Vallejo Municipal Code Ch. 3.50 Accounting Write-Off Limits

It is the city's policy to actively pursue collection of past-due accounts receivable, regularly review the status of past-due accounts, and write-off amounts that have been determined to be uncollectible by both the finance director and the city manager. Past due accounts receivables which are determined to be uncollectible may include, but are not limited to: water utility fees, business license tax, medical marijuana tax, transient occupancy tax, utility user tax, debts owed to the city from taxes or fees, loans and notes, permit fees, private development project fees, fees for services, regulatory and development impact fees, fines, interest and penalties, forgiveness of debt as approved by the city council, accounts returned by a collection agency as uncollectible, recovery for damage to city property, debtor has filed for bankruptcy and debt is discharged by the court, accounts of deceased persons, compromise of debt by proper authority, legal judgment, any other unpaid fees, and accounts of retired/separated employees. The finance director shall make all reasonable efforts to collect past due accounts receivables and documents such efforts in the file prior to any determination of uncollectability, with reference to the criteria as set forth below. A write-off of uncollectible accounts receivable from the city's accounting records does not constitute forgiveness of the debt or a gift of public funds.

(Ord. No. 1710 N.C. (2d), § 1, 7-14-2015)

The city manager and the finance director, or his or her designee, are hereby authorized to settle tax, fee or other accounts receivable disputes by writing off past-due accounts receivable that have been determined to be uncollectible, reducing or waiving amounts due or establishing payment plans, if such write off, payment plans, reduction or waiver serves to promote the city's fiscal welfare by expeditious payment, enhancing revenue, or otherwise as follows:

City manager—Up to five thousand dollars per account.

Finance director—Up to one thousand dollars per account.

Write-off of accounts with an outstanding balance due in excess of five thousand dollars must be approved by action of the city council.

The city manager and the finance director shall prepare and distribute to the city council an annual report listing accounts receivable that have been approved by the city manager and finance director under their authorized signature authority for write off in excess of one thousand dollars.

(Ord. No. 1710 N.C. (2d), § 1, 7-14-2015)

No account receivable shall be written off unless it meets one or more of the following criteria:

a. Assets without legal merit. A receivable which was never owed to the city and should not have been classified as a receivable, or is determined to be without legal merit by the city attorney's office on the ground that it is not a legally enforceable debt.

b. Assets that cannot be substantiated by evidence. The city does not have or is unable to produce the evidence of outstanding receivables due the city, including, without limitation, the lack of accounting records or witnesses to confirm the existence of the asset. An asset's existence and/or value may be confirmed by documents such as inspection reports, appraisals, deeds, contracts, or other written evidence.

Where an accounting ledger is incorrect and/or there is insufficient documentation to support routine adjustments, a write-off or reclassification may be executed.

c. Costs of asset recovery actions will exceed estimated recovery amounts. When making this determination, factors to be considered include:

1. Fees associated with the asset recovery tools that an organization is considering using;

2. Costs to the city associated with resources needed to pursue recovery, including internal agency costs, and additional recovery services (e.g., collection agencies);

3. Ability to compromise the amount of debt and to report the unrecovered portion of the debt to the Internal Revenue Service (IRS) as income; and

4. Need to pursue collection, regardless of costs, in those cases where it is in the best interest of the city.

d. Inability to locate debtor. An asset may be deemed unrecoverable when the debtor cannot be located. Before establishing that it cannot locate a debtor, staff must make a diligent attempt to contact or utilize available and appropriate sources of information such as credit reporting bureaus, city and county tax records, business references, utility companies, telephone directories, or places of employment.

e. It is not possible to collect a substantial amount. The determination of what constitutes a substantial amount of the asset is to be made by the city manager, or designee, based on historical recovery rates for particular types of assets, and documented in the write-off.

f. Bankruptcy. When a bankruptcy filing is disposed of by the court, the account shall be written off so long as it is consistent with the court's determinations.

(Ord. No. 1710 N.C. (2d), § 1, 7-14-2015)