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92_SB0055sam001 LRB9203552SMdvam01 1 AMENDMENT TO SENATE BILL 55 2 AMENDMENT NO. . Amend Senate Bill 55 by replacing 3 the title with the following: 4 "AN ACT concerning taxes."; and 5 by replacing everything after the enacting clause with the 6 following: 7 "Section 5. The Use Tax Act is amended by adding Section 8 3-46 as follows: 9 (35 ILCS 105/3-46 new) 10 Sec. 3-46. Bad Debts. 11 (a) A retailer is relieved from liability for the tax 12 under this Act that became due and payable, insofar as the 13 measure of the tax is represented by accounts that have been 14 found to be worthless and charged off for income tax purposes 15 by the retailer or, if the retailer is not required to file 16 income tax returns, charged off in accordance with generally 17 accepted accounting principles. A retailer that has 18 previously paid the tax may, under rules adopted by the 19 Department, take as a deduction the amount found worthless 20 and charged off by the retailer. If these accounts are 21 thereafter in whole or in part collected by the retailer, the -2- LRB9203552SMdvam01 1 amount collected shall be included in the first return filed 2 after the collection and the tax shall be paid with the 3 return. For purposes of this subdivision, the term 4 "retailer" includes any entity affiliated with the retailer 5 under Section 1504 of Title 26 of the United States Code. 6 (b) (1) In the case of accounts held by a lender, a 7 retailer or lender who makes a proper election under 8 subdivision (b)(4) shall be entitled to a deduction or 9 refund of the tax that the retailer has previously 10 reported and paid if all of the following conditions are 11 met: 12 (A) No deduction is claimed or allowed for any 13 portion of the account for which a previous 14 deduction was claimed or allowed. 15 (B) The accounts have been found worthless and 16 written off by the lender in accordance with the 17 requirements of subsection (a). 18 (C) The account was written off as a bad debt 19 on or after January 1, 2001. 20 (D) The party electing to claim the deduction 21 or refund under subdivision (b)(4) files a claim in 22 a manner prescribed by the Department. 23 (2) If the retailer or the lender thereafter 24 collects in whole or in part any accounts, one of the 25 following shall apply: 26 (A) If the retailer is entitled to the 27 deduction or refund under the election specified in 28 subdivision (b)(4), the retailer shall include the 29 amount collected in its first return filed after the 30 collection and pay tax on that amount with the 31 return. 32 (B) If the lender is entitled to the deduction 33 or refund under the election specified in 34 subdivision (b)(4), the lender shall pay the tax to -3- LRB9203552SMdvam01 1 the Department. 2 (3) For purposes of this subsection (b), the term 3 "lender" means any of the following: 4 (A) Any person who holds a retail account 5 which that person purchased directly from a retailer 6 who reported the tax. 7 (B) Any person who holds a retail account 8 pursuant to that person's contract directly with the 9 retailer who reported the tax. 10 (C) Any person who is either an affiliated 11 entity, under Section 1504 of Title 26 of the United 12 States Code, of a person described in subdivision 13 (3)(A) or (3)(B), or an assignee of a person 14 described in subdivision (3)(A) or (3)(B). 15 (4) Prior to claiming any deduction or refund under 16 this subsection (b), the retailer who reported the tax 17 and the lender shall file an election with the 18 Department, signed by both parties, designating which 19 party is entitled to claim the deduction or refund. This 20 election may not be amended or revoked unless a new 21 election, signed by both parties, is filed with the 22 Department. 23 (5) A lender as defined above may have its 24 deduction or refund for bad debts claimed on a return 25 filed by an affiliated retailer. 26 Section 10. The Service Use Tax Act is amended by adding 27 Section 3-41 as follows: 28 (35 ILCS 110/3-41 new) 29 Sec. 3-41. Bad debts. 30 (a) A retailer is relieved from liability for the tax 31 under this Act that became due and payable, insofar as the 32 measure of the tax is represented by accounts that have been -4- LRB9203552SMdvam01 1 found to be worthless and charged off for income tax purposes 2 by the retailer or, if the retailer is not required to file 3 income tax returns, charged off in accordance with generally 4 accepted accounting principles. A retailer that has 5 previously paid the tax may, under rules adopted by the 6 Department, take as a deduction the amount found worthless 7 and charged off by the retailer. If these accounts are 8 thereafter in whole or in part collected by the retailer, the 9 amount collected shall be included in the first return filed 10 after the collection and the tax shall be paid with the 11 return. For purposes of this subdivision, the term 12 "retailer" includes any entity affiliated with the retailer 13 under Section 1504 of Title 26 of the United States Code. 14 (b) (1) In the case of accounts held by a lender, a 15 retailer or lender who makes a proper election under 16 subdivision (b)(4) shall be entitled to a deduction or 17 refund of the tax that the retailer has previously 18 reported and paid if all of the following conditions are 19 met: 20 (A) No deduction is claimed or allowed for any 21 portion of the account for which a previous 22 deduction was claimed or allowed. 23 (B) The accounts have been found worthless and 24 written off by the lender in accordance with the 25 requirements of subsection (a). 26 (C) The account was written off as a bad debt 27 on or after January 1, 2001. 28 (D) The party electing to claim the deduction 29 or refund under subdivision (b)(4) files a claim in 30 a manner prescribed by the Department. 31 (2) If the retailer or the lender thereafter 32 collects in whole or in part any accounts, one of the 33 following shall apply: 34 (A) If the retailer is entitled to the -5- LRB9203552SMdvam01 1 deduction or refund under the election specified in 2 subdivision (b)(4), the retailer shall include the 3 amount collected in its first return filed after the 4 collection and pay tax on that amount with the 5 return. 6 (B) If the lender is entitled to the deduction 7 or refund under the election specified in 8 subdivision (b)(4), the lender shall pay the tax to 9 the Department. 10 (3) For purposes of this subsection (b), the term 11 "lender" means any of the following: 12 (A) Any person who holds a retail account 13 which that person purchased directly from a retailer 14 who reported the tax. 15 (B) Any person who holds a retail account 16 pursuant to that person's contract directly with the 17 retailer who reported the tax. 18 (C) Any person who is either an affiliated 19 entity, under Section 1504 of Title 26 of the United 20 States Code, of a person described in subdivision 21 (3)(A) or (3)(B), or an assignee of a person 22 described in subdivision (3)(A) or (3)(B). 23 (4) Prior to claiming any deduction or refund under 24 this subsection (b), the retailer who reported the tax 25 and the lender shall file an election with the 26 Department, signed by both parties, designating which 27 party is entitled to claim the deduction or refund. This 28 election may not be amended or revoked unless a new 29 election, signed by both parties, is filed with the 30 Department. 31 (5) A lender as defined above may have its 32 deduction or refund for bad debts claimed on a return 33 filed by an affiliated retailer. -6- LRB9203552SMdvam01 1 Section 15. The Service Occupation Tax Act is amended by 2 adding Section 3-41 as follows: 3 (35 ILCS 115/3-41 new) 4 Sec. 3-41. Bad debts. 5 (a) A retailer is relieved from liability for the tax 6 under this Act that became due and payable, insofar as the 7 measure of the tax is represented by accounts that have been 8 found to be worthless and charged off for income tax purposes 9 by the retailer or, if the retailer is not required to file 10 income tax returns, charged off in accordance with generally 11 accepted accounting principles. A retailer that has 12 previously paid the tax may, under rules adopted by the 13 Department, take as a deduction the amount found worthless 14 and charged off by the retailer. If these accounts are 15 thereafter in whole or in part collected by the retailer, the 16 amount collected shall be included in the first return filed 17 after the collection and the tax shall be paid with the 18 return. For purposes of this subdivision, the term 19 "retailer" includes any entity affiliated with the retailer 20 under Section 1504 of Title 26 of the United States Code. 21 (b) (1) In the case of accounts held by a lender, a 22 retailer or lender who makes a proper election under 23 subdivision (b)(4) shall be entitled to a deduction or 24 refund of the tax that the retailer has previously 25 reported and paid if all of the following conditions are 26 met: 27 (A) No deduction is claimed or allowed for any 28 portion of the account for which a previous 29 deduction was claimed or allowed. 30 (B) The accounts have been found worthless and 31 written off by the lender in accordance with the 32 requirements of subsection (a). 33 (C) The account was written off as a bad debt -7- LRB9203552SMdvam01 1 on or after January 1, 2001. 2 (D) The party electing to claim the deduction 3 or refund under subdivision (b)(4) files a claim in 4 a manner prescribed by the Department. 5 (2) If the retailer or the lender thereafter 6 collects in whole or in part any accounts, one of the 7 following shall apply: 8 (A) If the retailer is entitled to the 9 deduction or refund under the election specified in 10 subdivision (b)(4), the retailer shall include the 11 amount collected in its first return filed after the 12 collection and pay tax on that amount with the 13 return. 14 (B) If the lender is entitled to the deduction 15 or refund under the election specified in 16 subdivision (b)(4), the lender shall pay the tax to 17 the Department. 18 (3) For purposes of this subsection (b), the term 19 "lender" means any of the following: 20 (A) Any person who holds a retail account 21 which that person purchased directly from a retailer 22 who reported the tax. 23 (B) Any person who holds a retail account 24 pursuant to that person's contract directly with the 25 retailer who reported the tax. 26 (C) Any person who is either an affiliated 27 entity, under Section 1504 of Title 26 of the United 28 States Code, of a person described in subdivision 29 (3)(A) or (3)(B), or an assignee of a person 30 described in subdivision (3)(A) or (3)(B). 31 (4) Prior to claiming any deduction or refund under 32 this subsection (b), the retailer who reported the tax 33 and the lender shall file an election with the 34 Department, signed by both parties, designating which -8- LRB9203552SMdvam01 1 party is entitled to claim the deduction or refund. This 2 election may not be amended or revoked unless a new 3 election, signed by both parties, is filed with the 4 Department. 5 (5) A lender as defined above may have its 6 deduction or refund for bad debts claimed on a return 7 filed by an affiliated retailer. 8 Section 20. The Retailers' Occupation Tax Act is amended 9 by adding Section 3a as follows: 10 (35 ILCS 120/3a new) 11 Sec. 3a. Bad debts. 12 (a) A retailer is relieved from liability for the tax 13 under this Act that became due and payable, insofar as the 14 measure of the tax is represented by accounts that have been 15 found to be worthless and charged off for income tax purposes 16 by the retailer or, if the retailer is not required to file 17 income tax returns, charged off in accordance with generally 18 accepted accounting principles. A retailer that has 19 previously paid the tax may, under rules adopted by the 20 Department, take as a deduction the amount found worthless 21 and charged off by the retailer. If these accounts are 22 thereafter in whole or in part collected by the retailer, the 23 amount collected shall be included in the first return filed 24 after the collection and the tax shall be paid with the 25 return. For purposes of this subdivision, the term 26 "retailer" includes any entity affiliated with the retailer 27 under Section 1504 of Title 26 of the United States Code. 28 (b) (1) In the case of accounts held by a lender, a 29 retailer or lender who makes a proper election under 30 subdivision (b)(4) shall be entitled to a deduction or 31 refund of the tax that the retailer has previously 32 reported and paid if all of the following conditions are -9- LRB9203552SMdvam01 1 met: 2 (A) No deduction is claimed or allowed for any 3 portion of the account for which a previous 4 deduction was claimed or allowed. 5 (B) The accounts have been found worthless and 6 written off by the lender in accordance with the 7 requirements of subsection (a). 8 (C) The account was written off as a bad debt 9 on or after January 1, 2001. 10 (D) The party electing to claim the deduction 11 or refund under subdivision (b)(4) files a claim in 12 a manner prescribed by the Department. 13 (2) If the retailer or the lender thereafter 14 collects in whole or in part any accounts, one of the 15 following shall apply: 16 (A) If the retailer is entitled to the 17 deduction or refund under the election specified in 18 subdivision (b)(4), the retailer shall include the 19 amount collected in its first return filed after the 20 collection and pay tax on that amount with the 21 return. 22 (B) If the lender is entitled to the deduction 23 or refund under the election specified in 24 subdivision (b)(4), the lender shall pay the tax to 25 the Department. 26 (3) For purposes of this subsection (b), the term 27 "lender" means any of the following: 28 (A) Any person who holds a retail account 29 which that person purchased directly from a retailer 30 who reported the tax. 31 (B) Any person who holds a retail account 32 pursuant to that person's contract directly with the 33 retailer who reported the tax. 34 (C) Any person who is either an affiliated -10- LRB9203552SMdvam01 1 entity, under Section 1504 of Title 26 of the United 2 States Code, of a person described in subdivision 3 (3)(A) or (3)(B), or an assignee of a person 4 described in subdivision (3)(A) or (3)(B). 5 (4) Prior to claiming any deduction or refund under 6 this subsection (b), the retailer who reported the tax 7 and the lender shall file an election with the 8 Department, signed by both parties, designating which 9 party is entitled to claim the deduction or refund. This 10 election may not be amended or revoked unless a new 11 election, signed by both parties, is filed with the 12 Department. 13 (5) A lender as defined above may have its 14 deduction or refund for bad debts claimed on a return 15 filed by an affiliated retailer. 16 Section 99. Effective date. This Act takes effect on 17 January 1, 2002.".