An account is transferred to uncollectible when all collection action feasible has been pursued and the Commission has no prospects for collection.

The Commission will consider reclassifying an account as uncollectible when all of the delinquent tax is in the Active, Judgment, or Final category, all quarters are at least thirty-five months past due and the account has been closed/inactivated or terminated. All collection action that is appropriate should be exhausted prior to reclassification to uncollectible.

• The account is determined to be uncollectible because of circumstances revealed in a field investigation. Reclassification will originate with a recommendation from the field.
  
  
• Judgment is not renewed within ten years. Reclassification will originate with the Collection Section.
  
  
• The employer is deceased or all members of a partnership are deceased and left no estate or estates. Reclassification will originate with a recommendation from the field.
  
  
• The Collection Section has verified by contact with the Secretary of State that a corporation has been dissolved or its charter forfeited, and an investigation by a Commission representative has disclosed that the corporation has no assets and that no distribution of assets was made to stockholders upon dissolution or abandonment of the corporation. If the corporate debt is $20,000.00, we require that the field examiner provide a statement as to the distribution of assets. Normally, a recommendation for reclassification will originate with the field examiner. On special occasions, the reclassification may originate in the Collection Section. Any individual officer liability resulting from corporate indebtedness will be considered as if the corporate account were an individual proprietorship or partnership, etc.
  
  
• The employer is no longer operating a business, diligent collection effort has been made, all collection action that is feasible has been taken and the account does not meet current criteria for further collection action.
  
  
• The employer has been long absent from this state, has no assets in this state and his whereabouts are unknown. Reclassification will originate with a recommendation from the field.
  
  
• The employer's mailing address and current residence are unknown and a diligent effort has been made using all of the search tools and sources available. Employer cannot be located.
  

Note: The Collection Section might not reclassify an account to uncollectible if the whereabouts of the employer is known. Factors the Collection Section examiner may consider when denying uncollectible are the age and the size of the debt. In the event the uncollectible request is denied, quarterly billings should continue and periodic field contacts should be made in accordance with non-ACAP procedures.

It is important to remember that when account is reclassified to uncollectible, the balance is still owed by the employer. The debt is not forgiven and TWC is unable to compromise the balance or take less than full payment in order to satisfy the debt. TWC can rely on tax liens and abstracts to encumber the employer's property and that title companies, banks etc., will require repayment of our debt prior to allowing a purchase or sale to take place.

Using the Civil Actions criteria for renewal of the judgment and assessment, determine if the monetary delinquency is such that it meets renewal criteria. An account may be deemed uncollectible, but also meet renewal criteria. If this is the case, the account should be reclassified to uncollectible with judgment and assessment folders remaining available for renewal purposes. The uncollectible recommendation should be placed in the judgment/assessment folders. If the monetary delinquency is below renewal criteria and uncollectible is deemed appropriate, the judgment and assessment folders should be disassembled and the packets forwarded for archiving and posting to the transaction log screen . The documents can be retrieved. On the other hand, an account may not meet renewal criteria but not be uncollectible if the whereabouts of the employer are known.

The approval of the Administrative Actions Unit supervisor is required prior to reclassification of a reimbursing account to uncollectible.

If the judgment or assessment includes officers, those officers are liable for the portion of the debt as specified on the abstract of assessment or judgment. The uncollectible request on these accounts should include comments to the effect that efforts have been made to collect from the officers. If such a comment is not noted, the request should be returned to the field examiner for further investigation. If an officer is liable for only a portion of the debt, uncollectible can be initiated against the quarters in which there is no officer liability and we can continue to bill an officer for his portion of the debt.

Employer master files should be used in attempts to locate individuals, partners and officers. Alpha and social security number checks can be run on the master file in order to locate another TWC account with more current information. If the social security number is not available and the employer was bankrupt, the bankruptcy packet may include a social security number. Other sources that aid in locating lost employers are credit reports , Internet, Postmaster Letters and Employer Inquiry Letters. If these sources provide positive results in locating lost employers, the uncollectible request should be denied.

When an employer is located or an investigation of the account reveals information that prevents the account from reclassification, e-mail the responsible field examiner, their supervisor and regional tax manager with the reasons why the account will not be reclassified to uncollectible. Brief comments should also be placed on the account.

Use category transfer screen to reclassify an account to uncollectible. The screen allows for all quarters, non-quarterly charges, or specified quarters and charges to be reclassified. Once an account is reclassified, the employer master file header no longer reflects the uncollectible amounts. The delinquent summary and detail delinquency screens continue to reflect the delinquent quarters. The detail delinquency screen shows the quarters to be in the U category.

Any "Original Instrument" tax liens should be forwarded for archiving. Some county clerks do not return the original tax lien but record and return the copy. Determine via the transaction log if the tax lien is already posted and if it is not, forward the copy of the lien to archiving. If the other names and addresses screen does not provide the social security number for individual or partnership accounts, enter the social security number and any other information pertinent on the comment screens to help identify the employer. Indicate that the information was obtained from the C-1.

Interest no longer accrues on an account when it has been reclassified to uncollectible. That does not mean that additional interest is not owed. Be aware that interest may need to be added to the balance when quoting a payoff.