N.J. Admin. Code § 18:24-23.4

Current through Register Vol. 56, No. 11, June 3, 2024

Section 18:24-23.4 - Procedure for claiming credit for bad debts

(a) A seller may deduct a bad debt on the sales and use tax return for the period during which the bad debt is written off as uncollectable in the claimant's books and records and is eligible to be deducted for Federal income tax purposes. A claimant who is not required to file Federal income tax returns may deduct a bad debt on the sales and use tax return filed for the period in which the bad debt is written off as uncollectable in the claimant's books and records and would have been eligible for a bad debt deduction for Federal income tax purposes if the claimant had been required to file a Federal income tax return.

(b) If a deduction is taken for bad debt and the debt is subsequently collected in whole or in part, the sales or use tax on the amount so collected must be paid and reported on the sales and use tax return filed for the period in which the collection is made.

(c) When the amount of bad debt exceeds the amount of taxable sales for the period during which the bad debt is written off, a refund claim may be filed within four years from the due date of the return on which the bad debt could first be claimed.

(d) If the filing responsibilities have been assumed by a certified service provider, the service provider may claim, on behalf of the seller, any bad debt allowance provided by this section. The certified service provider must credit or refund the full amount of any bad debt allowance or refund received to the seller.

(e) For the purposes of reporting a payment received on a previously claimed bad debt, any payments made on a debt or account are first applied proportionally to the taxable price of the property or service and the sales tax thereon, and then to interest, service charges, and any other charges.

N.J. Admin. Code § 18:24-23.4

Amended by 48 N.J.R. 824(a), effective 5/16/2016