee or tax due under this chapter and unpaid, and all penalties thereon, shall constitute a debt to the city and may be collected by court proceedings, which remedy shall be in addition to all other remedies. (Res. 199, 2004)

3.25.060 Responsibilities.

The town council is responsible for ensuring that all the provisions of these policies/procedures are met. (Res. 199, 2004)