093_SB0227

 
                                     LRB093 04616 SJM 04669 b

 1        AN ACT concerning taxes.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  5.  The  Cigarette  Tax Act is amended by adding
 5    Section 3-2 as follows:

 6        (35 ILCS 130/3-2 new)
 7        Sec. 3-2. Bad debts deductible.
 8        (a)  Beginning on January  1,  2004,  a  distributor  may
 9    deduct  the  amount  of  bad debts from the tax imposed under
10    Section 2.  The  amount  deducted  must  be  charged  off  as
11    uncollectible  on  the  books of the distributor. If a person
12    pays all or part of a  bad  debt  with  respect  to  which  a
13    distributor  claimed  a  deduction  under  this  Section, the
14    distributor shall be liable for the amount of taxes  deducted
15    in connection with that portion of the debt for which payment
16    is  received  and  shall remit these taxes in his or her next
17    payment to the Department under Section 3.
18        (b)  Any claim  for  a  bad  debt  deduction  under  this
19    Section shall be supported by all of the following:
20             (1)  A copy of the original invoice.
21             (2)  Evidence  that  the cigarettes described in the
22        invoice were delivered to the person who ordered them.
23             (3)  Evidence  that  the  person  who  ordered   and
24        received  the  cigarettes did not pay the distributor for
25        the cigarettes and that the distributor  used  reasonable
26        collection practices in attempting to collect the debt.
27             (4)  As  used  in this Section, "bad debt" means the
28        taxes attributable to any  portion  of  a  debt  that  is
29        related  to  a  sale  of  cigarettes subject to tax under
30        Section 2 that is not otherwise deductible or excludable,
31        that has become worthless or uncollectible  in  the  time
 
                            -2-      LRB093 04616 SJM 04669 b
 1        period  between  the  date when taxes accrue to the State
 2        for the distributor's preceding tax return and  the  date
 3        when  taxes  accrue  to the State for the present return,
 4        and that is eligible to be claimed, or could be  eligible
 5        to  be  claimed  if  the  distributor kept accounts on an
 6        accrual basis, as a deduction pursuant to Section 166  of
 7        the  Internal  Revenue Code. A bad debt shall not include
 8        any interest on  the  wholesale  price  of  a  cigarette,
 9        uncollectible  amounts  on  property  that remains in the
10        possession of the distributor  until  the  full  purchase
11        price is paid, expenses incurred in attempting to collect
12        any  account  receivable  or  any  portion  of  the  debt
13        recovered, any accounts receivable that have been sold to
14        a third party for collection, and repossessed property.

15        Section  10.  The  Cigarette  Use  Tax  Act is amended by
16    adding Section 3-2 as follows:

17        (35 ILCS 135/3-2 new)
18        Sec. 3-2.  Bad debts deductible.
19        (a)  Beginning on January  1,  2004,  a  distributor  may
20    deduct  the  amount  of  bad debts from the tax imposed under
21    Section 2.  The  amount  deducted  must  be  charged  off  as
22    uncollectible  on  the books of the distributor.  If a person
23    pays all or part of a  bad  debt  with  respect  to  which  a
24    distributor  claimed  a  deduction  under  this  Section, the
25    distributor shall be liable for the amount of taxes  deducted
26    in connection with that portion of the debt for which payment
27    is  received  and  shall remit these taxes in his or her next
28    payment to the Department under Section 3.
29        (b)  Any claim  for  a  bad  debt  deduction  under  this
30    Section shall be supported by all of the following:
31             (1)  A copy of the original invoice.
32             (2)  Evidence  that  the cigarettes described in the
 
                            -3-      LRB093 04616 SJM 04669 b
 1        invoice were delivered to the person who ordered them.
 2             (3)  Evidence  that  the  person  who  ordered   and
 3        received  the  cigarettes did not pay the distributor for
 4        the cigarettes and that the distributor  used  reasonable
 5        collection practices in attempting to collect the debt.
 6             (4)  As  used  in this Section, "bad debt" means the
 7        taxes attributable to any  portion  of  a  debt  that  is
 8        related  to  a  sale  of  cigarettes subject to tax under
 9        Section 2 that is not otherwise deductible or excludable,
10        that has become worthless or uncollectible  in  the  time
11        period  between  the  date when taxes accrue to the State
12        for the distributor's preceding tax return and  the  date
13        when  taxes  accrue  to the State for the present return,
14        and that is eligible to be claimed, or could be  eligible
15        to  be  claimed  if  the  distributor kept accounts on an
16        accrual basis, as a deduction pursuant to Section 166  of
17        the  Internal Revenue Code.  A bad debt shall not include
18        any interest on  the  wholesale  price  of  a  cigarette,
19        uncollectible  amounts  on  property  that remains in the
20        possession of the distributor  until  the  full  purchase
21        price is paid, expenses incurred in attempting to collect
22        any  account  receivable  or  any  portion  of  the  debt
23        recovered, any accounts receivable that have been sold to
24        a third party for collection, and repossessed property.



25        Section  15.  The  Tobacco  Products  Tax  Act of 1995 is
26    amended by changing Section 10-32 as follows:

27        (35 ILCS 143/10-32 new)
28        Sec. 10-32. Bad debts deductible.
29        (a)   Beginning on January 1,  2004,  a  distributor  may
30    deduct  the  amount  of  bad debts from the tax imposed under
 
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 1    Section 10-10. The amount deducted must  be  charged  off  as
 2    uncollectible  on  the  books of the distributor. If a person
 3    pays all or part of a  bad  debt  with  respect  to  which  a
 4    distributor  claimed  a  deduction  under  this  Section, the
 5    distributor shall be liable for the amount of taxes  deducted
 6    in connection with that portion of the debt for which payment
 7    is  received  and  shall remit these taxes in his or her next
 8    payment to the Department under Section 10-30.
 9        (b)  Any claim  for  a  bad  debt  deduction  under  this
10    Section shall be supported by all of the following:
11             (1)  A copy of the original invoice.
12             (2)  Evidence that the tobacco products described in
13        the  invoice  were  delivered  to  the person who ordered
14        them.
15             (3)  Evidence  that  the  person  who  ordered   and
16        received the tobacco products did not pay the distributor
17        for  the  tobacco  products and that the distributor used
18        reasonable collection practices in attempting to  collect
19        the debt.
20             (4)  As  used  in this Section, "bad debt" means the
21        taxes attributable to any  portion  of  a  debt  that  is
22        related  to  a  sale  of  tobacco products subject to tax
23        under Section 10-10 that is not otherwise  deductible  or
24        excludable, that has become worthless or uncollectible in
25        the time period between the date when taxes accrue to the
26        State  for the distributor's preceding tax return and the
27        date when taxes accrue  to  the  State  for  the  present
28        return,  and  that is eligible to be claimed, or could be
29        eligible to be claimed if the distributor  kept  accounts
30        on  an  accrual basis, as a deduction pursuant to Section
31        166 of the Internal Revenue Code. A bad  debt  shall  not
32        include  any interest on the wholesale price of a tobacco
33        product, uncollectible amounts on property  that  remains
34        in  the  possession  of  the  distributor  until the full
 
                            -5-      LRB093 04616 SJM 04669 b
 1        purchase price is paid, expenses incurred  in  attempting
 2        to  collect  any account receivable or any portion of the
 3        debt recovered, any accounts receivable  that  have  been
 4        sold  to  a  third  party for collection, and repossessed
 5        property.

 6        Section 99.  Effective date.  This Act takes effect  upon
 7    becoming law.