98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
SB3397

 

Introduced 2/14/2014, by Sen. Toi W. Hutchinson

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 120/6d new

    Amends the Retailers' Occupation Tax Act. Provides that a retailer is relieved from liability for any tax that becomes due and payable if the tax is represented by amounts that are found to be worthless or uncollectible and have been charged off in accordance with generally accepted accounting principles on and after July 1, 2014. Provide for a deduction if the retailer had previously paid such a tax. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Retailers' Occupation Tax Act is amended by
5adding Section 6d as follows:
 
6    (35 ILCS 120/6d new)
7    Sec. 6d. Deduction for uncollectible debt.
8    (a) A retailer is relieved from liability for any tax that
9becomes due and payable if the tax is represented by amounts
10that are found to be worthless or uncollectible and have been
11charged off in accordance with generally accepted accounting
12principles. A retailer that has previously paid such a tax may,
13under rules and regulations adopted by the Department, take as
14a deduction the amount charged off by the retailer. If these
15accounts are thereafter in whole or in part collected by the
16retailer, the amount collected shall be included in the first
17return filed after the collection, and the tax shall be paid
18with the return. For purposes of this Section, the term
19"retailer" includes a retailer's affiliate.
20    (b) With respect to the payment of taxes on purchases made
21through a private-label credit card:
22        (1) If consumer accounts or receivables are found to be
23    worthless or uncollectible, the retailer may claim a

 

 

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1    deduction on a return, or obtain a refund of, the tax
2    remitted by the retailer on the unpaid balance due if:
3            (A) the accounts or receivables have been charged
4        off as bad debt on the lender's books and records on or
5        after July 1, 2014; and
6            (B) a deduction was not previously claimed and a
7        refund was not previously allowed on that portion of
8        the accounts or receivables.
9        (2) If the retailer or the lender subsequently
10    collects, in whole or in part, the accounts or receivables
11    for which a deduction or refund has been granted under
12    paragraph (1), the retailer must include the taxable
13    percentage of the amount collected in the first return
14    filed after the collection and pay the tax on the portion
15    of that amount for which a deduction or refund was granted.
16        (3) The deduction or refund allowed includes all credit
17    sale transaction amounts that are outstanding with respect
18    to the specific private-label credit card account or
19    receivable at the time the account or receivable is charged
20    off, regardless of the date the credit sale transaction
21    actually occurred.
22        (4) A retailer may use one of the following methods to
23    determine the amount of the deduction or refund:
24            (A) an apportionment method to substantiate the
25        amount of tax imposed under this Act which is included
26        in the bad debt to which the deduction or refund

 

 

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1        applies; this method must use the retailer's Illinois
2        and non-Illinois sales, the retailer's taxable and
3        non-taxable sales, and the amount of tax the retailer
4        remitted to this State; or
5            (B) A specified percentage of the accounts or
6        receivables giving rise to the deduction or refund,
7        which is derived from a sampling of the retailer's or
8        lender's records.
9        (5) For purposes of computing the deduction or refund,
10    payments on the accounts or receivables shall be allocated
11    based on the terms and conditions of the contract between
12    the retailer or lender and the consumer.
13    (c) For purposes of this Section:
14        "Lender" means a person who owns or has owned a
15    private-label credit card account or an interest in a
16    private-label credit card receivable that:
17            (1) the person purchased directly from a retailer
18        who remitted the tax imposed under this Act or the
19        retailer's affiliates, or transferred from a third
20        party;
21            (2) the person originated pursuant to that
22        person's contract with the retailer who remitted the
23        tax imposed under this Act or the retailer's
24        affiliates; or
25            (3) is a retailer's affiliate of a person described
26        in paragraph (1) or paragraph (2), or an assignee or

 

 

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1        other transferee of such person.
2        "Private-label credit card" means a charge card or
3    credit card that carries, refers to, or is branded with the
4    name or logo of a retailer. The deduction or refund
5    provided in this section applies only to purchases from the
6    retailer whose name or logo appears on the card and
7    purchases from the retailer's affiliates or franchisees.
8        "Retailer's affiliates" means an entity affiliated
9    with the retailer under 26 U.S.C. 1504, or an entity that
10    would be an affiliate under that Section had the entity
11    been a corporation.
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.