§ 6-7-2-14.5 — Deduction for certain receivables

Indiana § 6-7-2-14.5

• Jurisdiction: Indiana
• Art. 7: TOBACCO TAXES
• Ch. 2: Tobacco Products Tax

Text

5. (a) In determining the amount of taxes
imposed by this chapter that a distributor must remit under section 12
of this chapter, the distributor shall, subject to subsections (c) and (d),
deduct from the distributor's wholesale income subject to the tax
imposed by this chapter that is derived from wholesale transactions
made during a particular reporting period an amount equal to the
distributor's receivables that:
(1) resulted from wholesale transactions on which the distributor
has previously paid the taxes imposed by this chapter to the
department; and
(2) were written off as an uncollectible debt for federal tax
purposes under Section 166 of the Internal Revenue Code during
the particular reporting period.
(b) If a distributor deducts a receivable under subsection (a) and
subsequently collects all or part of that receivable, the distributor shall,
subject to subsection (d)(5), include the amount collected as part of the
distributor's wholesale income subject to the tax imposed by this
chapter for the particular reporting period in which the distributor
makes the collection.
(c) As used in this subsection, "affiliated group" means any
combination of the following:
(1) An affiliated group within the meaning provided in Section
1504 of the Internal Revenue Code (except that the ownership
percentage in Section 1504(a)(2) of the Internal Revenue Code
shall be determined using fifty percent (50%) instead of eighty
percent (80%)) or a relationship described in Section 267(b)(11)
of the Internal Revenue Code.
(2) Two (2) or more partnerships (as defined in IC 6-3-1-19),
including limited liability companies and limited liability
partnerships, that have the same degree of mutual ownership as
an affiliated group described in subdivision (1), as determined
under the rules adopted by the department.
The right to a deduction under this section is not assignable to an
individual or entity that is not part of the same affiliated group as the
assignor.
(d) The following provisions apply to a deduction for a receivable
treated as uncollectible debt under subsection (a):
(1) The deduction does not include interest.
(2) The amount of the deduction shall be determined in the
manner provided by Section 166 of the Internal Revenue Code for
bad debts but shall be adjusted to exclude:
(A) financing charges or interest;
(B) uncollectible amounts on property that remain in the
possession of the distributor until the full purchase price is
paid;
(C) expenses incurred in attempting to collect any debt; and
(D) repossessed property.
(3) The deduction shall be claimed on the return for the period
during which the receivable is written off as uncollectible in the
claimant's books and records and is eligible to be deducted for
federal income tax purposes. For purposes of this subdivision, a
claimant who is not required to file federal income tax returns
may deduct an uncollectible receivable on a return filed for the
period in which the receivable is written off as uncollectible in the
claimant's books and records and would be eligible for a bad debt
deduction for federal income tax purposes if the claimant were
required to file a federal income tax return.
(4) If the amount of uncollectible receivables claimed as a
deduction by a distributor for a particular reporting period
exceeds the amount of the distributor's taxable wholesale sales for
that reporting period, the distributor may file a refund claim under
IC 6-8.1-9. However, the deadline for the refund claim shall be
measured from the due date of the return for the reporting period
on which the deduction for the uncollectible receivables could
first be claimed.
(5) For purposes of reporting a payment received on a previously
claimed uncollectible receivable, any payments made on a debt or
account shall be applied first proportionally to the taxable
wholesale price of the property and the part of the receivable
attributable to the tax imposed by this chapter, and secondly to
interest, service charges, and any other charges.

Legislative History

As added by P.L.211-2007, SEC.38. Amended by P.L.165-2021, SEC.113.