New York Codes, Rules and Regulations › Title 20 - DEPARTMENT OF TAXATION AND FINANCE › Chapter IV - Sales And Use And Other Miscellaneous Taxes › Subchapter A - Sales And Use Taxes › Part 534 - Refunds And Credits › Section 534.7 - Refunds and credits attributable to bad debts

Current through Register Vol. 46, No. 28, July 10, 2024
Tax Law, §§ 1132(e), 1139(e)
(a)
Definitions.
The following definitions apply for the purpose of
					 determining entitlement and computation of the refunds and credits authorized
					 in this section only.
(1) The term
uncollectible
means worthless, as used for federal income tax
				  purposes. Legal action to enforce payment when it would probably not result in
				  satisfaction of a judgment upon a showing of the underlying facts is not a
				  necessary prerequisite in determining worthlessness.
(2)
The term retail-vendor
means a vendor of tangible personal property or services, payment for which is
				  made, in whole or in part, by the extension of credit to the purchaser by such
				  vendor who is responsible for remitting applicable sales tax to the department
				  and includes a lessor-vendor which meets the conditions of paragraph (b)(2) of
				  this section.
(3) The term
account-obligor
means the purchaser of tangible personal
				  property or services, the receipts of which are paid, in whole or in part, by
				  the extension of credit by the retail-vendor.
(4) The term
receivables of a
				  retail-vendor
means indebtedness to the retail-vendor incurred by an
				  account-obligor upon his purchases whether or not subject to the sales and use
				  taxes.
(5) The term
captive
				  finance company
means a company that meets all of the following
				  conditions:
(i) it is wholly owned by the
				  retail-vendor or is wholly owned by a company which is related to such
				  retail-vendor through an unbroken chain of wholly owned companies;
(ii) it does not finance receivables of any
				  vendor other than its retail-vendor or any company related to such
				  retail-vendor by an unbroken chain of wholly owned related companies;
(iii) it does not extend credit to anyone
				  other than in the form of the purchase of receivables created as a result of
				  extension of credit by the retail-vendor, except that the requirement of this
				  subparagraph shall not be violated by the investment of excess cash funds in
				  the shortor long-term financial markets or by advancing funds to its
				  retail-vendor or a company which is related to such retail-vendor through an
				  unbroken chain of wholly owned companies;
(iv) it does not sell receivables to a third
				  party other than a transfer of a receivable to its retail-vendor; and
(v) it does not receive payments on the
				  receivable directly from the account-obligors. Instead, the foregoing payments,
				  including interest, on the receivable must be made by the account-obligors
				  directly to the retail-vendor, and must be reported as income by the
				  retail-vendor for income and franchise tax purposes.
(6) The term
recourse
means
				  that all bad debts are transferred back to the retail-vendor or such bad debts
				  are charged against the retail-vendor's reserve account established for that
				  purpose.