Effective: June 26, 2003
Latest Legislation: House Bill 95 - 125th General Assembly
(A) As used in this section, "bad debt" means any debt that has become worthless or uncollectible in the time period between a vendor's preceding return and the present return, has been uncollected for at least six months, and that may be claimed as a deduction pursuant to the "Internal Revenue Code of 1954," 68A Stat. 50, 26 U.S.C. 166, as amended, and regulations adopted pursuant thereto, or that could be claimed as such a deduction if the vendor kept accounts on an accrual basis. "Bad debt" does not include any interest or sales tax on the purchase price, uncollectible amounts on property that remains in the possession of the vendor until the full purchase price is paid, expenses incurred in attempting to collect any account receivable or for any portion of the debt recovered, and repossessed property.
(B) In computing taxable receipts for purposes of this chapter, a vendor may deduct the amount of bad debts. The amount deducted must be charged off as uncollectible on the books of the vendor. A deduction may be claimed only with respect to bad debts on which the taxes pursuant to sections 5739.10 and 5739.12 of the Revised Code were paid in a preceding tax period. If the vendor's business consists of taxable and nontaxable transactions, the deduction shall equal the full amount of the debt if the debt is documented as a taxable transaction in the vendor's records. If no such documentation is available, the maximum deduction on any bad debt shall equal the amount of the bad debt multiplied by the quotient obtained by dividing the sales taxed pursuant to this chapter during the preceding calendar year by all sales during the preceding calendar year, whether taxed or not. If a consumer or other person pays all or part of a bad debt with respect to which a vendor claimed a deduction under this section, the vendor 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 such taxes in the vendor's next payment to the tax commissioner.
(C) Any claim for a bad debt deduction under this section shall be supported by such evidence as the tax commissioner by rule requires. The commissioner shall review any change in the rate of taxation applicable to any taxable sales by a vendor claiming a deduction pursuant to this section and adopt rules for altering the deduction in the event of such a change in order to ensure that the deduction on any bad debt does not result in the vendor claiming the deduction recovering any more or less than the taxes imposed on the sale that constitutes the bad debt.
(D) In any reporting period in which the amount of bad debt exceeds the amount of taxable sales for the period, the vendor may file a refund claim for any tax collected on the bad debt in excess of the tax reported on the return. The refund claim shall be filed in the manner provided in section 5739.07 of the Revised Code, except that the claim may be filed within four years of the due date of the return on which the bad debt first could have been claimed.
(E) When the filing responsibilities of a vendor have been assumed by a certified service provider, the certified service provider shall claim the bad debt allowance provided by this section on behalf of the vendor. The certified service provider shall credit or refund to the vendor the full amount of any bad debt allowance or refund.
(F) No person other than the vendor in the transaction that generated the bad debt or, as provided in division (E) of this section, a certified service provider, may claim the bad debt allowance provided by this section.
Structure Ohio Revised Code
Section 5739.01 | Sales Tax Definitions.
Section 5739.011 | Exemptions for Manufacturing.
Section 5739.012 | Taxation of Bundled Transactions.
Section 5739.02 | Levy of Sales Tax - Purpose - Rate - Exemptions.
Section 5739.021 | Additional Sales Tax Levied by County.
Section 5739.022 | Repealing Emergency Permissive Tax.
Section 5739.023 | Transit Authority Tax Levy.
Section 5739.025 | Computation; Audits; Sale of a Fractional Ownership Program Aircraft.
Section 5739.026 | County Sales Tax for Specific Purposes.
Section 5739.027 | Tax on Watercraft or Outboard Motor Purchased by Nonresident.
Section 5739.029 | Nonresident Consumer Motor Vehicle Sales Tax.
Section 5739.0210 | Retail Sales Tax on Manufactured or Mobile Home.
Section 5739.03 | Consumer to Pay Tax - Report of Tax - Exemption Certificates.
Section 5739.031 | Direct Payment Permits.
Section 5739.032 | Permit Holder Tax Payments by Electronic Funds Transfer.
Section 5739.033 | Location of Sale.
Section 5739.034 | Telecommunications Services Definitions.
Section 5739.04 | Notification of Change in County or Transit Authority Boundaries.
Section 5739.05 | Powers and Duties of Tax Commissioner - Payment by Vendor on Predetermined Basis.
Section 5739.051 | Medicaid Health Insuring Corporation; Direct Payments; Returns.
Section 5739.06 | Monetary Allowance Granted Under Streamlined Sales and Use Tax Agreement.
Section 5739.061 | Vendor Compensation for Complying With Origin Based Sourcing Requirements.
Section 5739.07 | Vendor or Consumer Refunds.
Section 5739.071 | Partial Refund for Providers of Electronic Information Services.
Section 5739.072 | Refund May Be Applied in Satisfaction of Debt Due State.
Section 5739.08 | Municipal or Township Excise Lodging Taxes.
Section 5739.081 | Tax Return Information Provided to Convention and Visitors' Bureau.
Section 5739.09 | Administration and Allocation of Lodging Tax.
Section 5739.091 | Expansion of Definition of Hotel.
Section 5739.092 | Use of Funds Distributed to Convention and Visitors' Bureau.
Section 5739.10 | Excise Tax on Vendor's Receipts.
Section 5739.101 | Declaration of Resort Area.
Section 5739.102 | Remitting Tax - Resort Area Excise Tax Fund.
Section 5739.103 | Registration With Tax Commissioner.
Section 5739.11 | Records Open to Inspection - Exemption Certificate.
Section 5739.12 | Monthly Return by Vendor - Reconciliation Return.
Section 5739.121 | Bad Debt Deduction.
Section 5739.122 | Vendor Tax Payments by Electronic Funds Transfer.
Section 5739.124 | Returns of Taxpayers Using Electronic Funds Transfer.
Section 5739.131 | Service of Process or Notice to Nonresident.
Section 5739.132 | Interest on Unpaid Tax, Fee, or Charge; Interest on Refund.
Section 5739.133 | Penalties for Failure to Remit - Preassessment Interest.
Section 5739.14 | Sale of Entire Business - Successor Liable for Taxes and Penalties Due.
Section 5739.15 | Jeopardy Assessment.
Section 5739.16 | Four-Year Limitation for Assessments - Exceptions.
Section 5739.17 | Vendor's License.
Section 5739.18 | System for Issuing Vendor's Licenses.
Section 5739.19 | Revocation of License.
Section 5739.21 | Crediting of Funds.
Section 5739.211 | Use and Allocation of County Sales Tax Funds.
Section 5739.213 | Payments From Tourism Development District.
Section 5739.26 | Tax Paid by Consumer - Prohibition Against False Certificates.
Section 5739.29 | Vendor to Collect Tax - Prohibition Against Rebate.
Section 5739.30 | Return or Report Must Be Filed - Prohibitions - Actions by Tax Commissioner.
Section 5739.31 | Vendor or Transient Vendor's License - Prohibitions Upon License Suspension.
Section 5739.32 | Withholding Tax Funds to Insure Compliance by Local Officials.
Section 5739.33 | Personal Liability for Tax.
Section 5739.34 | No Preememption.
Section 5739.35 | Delegation of Investigative Powers.
Section 5739.36 | Report of Tax Revenue by Industry Classification.