California Code of Regulations › Title 18 - Public Revenues › Division 2 - California Department of Tax and Fee Administration- Business Taxes (State Board of Equalization- Business Taxes, See Ch. 6 and 9.9) › Chapter 2 - Use Fuel Tax › Article 3 - Reports and Records › Section 1331.6 - Credit for Bad Debt Losses of Vendors

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The amount of tax reported and paid by a vendor which is
					 included in an account found to be worthless and charged off for income tax
					 purposes, may be taken as a credit against the tax due on the use fuel tax
					 return of the vendor. Allowance of this credit is subject to the limitation
					 period prescribed in Section
					 8782
					 of the Revenue and Taxation Code and the other provisions of this
					 regulation.
The right to the tax credit arises in the month in which
					 the account is found to be worthless and charged off for income tax purposes.
					 The credit should be taken on the return for the period in which the right to
					 the credit arose. Failure to take this credit in the proper period will not
					 prevent the allowance of a credit of the amount of tax for which the vendor was
					 entitled to credit under this section.
A vendor using the reserve method to account for bad debts
					 for income tax purposes should take the credit on the return for the period in
					 which the account is found to be worthless and charged against the reserve. No
					 tax credit is allowable for any portion of a debt recovered that is retained by
					 or paid to any person as compensation for his or her services or expenses in
					 collecting the account.
If any account with respect to which credit has been taken
					 is subsequently collected, in whole or in part, the vendor shall apply the
					 amount collected ratably to the charges for the fuel and the tax thereon. If
					 the purchaser is indebted to the vendor with respect to other items also
					 charged off as bad debts, payments made on account thereof shall first be
					 credited to the charges for the fuel and the tax thereon unless the purchaser
					 shall specify otherwise. The tax thus collected shall be included in the return
					 due for the period in which the collection is made and must be remitted to the
					 Board within the time prescribed for payment of the tax due for that
					 period.
Whenever any charge arising from the sale of fuel remains
					 unpaid for a period of 90 days after the close of the calendar month in which
					 the sale is made, or the account is found to be uncollectible prior to 90 days
					 after the close of the calendar month in which the sale is made, that
					 indebtedness is a delinquent account as to which the vendor shall report to the
					 Board as herein specified. For the purpose hereof the date of the delivery
					 invoice is deemed the date of sale.
The vendor shall file with each use fuel tax return a
					 schedule listing the names and addresses of all purchasers whose accounts
					 became delinquent within the meaning of the preceding paragraph as of the close
					 of the reporting period for which the return is filed and remain unpaid at the
					 time of such filing. The listing shall be accompanied by a notice of delinquent
					 account on a form prescribed by the Board.
When the account of the purchaser is no longer delinquent
					 or amounts remaining unpaid for over 60 days have been cleared and the vendor
					 is satisfied that the remainder of the account will be paid, the vendor should
					 complete the triplicate and quadruplicate of the Notice of Worthless Account
					 (Bad Debts) form (BOE-120 Rev. 1 (7-98)) (incorporated by reference) by
					 indicating the payments received. The triplicate (pink) of the Notice of
					 Worthless Account (Bad Debts) form should be forwarded promptly to the
					 Board.
Failure to list a delinquent account as herein required
					 shall constitute a waiver of the credit that might otherwise be allowable for
					 the amount of the delinquency under Section
					 8732.5
					 of the Revenue and Taxation Code in the event that the account is later found
					 to be worthless.
1. Amendment
					 filed 12-9-68; effective thirtieth day thereafter (Register 68, No. 47). For
					 prior history, see Register 66, No. 31.
2. Amendment of section and
					 NOTE filed 10-21-94; operative 11-21-94 (Register 94, No. 42).
3.
					 Amendment of section heading and section filed 8-30-99; operative 9-29-99
					 (Register 99, No. 36).
Note: Authority cited: Section
						9251,
						Revenue and Taxation Code. Reference: Sections
						8732.5,
						8737
						and
						8782,
						Revenue and Taxation Code.