Kansas Administrative Regulations › Agency 92 - KANSAS DEPARTMENT OF REVENUE › Article 19 - KANSAS RETAILERS' SALES TAX › Section 92-19-3b - Allowances for bad debts

Current through Register Vol. 43, No. 28, July 11, 2024
(a)
			 General.
(1) For purposes of this regulation,
			 "bad debt" shall mean any debt owed to or account receivable held by a retailer
			 that can be claimed as a "wholly or partially worthless debt" deduction under
			 26 U.S.C. Section 166 that arose from the sale of goods or services upon which
			 the retailer reported retailers' sales or use tax in a prior reporting period;
			 and
(2)
(A) A retailer shall be eligible to claim a
			 bad debt allowance if the retailer meets the following conditions:
(i) Was the original seller of the taxable
			 goods or services;
(ii) charged and
			 remitted the retailers' sales or use tax on a sale that can be claimed as a
			 worthless debt deduction under 26 U.S.C. Section 166; and
(iii) has written off the bad debt as
			 worthless or uncollectible in its books and records.
(B) A certified service provider shall be
			 eligible to claim a bad debt allowance on behalf of a retailer that meets the
			 conditions in paragraph (a)(2)(A) if the provider meets the requirements in
			 subsection (g).
(3) A
			 claim for a bad debt allowance shall be considered to be filed with the
			 department according to one of the following:
(A) On the due date of the return for the
			 reporting period in which the bad debt is written off as uncollectible in the
			 retailer's books and records, when a deduction for the bad debt is taken on
			 that return; or
(B) on the date
			 that the retailer files a refund claim with the department, if part or all of a
			 bad debt allowance is being claimed as a refund because the bad debt allowance
			 was not taken as a deduction on the appropriate return or the deduction that
			 was taken exceeded the amount of taxable gross receipts being reported on that
			 return. The filing date for a refund claim provided by
			 K.S.A.
			 79-3609, and amendments thereto, shall be the
			 later of either the postmark date on the refund request or the postmark date on
			 the required supporting documentation.
(4) Each claim by a retailer for a deduction,
			 credit, or refund based on a bad debt allowance shall be made in accordance
			 with this regulation. K.A.R. 92-19-3c shall control the treatment of goods that
			 are repossessed by a retailer after the retailer has taken a bad debt allowance
			 on the underlying credit sale of goods defaulted on by the retailers'
			 customer.
(5) After a retailer
			 sells, factors, assigns, or otherwise transfers an account receivable,
			 installment contract, or other similar debt instrument for a discount of any
			 kind that authorizes a third party to collect customer payments, the retailer
			 shall not be eligible to claim a bad debt allowance, credit, or refund for bad
			 debts that arise under an instrument that was sold or transferred at a
			 discount. A third party that purchases or otherwise obtains a debt instrument
			 from the retailer, and any person that subsequently purchases or otherwise
			 obtains the debt instrument, shall not be eligible to claim a bad debt
			 allowance, credit, or refund for an underlying credit sale of goods or services
			 defaulted on by the retailer's customer.