Full Text of HB0552 94th General Assembly
HB0552 94TH GENERAL ASSEMBLY
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94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006 HB0552
Introduced 1/27/2005, by Rep. William B. Black SYNOPSIS AS INTRODUCED: |
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35 ILCS 130/3-2 new |
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35 ILCS 135/3-2 new |
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35 ILCS 143/10-32 new |
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Amends the Cigarette Tax Act, the Cigarette Use Tax Act, and the Tobacco
Products Tax Act of 1995. Provides that, beginning on January 1, 2006, a
distributor
may deduct the amount of bad debts from the tax imposed under these Acts.
Provides
that "bad debt" means the taxes attributable to any portion of a debt owed to
the
distributor that is related to a sale of cigarettes or tobacco products subject
to tax under these
Acts, that is not
otherwise deductible or excludable, that has become worthless or uncollectible,
and that
meets other criteria. Effective immediately.
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| FISCAL NOTE ACT MAY APPLY | |
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A BILL FOR
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HB0552 |
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LRB094 06727 BDD 36826 b |
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| AN ACT concerning taxes.
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| Be it enacted by the People of the State of Illinois, | 3 |
| represented in the General Assembly:
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| Section 5. The Cigarette Tax Act is amended by adding | 5 |
| Section 3-2 as follows:
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| (35 ILCS 130/3-2 new)
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| Sec. 3-2. Bad debts deductible.
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| (a) Beginning on January 1, 2006, a distributor may deduct | 9 |
| the amount of bad
debts from the tax imposed under Section 2. | 10 |
| The amount deducted must be charged
off
as uncollectible on the | 11 |
| books of the distributor. If a person pays all or part
of a bad | 12 |
| debt
with respect to which a distributor claimed a deduction | 13 |
| under this Section, the
distributor
shall be liable for the | 14 |
| amount of taxes deducted in connection with that
portion of the
| 15 |
| debt for which payment is received and shall remit these taxes | 16 |
| in his or her
next payment
to the Department under Section 3.
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| (b) Any claim for a bad debt deduction under this Section | 18 |
| shall be supported
by all of the following:
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| (1) A copy of the original invoice.
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| (2) Evidence that the cigarettes described in the | 21 |
| invoice were delivered
to
the person who ordered them.
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| (3) Evidence that the person who ordered and received | 23 |
| the cigarettes did
not pay the distributor for the | 24 |
| cigarettes and that the distributor used
reasonable
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| collection practices in attempting to collect the debt.
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| (4) As used in this Section, "bad debt" means the taxes | 27 |
| attributable to
any
portion of a debt that is related to a | 28 |
| sale of cigarettes subject to tax under
Section
2 that is | 29 |
| not otherwise deductible or excludable, that has become | 30 |
| worthless or
uncollectible in the time period between the | 31 |
| date when taxes accrue to the
State
for the distributor's | 32 |
| preceding tax return and the date when taxes accrue to
the
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HB0552 |
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LRB094 06727 BDD 36826 b |
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| 1 |
| State for the present return, and that is eligible to be | 2 |
| claimed, or could be
eligible
to be claimed if the | 3 |
| distributor kept accounts on an accrual basis, as a
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| deduction
pursuant to Section 166 of the Internal Revenue | 5 |
| Code. A bad debt shall not
include any interest on the | 6 |
| wholesale price of a cigarette, uncollectible
amounts
on | 7 |
| property that remains in the possession of the distributor | 8 |
| until the full
purchase
price is paid, expenses incurred in | 9 |
| attempting to collect any account
receivable or
any portion | 10 |
| of the debt recovered, any accounts receivable that have | 11 |
| been sold
to
a third party for collection, and repossessed | 12 |
| property.
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| Section 10. The Cigarette Use Tax Act is amended by adding | 14 |
| Section 3-2 as follows: | 15 |
| (35 ILCS 135/3-2 new)
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| Sec. 3-2. Bad debts deductible. | 17 |
| (a) Beginning on January 1, 2006, a distributor may deduct | 18 |
| the amount of bad
debts from the tax imposed under Section 2. | 19 |
| The amount deducted must be
charged off
as uncollectible on the | 20 |
| books of the distributor. If a person pays all or part
of a bad | 21 |
| debt
with respect to which a distributor claimed a deduction | 22 |
| under this Section, the
distributor
shall be liable for the | 23 |
| amount of taxes deducted in connection with that
portion of the
| 24 |
| debt for which payment is received and shall remit these taxes | 25 |
| in his or her
next payment
to the Department under Section 3. | 26 |
| (b) Any claim for a bad debt deduction under this Section | 27 |
| shall be
supported by
all of the following: | 28 |
| (1) A copy of the original invoice. | 29 |
| (2) Evidence that the cigarettes described in the | 30 |
| invoice were delivered
to
the person who ordered them. | 31 |
| (3) Evidence that the person who ordered and received | 32 |
| the cigarettes did
not pay the distributor for the | 33 |
| cigarettes and that the distributor used
reasonable
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| collection practices in attempting to collect the debt. |
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HB0552 |
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LRB094 06727 BDD 36826 b |
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| (4) As used in this Section, "bad debt" means the taxes | 2 |
| attributable to
any
portion of a debt that is related to a | 3 |
| sale of tobacco products subject to tax
under
Section 10-10 | 4 |
| that is not otherwise deductible or excludable, that has | 5 |
| become
worthless or uncollectible in the time period | 6 |
| between the date when taxes
accrue
to the State for the | 7 |
| distributor's preceding tax return and the date when taxes
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| accrue to the State for the present return, and that is | 9 |
| eligible to be claimed,
or
could be eligible to be claimed | 10 |
| if the distributor kept accounts on an accrual
basis,
as a | 11 |
| deduction pursuant to Section 166 of the Internal Revenue | 12 |
| Code. A bad debt
shall not include any interest on the | 13 |
| wholesale price of a tobacco product,
uncollectible | 14 |
| amounts on property that remains in the possession of the
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| distributor
until the full purchase price is paid, expenses | 16 |
| incurred in attempting to
collect any
account receivable or | 17 |
| any portion of the debt recovered, any accounts
receivable
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| that have been sold to a third party for collection, and | 19 |
| repossessed
property.
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| Section 15. The Tobacco Products Tax Act of 1995 is amended | 21 |
| by adding Section 10-32 as follows: | 22 |
| (35 ILCS 143/10-32 new)
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| Sec. 10-32. Bad debts deductible.
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| (a) Beginning on January 1, 2006, a distributor may deduct | 25 |
| the amount of
bad
debts from the tax imposed under Section | 26 |
| 10-10. The amount deducted must be
charged
off as uncollectible | 27 |
| on the books of the distributor. If a person pays all or
part | 28 |
| of a bad
debt with respect to which a distributor claimed a | 29 |
| deduction under this
Section, the
distributor shall be liable | 30 |
| for the amount of taxes deducted in connection with
that | 31 |
| portion
of the debt for which payment is received and shall | 32 |
| remit these taxes in his or
her next
payment to the Department | 33 |
| under Section 10-30.
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| (b) Any claim for a bad debt deduction under this Section |
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HB0552 |
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LRB094 06727 BDD 36826 b |
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| shall be supported
by
all of the following:
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| (1) A copy of the original invoice.
| 3 |
| (2) Evidence that the tobacco products described in the | 4 |
| invoice were
delivered to the person who ordered them.
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| (3) Evidence that the person who ordered and received | 6 |
| the tobacco
products did not pay the distributor for the | 7 |
| tobacco products and that the
distributor used reasonable | 8 |
| collection practices in attempting to collect the
debt.
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| (4) As used in this Section, "bad debt" means the taxes | 10 |
| attributable to
any
portion of a debt that is related to a | 11 |
| sale of tobacco products subject to tax
under
Section 10-10 | 12 |
| that is not otherwise deductible or excludable, that has | 13 |
| become
worthless or uncollectible in the time period | 14 |
| between the date when taxes
accrue
to the State for the | 15 |
| distributor's preceding tax return and the date when taxes
| 16 |
| accrue to the State for the present return, and that is | 17 |
| eligible to be claimed,
or
could be eligible to be claimed | 18 |
| if the distributor kept accounts on an accrual
basis,
as a | 19 |
| deduction pursuant to Section 166 of the Internal Revenue | 20 |
| Code. A bad debt
shall not include any interest on the | 21 |
| wholesale price of a tobacco product,
uncollectible | 22 |
| amounts on property that remains in the possession of the
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| distributor
until the full purchase price is paid, expenses | 24 |
| incurred in attempting to
collect any
account receivable or | 25 |
| any portion of the debt recovered, any accounts
receivable
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| that have been sold to a third party for collection, and | 27 |
| repossessed
property.
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| Section 99. Effective date. This Act takes effect upon | 29 |
| becoming law. |
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