A. Any stamping agent may deduct the amount of bad debts from the tax imposed by this chapter. The amount deducted shall be charged off as uncollectible on the books of the stamping agent. If a person pays all or part of a bad debt that a stamping agent claimed as a deduction under this section, the stamping agent shall be liable for the amount of taxes deducted in connection with that portion of the debt for which payment is received and shall remit these taxes together with its next report to the Department pursuant to subsection C of § 58.1-1003.
B. Any claim for a bad debt deduction under this section shall be supported by all of the following:
1. A copy of the original invoice;
2. Evidence that the cigarettes described in the invoice were delivered to the person who ordered them; and
3. Evidence that the person who ordered and received the cigarettes did not pay the stamping agent for the cigarettes and that the stamping agent used reasonable collection practices in attempting to collect the debt.
C. As used in this section, "bad debt" means the taxes under this chapter attributable to any portion of a debt that is related to a sale of cigarettes subject to tax under this chapter that is not otherwise deductible or excludable, that has become worthless or uncollectible in the time period between the date when taxes accrue to the Department for the stamping agents' preceding tax return and the date when taxes accrue to the Department for the present return, and that is eligible to be claimed, or could be eligible to be claimed if the stamping agent kept accounts on an accrual basis, as a deduction pursuant to § 166 of the Internal Revenue Code. A bad debt shall not include (i) any interest on the wholesale price of cigarettes, (ii) uncollectible amounts on property that remains in the possession of the stamping agent until the full purchase price is paid, (iii) expenses incurred in attempting to collect any account receivable or any portion of the debt recovered, (iv) any accounts receivable that have been sold to a third party for collection, and (v) repossessed property.
2006, cc. 64, 229.
Structure Code of Virginia
§ 58.1-1003. How paid; affixing of stamps; records of stamping agents; civil penalties
§ 58.1-1003.1. Bad debt; deduction; definition
§ 58.1-1003.3. Roll-your-own cigarette machines
§ 58.1-1008. Monthly reports of stamping agents; penalty
§ 58.1-1008.1. Monthly reports of tobacco product manufacturers
§ 58.1-1008.2. Materially false statements in reports
§ 58.1-1010. Sale of unstamped cigarettes by wholesale dealers; penalty
§ 58.1-1011. Qualification for permit to affix Virginia revenue stamps; penalty
§ 58.1-1013. Penalty for failing to affix stamps; subsequent violations of article
§ 58.1-1016. Administration and enforcement of tax
§ 58.1-1017. Sale, purchase, possession, etc., of cigarettes for purpose of evading tax; penalties
§ 58.1-1017.1. Possession with intent to distribute tax-paid, contraband cigarettes; penalties
§ 58.1-1017.2. Sealed pack labeled as cigarettes; prima facie evidence of cigarettes
§ 58.1-1017.3. Fraudulent purchase of cigarettes; penalties
§ 58.1-1017.4. Documents to be provided at purchase
§ 58.1-1019. Monthly returns and payment of tax
§ 58.1-1020. Assessment of tax by Department
§ 58.1-1021.02. Tax on tobacco products
§ 58.1-1021.02:1. Reports by manufacturers of tobacco products
§ 58.1-1021.02:2. Records to be kept and reports by remote retail sellers of cigars and pipe tobacco
§ 58.1-1021.03. Monthly return and payments of tax
§ 58.1-1021.04. Failure to file return; fraudulent return; penalties; interest; overpayment of tax
§ 58.1-1021.04:1. Distributor's or remote retail seller's license; penalty
§ 58.1-1021.04:2. Certain records required of distributor; access to premises
§ 58.1-1021.04:4. Purchase of tobacco products for resale
§ 58.1-1021.04:5. Tax Commissioner to establish guidelines and rules
§ 58.1-1021.05. Use of revenues