Wisconsin Administrative Code › Department of Revenue › Chapter Tax 4 - Motor Vehicle And General Aviation Fuel Taxation › Section Tax 4.12 - Uncollected motor vehicle fuel taxes and repossessions

Current through June 24, 2024
(1) PURPOSE. This
			 section clarifies when and how a supplier required to be licensed by the
			 department may recover the motor vehicle fuel tax from the department when a
			 purchaser is unable to pay the tax to the supplier. This section also clarifies
			 when and how a wholesaler distributor may recover the motor vehicle fuel tax
			 from the department when the wholesaler distributor is unable to collect the
			 tax from another wholesaler distributor or a retail dealer.
(2) STATUTES. Under s.
			 78.01(2s),
			 Stats., a supplier is not liable for the tax on motor vehicle fuel when the
			 supplier is unable to recover the tax from a purchaser. With proper
			 documentation, the supplier may claim a tax deduction on a later remittance of
			 taxes. A wholesaler distributor may file a refund claim with the department to
			 recover the tax on uncollectable accounts covering sales to other wholesaler
			 distributors and retail dealers.
(3) PROCEDURE.
(a)
Tax imposed.
A supplier
			 shall pay the motor vehicle fuel tax to the department by the 15th day of the
			 month after the month in which the fuel is received, as described in s.
			 78.07,
			 Stats., irrespective of whether the sale is for cash or credit.
(b)
Bad debts.
1. `Deduction from measure of tax.' A
			 supplier is relieved from the liability for motor vehicle fuel tax on accounts
			 which have become worthless and which have met the requirements to be charged
			 off for income or franchise tax purposes. The bad debt tax deduction shall be
			 reported and claimed on the supplier's monthly tax report for the month in
			 which the account becomes worthless. However, if a supplier is out of business
			 when the account becomes worthless, a bad debt deduction may be claimed on the
			 last return filed by that business or through a refund claim filed with the
			 department. A wholesaler distributor may claim a bad debt tax deduction for the
			 amount of tax liability for motor vehicle fuel tax on sales to other wholesaler
			 distributors or retail dealers on accounts which have become worthless and
			 which have met the requirements to be charged off for income or franchise tax
			 purposes by filing a refund claim with the department. A claim for refund
			 relating to a worthless account must be filed within 4 years of the 15th day of
			 the 4th month following the close of the supplier's or wholesaler distributor's
			 calendar or fiscal year within which the account becomes worthless.
Examples:
1) An account of a supplier who is still in
			 business becomes worthless and meets the requirements to be charged off for
			 income or franchise tax purposes on January 10, 2011. The supplier may claim a
			 bad debt deduction on the motor vehicle fuel tax return, form MF-002, filed for
			 the month of January 2011, even though the bad debt deduction may not be
			 claimed for income or franchise tax purposes until the 2011 income or franchise
			 tax return is filed in 2012.
2)
			 Assume the same facts as in Example 1, except the account is that of a
			 wholesaler distributor. Irrespective of when the wholesaler distributor files
			 the income or franchise tax return on which the bad debt deduction is claimed,
			 the wholesaler distributor may file a claim for refund to recover the
			 uncollected motor vehicle fuel tax any time between January 10, 2011 and April
			 15, 2016.
2. `Recovery
			 of bad debts charged off.' If a bad debt deduction has been claimed by a
			 supplier or wholesaler distributor for an account found worthless and charged
			 off and the account is thereafter in whole or in part collected by the supplier
			 or wholesaler distributor, the bad debt deduction shall be repaid to the
			 department. A supplier shall report the amount so collected in the first tax
			 report, form MF-002, filed after the collection, and the tax on the amount
			 collected shall be paid with the report. A wholesaler distributor shall file a
			 corrected refund claim and pay the tax collected within 30 days of
			 collection.
3. `Amount deductible.'
a. A deduction may only be claimed for the
			 unpaid amount of tax on an account found worthless and charged off. The total
			 amount charged off may include the cost of the fuel, interest, financing or
			 insurance costs in addition to the tax amount. To determine the unpaid amount
			 of tax to be deducted, all payments and credits to the account shall be
			 prorated to the various components of the total amount that the purchaser
			 contracted to pay.
Example:
At the time when the tax rate is
				30.9¢ per gallon, Supplier A sells 8,000 gallons of gasoline to Company B.
				Company B has an agreement with Supplier A to delay payment of the tax. The
				amount of the contract is $12,942, consisting of tax, $2,472, and the cost of
				fuel, $10,470. Company B defaults and discontinues operations, leaving a
				balance due Supplier A of $2,100, which includes interest of $200 not included
				in the contract amount. The deductible tax loss is $363, computed as
				follows:
Contract amount
$12,942
Unpaid contract amount
-1,900
Paid contract amount
$11,042
Portion constituting tax*
x.191
Tax paid
$2,109
b. No
			 deduction may be allowed for expenses incurred by a supplier or wholesaler
			 distributor in attempting to collect any account receivable, or for that
			 portion of a debt recovered that is reclaimed by or paid to a third party as
			 compensation for services rendered in collecting the account.
4. `Special situations.' A
			 purchaser of receivables may not claim a bad debt deduction for the motor
			 vehicle fuel tax on receivables that subsequently become worthless.
5. `Repossessions.' When motor vehicle fuel
			 is repossessed a tax deduction may be allowed only to the extent that the
			 supplier or wholesaler distributor sustains a net loss upon which tax was
			 paid.
(c)
Tax
			 rate change.
If a deduction for uncollectible tax is claimed in a
			 period when the tax rate is different from the tax rate in effect when the tax
			 was reported on the tax report, an adjustment to the gallons claimed shall be
			 made to compensate for the tax rate differential. The number of gallons to
			 claim is computed by dividing the old tax rate by the new tax rate and
			 multiplying that percentage by the gallons sold.
Example:
If tax was reported on an 8,000 gallon
				sale when the tax rate was 23.2¢ per gallon and a deduction was taken at a
				24¢ rate, only 7,733 gallons may be claimed on the monthly supplier's tax
				report; [23.2 24] x 8,000 = 7,733.