State of Illinois
92nd General Assembly
Legislation

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[ Introduced ][ Engrossed ][ House Amendment 001 ]


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.".

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