139.362 Bad debt deductions.

(1) In this section, “bad debt" means an amount that is equal to the purchase price of cigarettes, if such amount may be claimed as a deduction under section 166 of the Internal Revenue Code. “Bad debt" does not include financing charges, interest on the wholesale price of cigarettes, uncollectible amounts on property that remains in the seller's possession until the full purchase price is paid, expenses incurred in attempting to collect any debt, debts sold or assigned to 3rd parties for collection, and repossessed property.

(2) A person who pays the taxes imposed under this subchapter may claim as a deduction on a return under s. 139.38, and against the purchase of stamps under s. 139.32, the amount of any such taxes that are attributable to bad debt that the person writes off as uncollectible in the person's books and records and that is eligible to be deducted as bad debt for federal income tax purposes, regardless of whether the person is required to file a federal income tax return. A person who claims a deduction under this section shall claim the deduction on the return under s. 139.38 that is submitted for the period in which the person writes off the amount of the bad debt as uncollectible in the person's books and records and in which such amount is eligible to be deducted as bad debt for federal income tax purposes. If the person subsequently collects in whole or in part any bad debt for which a deduction is claimed under this section, the person shall submit to the department the portion of the deduction related to the amount collected, in the manner prescribed by the department and for the period in which the amount is collected.

(3) A person who claims a deduction under this section shall submit the claim on a form prescribed by the department and shall submit with the form all of the following:

(a) A copy of the original invoice for the sale of cigarettes that represents bad debt.

(b) Evidence that the cigarettes described in the invoice under par. (a) were delivered to the person who ordered them.

(c) Evidence that the person who ordered and received the cigarettes did not pay the person who claims a deduction under this section for the cigarettes.

(d) Evidence that the person who claims a deduction under this section used reasonable collection practices in attempting to collect the amount owed under par. (c).

(4) Any person who possesses cigarettes for which the taxes imposed under this subchapter have not been paid and have been claimed as a deduction under this section shall file a report as prescribed by the department, pay the taxes imposed under this subchapter on the cigarettes, and be subject to this subchapter in the same manner as is provided for persons who hold valid permits under this subchapter.

History: 2005 a. 25.