PRINTER'S NO. 1089
No. 957 Session of 1999
INTRODUCED BY TILGHMAN, BRIGHTBILL AND HART, MAY 10, 1999
REFERRED TO FINANCE, MAY 10, 1999
AN ACT
1 Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2 act relating to tax reform and State taxation by codifying
3 and enumerating certain subjects of taxation and imposing
4 taxes thereon; providing procedures for the payment,
5 collection, administration and enforcement thereof; providing
6 for tax credits in certain cases; conferring powers and
7 imposing duties upon the Department of Revenue, certain
8 employers, fiduciaries, individuals, persons, corporations
9 and other entities; prescribing crimes, offenses and
10 penalties," further providing for refunds and prepayment of
11 tax.
12 The General Assembly of the Commonwealth of Pennsylvania
13 hereby enacts as follows:
14 Section 1. Section 201 of the act of March 4, 1971 (P.L.6,
15 No.2), known as the Tax Reform Code of 1971, is amended by
16 adding clauses to read:
17 Section 201. Definitions.--The following words, terms and
18 phrases when used in this Article II shall have the meaning
19 ascribed to them in this section, except where the context
20 clearly indicates a different meaning:
21 * * *
22 (uu) "Tax paid by the vendor." The tax based on the
1 original purchase price and remitted to the Department of
2 Revenue by the vendor less the amount attributable to the tax
3 included in any payments by the purchaser at the time of or
4 subsequent to the sale. Partial payments by the purchaser shall
5 be prorated between the original purchase price and the tax due
6 on the sale.
7 (vv) "Uncollectible." Worthless, pursuant to section 166 of
8 the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.
9 § 166), or successor section.
10 Section 2. Sections 246 and 247 of the act are amended to
11 read:
12 Section 246. [Collection] Payment of Tax on Credit Sales.--
13 If any sale subject to tax hereunder is wholly or partly on
14 credit, the taxpayer shall [require the purchaser to pay in cash
15 at the time the sale is made, or within thirty days thereafter,]
16 remit to the Commonwealth the full tax due on the basis of the
17 entire purchase price.
18 Section 247. Prepayment of Tax.--[Whenever a] (a) If any
19 sale of tangible personal property subject to tax pursuant to
20 this article is wholly or partly on credit or if the vendor is
21 forbidden by law or governmental regulation to charge and
22 collect the purchase price in advance of or at the time of
23 delivery, the vendor shall prepay the tax as required by section
24 222 of this article, but in [such] either case if [the purchaser
25 shall fail to pay to the vendor the total amount of the purchase
26 price and the tax, and such amount is written off as
27 uncollectible by the vendor, the vendor shall not be liable for
28 such tax and shall be entitled to a credit or refund of such tax
29 paid] any portion of the purchase price is found to be
30 uncollectible, the vendor shall be entitled to a credit or
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1 refund of such tax pursuant to section 247.1 of this article on
2 that part of the purchase price found to be uncollectible. If
3 the purchase price is thereafter collected, in whole or in part,
4 the amount of any credit or refund attributable to the amount
5 collected shall be [first applied to the payment of the entire
6 tax portion of the bill, and shall be] remitted to the
7 department by the vendor with the first return filed after such
8 collection. [For any tax prepaid prior to the effective date of
9 this article, credit may be claimed on any returns filed for the
10 periods prior to the effective date of this article. Tax prepaid
11 after the effective date of this article shall be subject to
12 refund upon petition to the department under the provisions of
13 section 252 of this article, filed within one hundred five days
14 of the close of the fiscal year in which such accounts are
15 written off.]
16 (b) For purposes of this section, a credit sale shall
17 include:
18 (1) A sale made on a credit account that is owned by the
19 vendor who remitted the tax or any affiliated entity under
20 section 1504(a)(1) of the Internal Revenue Code of 1986 (Public
21 Law 99-514, 26 U.S.C. § 1504(a)(1)).
22 (2) A sale made on a credit account issued by a credit card
23 bank pursuant to a private label credit card agreement with the
24 vendor who remitted the tax.
25 (3) A transfer in which the customer tenders payment in the
26 form of a check or draft which is not subsequently honored for
27 payment.
28 Section 3. The act is amended by adding a section to read:
29 Section 247.1. Refunds and Credits for Bad Debts.--(a)
30 Subject to the further limitations provided in subsection (b),
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1 the following rules shall apply to refunds and credits for bad
2 debts:
3 (1) No credit or refund may be sought until a debt has been
4 found to be uncollectible.
5 (2) Credit for tax paid by a vendor with respect to a debt
6 which has been found to be uncollectible may be taken by the
7 vendor on any return which is due on or after the date the debt
8 has been found to be uncollectible but, in any event, credit
9 shall be taken within three years from the date the tax was paid
10 to the department.
11 (3) To the extent credit has not been taken on a return, a
12 petition for credit or refund of tax paid by a vendor with
13 respect to a debt which has been found to be uncollectible shall
14 be filed by the vendor with the department within three years
15 from the date the tax was paid by the applicant to the
16 department.
17 (4) Notwithstanding any other provision of this article,
18 credits or refunds attributable to uncollectible debts shall be
19 made without interest.
20 (b) With respect to debts found to be uncollectible during
21 the period January 1, 2000, through December 31, 2000, the
22 amount credited or refunded shall be limited to one-third of the
23 tax paid by the vendor to the Commonwealth, less any commission
24 for collection of the tax, on that portion of the purchase price
25 found to be uncollectible during calendar year 2000. With
26 respect to debts found to be uncollectible during the period
27 January 1, 2001, through December 31, 2001, the amount credited
28 or refunded shall be limited to two-thirds of the tax paid by
29 the vendor to the Commonwealth, less any commission for
30 collection of the tax, on that portion of the purchase price
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1 found to be uncollectible during calendar year 2001. With
2 respect to debts found to be uncollectible on or after January
3 1, 2002, the amount credited or refunded shall be limited to the
4 tax paid by the vendor to the Commonwealth, less any commission
5 for collection of the tax, on that portion of the purchase price
6 found to be uncollectible on or after January 1, 2002. The
7 department shall prescribe the methods for calculating the
8 amount of credit or refund allowed under this section. No credit
9 or refund is allowable with respect to any interest or finance
10 charges or any expense incurred in attempting to collect any
11 account receivable, or with respect to that portion of a debt
12 recovered that is retained by or paid to a third party as
13 compensation for services rendered in collecting the account.
14 Section 4. This act shall take effect January 1, 2000.
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