Bad Debts (280-RICR-20-70-22)

280-RICR-20-70-22 ACTIVE RULE

22.1 Purpose

This regulation implements R.I. Gen. Laws Chapter 44-18.1. This regulation provides for the treatment of Bad Debts.

22.2 Authority

This regulation is promulgated pursuant to R.I. Gen. Laws Chapter 44-18.1 as amended, R.I. Gen. Laws §§ 44-1-4, 44-18.1-1 and 44-19-33. Additionally these regulations have been prepared in accordance with the requirements of R.I. Gen. Laws Chapter 42-35 - Rhode Island Administrative Procedures Act.

22.3 Application

The terms and provisions of these rules and regulations shall be liberally construed to permit the Department of Revenue to effectuate the purposes of R.I. Gen. Laws Chapter 44-18.1 and other applicable state laws and regulations.

22.4 Severability

If any provision of these rules and regulations, or the application thereof to any person or circumstances, is held invalid by a court of competent jurisdiction, the validity of the remainder of the rules and regulations shall not be affected thereby.

22.5 Bad Debts

A. A retailer is relieved from liability for sales tax to the extent to which the liability is represented by accounts which have become worthless and have been charged off for income tax purposes. If the retailer has paid the tax, the retailer is then entitled to a deduction from gross receipts for the amount of the worthless account. If the retailer subsequently collects such account in whole or in part the amount so collected must be included in the first sales tax return filed after such receipt.

B. To support claim for such deduction the retailer must maintain adequate and complete records showing:

1. Date of original sale and name and address of purchaser;

2. Amount purchaser contracted to pay;

3. Amount on which retailer paid tax;

4. All payments or other credits applied to the worthless account; and

5. Evidence that the uncollectible portion of the gross receipts on which tax was paid actually has been charged off as a bad debt for income tax purposes and the date of such ascertainment.

Title 280 Department of Revenue
Chapter 20 Division of Taxation
Subchapter 70 Sales and Use Tax
Part 22 Bad Debts (280-RICR-20-70-22)
Type of Filing Direct Final Amendment
Regulation Status Active
Effective 03/16/2018

Regulation Authority :

Section 44-18 and 44-19

Purpose and Reason :

This regulation implements R. I. Gen Laws Chapter 44-18.1. This regulation provides for the treatment of Bad Debts.

There are no electronic rulemaking documents for rules filed prior to August 14, 2018. For rulemaking documents for rules filed prior to this date, please contact the appropriate agency's Rules Coordinator.