139.801 Bad debt deductions.

(1) In this section, “bad debt" means an amount that is equal to the purchase price of tobacco products and vapor products, if such amount may be claimed as a deduction under section 166 of the Internal Revenue Code. “Bad debt" does not include financing charges, interest on the wholesale price of tobacco products and vapor products, uncollectible amounts on property that remains in the seller's possession until the full purchase price is paid, expenses incurred in attempting to collect any debt, debts sold or assigned to 3rd parties for collection, and repossessed property.

(2) A distributor who pays the taxes imposed under s. 139.76 may claim as a deduction on a return under s. 139.77 the amount of any such taxes that are attributable to bad debt that the distributor writes off as uncollectible in the distributor's books and records and that is eligible to be deducted as bad debt for federal income tax purposes, regardless of whether the distributor is required to file a federal income tax return. A distributor who claims a deduction under this section shall claim the deduction on the return under s. 139.77 that is submitted for the period in which the distributor writes off the amount of the deduction as uncollectible in the distributor's books and records and in which such amount is eligible to be deducted as bad debt for federal income tax purposes. If the distributor subsequently collects in whole or in part any bad debt for which a deduction is claimed under this section, the distributor shall include the amount collected in the return filed for the period in which the amount is collected and shall pay the tax with the return.

(3) A distributor who claims a deduction under this section shall submit with the return under sub. (2) all of the following:

(a) A copy of the original invoice for the sale of tobacco products or vapor products that represents bad debt.

(b) Evidence that the tobacco products or vapor products described in the invoice under par. (a) were delivered to the person who ordered them.

(c) Evidence that the person who ordered and received the tobacco products or vapor products did not pay the distributor for them.

(d) Evidence that the distributor used reasonable collection practices in attempting to collect the amount owed under par. (c).

(4) Any person who possesses tobacco products or vapor products for which the taxes imposed under this subchapter have not been paid and have been claimed as a deduction under this section shall file a report as prescribed by the department, pay the taxes imposed under this subchapter on tobacco products and vapor products, and be subject to this subchapter in the same manner as is provided for persons who hold valid permits under this subchapter.

History: 2005 a. 25; 2019 a. 9.