The Bureau of Internal Revenue (BIR) has increased the cost to collect threshold for Accounts Receivable and Delinquent Accounts (AR/DA) from ₱20,000 to ₱80,000 under Revenue Memorandum Order (RMO) No. 011-2026, issued on May 12, 2026. The order takes effect immediately and applies to all internal revenue officers and concerned personnel involved in collection enforcement.
The issuance covers AR/DA accounts that are already final, executory, and demandable, and revises the benchmark used to determine whether pursuing collection remains economically justified. It also repeals, amends, or modifies all inconsistent issuances. At its core, the order is not about tax liability. It is about enforcement priority, and what the government now considers worth pursuing.
A Sharper Line on What Gets Collected
RMO No. 011-2026 redefines the “cost to collect” principle as a working enforcement filter. This principle ensures that the effort, manpower, and administrative cost of pursuing a delinquent account does not exceed the likely recovery.
By increasing the threshold from ₱20,000 to ₱80,000, the BIR has effectively drawn a much sharper line in its collection strategy:
- Accounts below ₱80,000 are now structurally less likely to be prioritized for active enforcement measures; Meanwhile,
- Higher-value cases are elevated within the collection hierarchy.
This is not a repricing of tax obligations, but a recalibration of enforcement attention.
What Does This Signal Inside the BIR
The move reflects a blunt administrative reality that the BIR does not have unlimited enforcement capacity, but it does have an expanding universe of delinquent accounts. Low-value AR/DA cases often require the same procedural steps as higher-value accounts. In effect, smaller delinquencies consume disproportionate administrative energy relative to their fiscal return.
By quadrupling the threshold, the BIR is signaling a shift toward concentration rather than coverage. The goal is no longer to pursue all delinquent accounts equally, but to prioritize those that justify the cost of pursuit.
The Practical Reality for Taxpayers
This is where the policy becomes more than administrative housekeeping. For taxpayers, especially individuals and small businesses with lower outstanding tax liabilities, the change may translate into a noticeable shift in enforcement intensity.
Accounts below ₱80,000 remain legally demandable, but may no longer receive the same level of immediate or aggressive collection action compared to higher-value delinquencies.
In practical terms, this creates a tiered enforcement environment:
- Higher-value delinquent accounts are now clearly in focus.
- Meanwhile, lower-value accounts may move more slowly through enforcement channels or be deprioritized depending on internal write-off or case disposition procedures.
However, the key point is that tax liability does not disappear. The obligation remains fully enforceable under the law. What changes is how quickly and how aggressively the government pursues collection.
Economic Feasibility Redefined
The concept of “economic feasibility” embedded in the order relays that the government is now more explicitly weighing enforcement costs against expected recovery. This is not a relaxation of enforcement — it is a prioritization model that accepts a hard truth that some accounts cost more to collect than they are worth.
By raising the threshold to ₱80,000, the BIR is effectively tightening its definition of what constitutes a “worthwhile” collection case, while freeing capacity for higher-yield enforcement activity.
Forward Outlook
With immediate implementation, RMO No. 011-2026 will require rapid recalibration of AR/DA monitoring, case prioritization, and enforcement workflows across revenue offices. Its impact will be measured in two ways:
- First, whether it reduces administrative congestion in low-value delinquency cases; and
- Second, whether it improves overall collection efficiency without weakening compliance discipline.
Ultimately, this issuance signals a more selective BIR enforcement posture that is less about chasing every peso equally, and more about enforcing where the return justifies the pursuit.
Article written by: Paul Jericho Aguila, CPA
