(a)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, have been charged off as bad debt on the retailer's books and records in accordance with generally accepted accounting principles, and have been claimed as a deduction pursuant to Section 166 of the Internal Revenue Code on the income tax return filed by the retailer. A retailer that has previously paid such a tax may, under rules and regulations adopted by the Department, take as a deduction the amount charged off by the retailer. If these accounts are thereafter, in whole or in part, collected by the retailer, the amount collected shall be included in the first return filed after the collection, and the tax shall be paid
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(a) 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, have been charged off as bad debt on the retailer's books and records in accordance with generally accepted accounting principles, and have been claimed as a deduction pursuant to Section 166 of the Internal Revenue Code on the income tax return filed by the retailer. A retailer that has previously paid such a tax may, under rules and regulations adopted by the Department, take as a deduction the amount charged off by the retailer. If these accounts are thereafter, in whole or in part, collected by the retailer, the amount collected shall be included in the first return filed after the collection, and the tax shall be paid with the return. (b) With respect to the payment of taxes on purchases made through a private-label credit card: (1) If consumer accounts or receivables are found to be worthless or uncollectible, the retailer may claim a deduction on a return in an amount equal to, or may obtain a refund of, the tax remitted by the retailer on the unpaid balance due if: (A) the accounts or receivables have been charged off as bad debt on the lender's books and records on or after January 1, 2016; (B) the accounts or receivables have been claimed as a deduction pursuant to Section 166 of the Internal Revenue Code on the federal income tax return filed by the lender; and (C) a deduction was not previously claimed and a refund was not previously allowed on that portion of the account or receivable. (2) If the retailer or the lender subsequently collects, in whole or in part, the accounts or receivables for which a deduction or refund has been granted under paragraph (1), the retailer must include the taxable percentage of the amount collected in the first return filed after the collection and pay the tax on the portion of that amount for which a deduction or refund was granted. (3) For purposes of the deduction or refund allowable under this Section, the limitations period for claiming the deduction or refund shall be the same as the limitations period set forth in Section 6 of this Act for filing a claim for credit, and shall commence on the date that the account or receivable has been claimed as a bad debt deduction pursuant to Section 166 of the Internal Revenue Code on the federal income tax return filed by the lender, regardless of the date on which the sale of the tangible personal property actually occurred. (4) The deduction or refund allowed under this Section: (A) does not apply to credit sale transaction amounts resulting from purchases of titled property; (B) includes only those credit sale transaction amounts that represent purchases from the retailer whose name or logo appears on the private-label credit card used to make those purchases; (C) may only be taken by the taxpayer, or its successors, that filed the return and remitted tax on the original sale on which the deduction or refund claim is based; and (D) includes all credit sale transaction amounts eligible under paragraph (B) that are outstanding with respect to the specific private-label credit card account or receivable at the time the account or receivable is charged off, regardless of the date the credit sale transaction actually occurred. (5) The retailer and lender shall maintain adequate books, records, or other documentation supporting the charge off of the accounts or receivables for which a deduction was taken or a refund was claimed under this Section. A retailer claiming a deduction or refund for bad debts from purchases made using a private label credit card shall meet the same standard of documentation as a retailer that claims a deduction or refund for bad debts that are from purchases made not using a private label credit card. For purposes of computing the deduction or refund, payments on the accounts or receivables shall be prorated against the amounts outstanding on the account. (c) For purposes of this Section: (1) "Retailer" means a person who holds himself or herself out as being engaged (or who habitually engages) in selling tangible personal property at retail with respect to such sales and includes a retailer's affiliates. (2) "Lender" means a person, or an affiliate, assignee, or transferee of that person, who owns or has owned a private-label credit card account or an interest in a private-label credit card receivable that the person: (A) purchased directly from a retailer who remitted the tax imposed under this Act; (B) originated pursuant to that person's contract with the retailer who remitted the tax imposed under this Act; or (C) acquired from a third party. (3) "Private-label credit card" means a charge card or credit card that carries, refers to, or is branded with the name or logo of a retailer and may only be used to make purchases from that retailer or that retailer's affiliates. (4) "Affiliate" means an entity affiliated under Section 1504 of the Internal Revenue Code, or an entity that would be an affiliate under that Section had the entity been a corporation. (d) This Section is exempt from the provisions of Section 2-70 of this Act, Section 3-90 of the Use Tax Act, Section 3-55 of the Service Use Tax Act, Section 3-55 of the Service Occupation Tax Act, and any other provision of law that provides that an exemption, credit, or deduction automatically sunsets after a specified period of time after the effective date of the Public Act creating the exemption, credit, or deduction.