(a) Bad Debt Deductions. A licensed distributor, supplier,
permissive supplier, or compressed natural gas and liquefied natural
gas dealer may file a claim for refund on the monthly return of taxes
paid on fuel that was sold on account that is later determined to
be uncollectible, worthless, and previously written off as bad debt
at the time that the distributor, supplier, permissive supplier, or
compressed natural gas and liquefied natural gas dealer held an active
license.
(1) The claim for refund must be in writing, state
the fuel type (gasoline, diesel, compressed natural gas, or liquefied
natural gas), state the beginning and ending date of sales on which
the bad debt is claimed, the number of gallons, and the dollar amount
of bad debts. The licensed distributor, supplier, permissive supplier,
or compressed natural gas and liquefied natural gas dealer must establish
the bad debt amount by providing information on the form required
by the comptroller. Required information includes but is not limited
to the following:
(A) the date of sale or invoice date;
(B) invoice fuel amount and invoice fuel tax amount;
(C) the name and address of the purchaser, and if applicable,
the license number of the purchaser;
(D) all payments or credits applied to the account
of the purchaser; and
(E) uncollected amounts in the purchaser's account
that were written off as bad debt in the distributor's, supplier's,
permissive supplier's, or compressed natural gas and liquefied natural
gas dealer's, records, including the number of gallons of fuel represented
by the motor fuel portion of the bad debt.
(2) All payments and credits made by the purchaser
must be applied to the purchaser's account to determine the bad debt
amount, and if the purchaser's account also contains purchases of
goods other than motor fuel, then the payments and credits to that
account should be applied ratably between motor fuel, including tax,
and other goods sold to the purchaser. The comptroller will only allow
a claim for refund of tax on the number of gallons represented by
the motor fuel portion of the bad debt. The maximum amount of refund
claimed cannot exceed the tax paid on the fuel sold on account that
has been written off as a bad debt.
(3) A claim for refund of taxes based on a bad debt
must be filed within four years from the date the account is entered
in the distributor's, supplier's, permissive supplier's, or compressed
natural gas and liquefied natural gas dealer's books as a bad debt.
(b) Accelerated Credit. If a licensed supplier or permissive
supplier reported and remitted taxes on a tax return for fuel sold
on account to a purchaser who is licensed as a distributor or importer
at the time of the transaction and who subsequently fails to pay the
taxes to the seller, the licensed supplier or permissive supplier
may take a credit against tax liability on a subsequent tax return
if the licensed supplier or permissive supplier notifies the comptroller
of the default.
(1) The notification to the comptroller for credits
claimed before June 19, 2009, must be made no later than 60 days after
the date of default. The notification to the comptroller for credits
claimed on or after June 19, 2009, must be made no later than 15 days
after the date of default.
(2) The notification to the comptroller may be made
by taking a credit on an original or amended return or in writing.
If the notification is in writing the credits may be taken beginning
with the return for the reporting month in which the notification
is made. When credits are taken on a return, the licensed supplier
or permissive supplier must submit with that return information required
by the comptroller.
(3) A licensed supplier or permissive supplier who
fails to notify the comptroller of the default within the prescribed
period in paragraph (1) of this subsection cannot take a credit on
a return, but may seek a refund of taxes based on bad debts subject
to the requirements provided by subsection (a) of this section.
(4) For credits claimed before June 19, 2009, all payments
and credits made by the purchaser must be applied to the purchaser's
account to determine that non-payment amount, and if the purchaser's
account contains the purchase of goods or items other than motor fuel,
then the payments and credits to that account should be applied ratably
between motor fuel, including tax, and other goods or items sold to
the purchaser. The comptroller will only allow a credit of tax on
the number of gallons represented by the motor fuel portion of the
unpaid amount. The maximum amount of credit taken cannot exceed the
tax paid on the fuel sold on account that has been unpaid. For credits
claimed on or after June 19, 2009, the supplier or permissive supplier
may claim credit on the amount of the deferred tax payment defaulted
by the distributor or importer.
(5) If the notification of default was timely made
to the comptroller as prescribed by paragraph (1) of this subsection,
credits for taxes that were not collected from the licensed purchaser
must be taken within four years from the date of default.
(6) A distributor or importer whose right to defer
payment of tax to a supplier or permissive supplier has been suspended
before June 19, 2009, may seek reinstatement of the right to defer
payment when all motor fuel tax liability has been satisfied and considered
in good standing with the comptroller. The distributor or importer
must request that the comptroller issue a notice of good standing
for motor fuel taxes.
(7) A distributor or importer on which a supplier or
permissive supplier has notified the comptroller of default of the
deferred tax payment on or after June 19, 2009, loses the right to
defer payment of tax to that supplier or permissive supplier for one
year following the date that the supplier or permissive supplier notified
the comptroller of default. The distributor or importer may seek reinstatement
of the right to defer payment if the supplier or permissive supplier
erroneously claimed a credit or the default was due to circumstances
beyond the distributor's or importer's control, such as a bank error.
Request for reinstatement of the right to defer taxes should be made
to the comptroller in writing.
(c) Credit card sales. The refund for bad debts or
credit for non-payment of taxes allowed under this section does not
apply to sales of fuel that is delivered into the supply tank of a
motor vehicle or motorboat when payment is made through the use and
acceptance of a credit card. For purpose of this section, a credit
card is defined as any card, plate, key, or like device by which credit
is extended to and charged to the purchaser's account. Sales made
through the use and acceptance of a fuel access card, where the only
use of the access card is to record the quantity and type of fuel
or other information acquired merely for the purpose of reconciling
accounts and no credit is extended to the holder are eligible for
the bad debt credit. Credit sales to commercial or agricultural customers
at locations not open to the general public are eligible for the bad
debt credit.
(d) A supplier, permissive supplier, distributor, or
compressed natural gas and liquefied natural gas dealer who collects
all or part of an account that was written off as a bad debt for which
a refund was sought under subsection (a) of this section or who collects
all or part of the unpaid tax after a credit was taken under subsection
(b) of this section, must report and remit the collected amount on
an amended return for the reporting period in which the bad debt was
originally claimed. The comptroller may assess a deficiency, including
10% penalty at the rate provided by Tax Code, §111.060, if the
amount recovered is not reported and tax is not paid to the state
during the month in which the recovery is made. Interest will accrue
from the date the credit was taken.
(e) If the comptroller determines that a taxpayer obtained
a refund from the comptroller or took a credit on a return when he
knew or should reasonably have known that the account or tax was collectible,
the comptroller may issue a deficiency for the tax plus 10% penalty
and interest imposed from the date the refund was granted or the credit
taken. In addition, other penalties provided by this section or by
Tax Code, Chapters 111 or 162, may be imposed.
(f) The comptroller may issue a deficiency assessment
for tax, plus penalty and interest applicable under Tax Code, Chapter
111, against the purchaser whose account was the subject of a refund
for bad debt obtained or a credit claimed by a distributor, supplier,
permissive supplier, or compressed natural gas and liquefied natural
gas dealer.
(g) Criminal and civil penalties for issuing bad checks.
Cont'd... |