093_SB0227eng SB227 Engrossed LRB093 04616 SJM 04669 b 1 AN ACT concerning taxes. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Cigarette Tax Act is amended by adding 5 Section 3-2 as follows: 6 (35 ILCS 130/3-2 new) 7 Sec. 3-2. Credit voucher for bad debts. 8 (a) Definitions. As used in this Section: 9 "Bad debt" means the taxes attributable to any portion of 10 a debt that is related to a sale of cigarettes subject to tax 11 under Section 2 that is not otherwise deductible or 12 excludable for any tax purpose, that has become worthless or 13 uncollectible within 60 days after the delivery of the 14 cigarettes that are represented by a claim. "Bad debt" does 15 not include any interest on the wholesale price of a 16 cigarette, uncollectible amounts on property that remains in 17 the possession of the distributor until the full purchase 18 price is paid, expenses incurred in attempting to collect any 19 account receivable or any portion of the debt recovered, any 20 accounts receivable that have been sold to a third party for 21 collection, or repossessed property. 22 "Reasonable collection practices" means that at least 3 23 attempts are made to collect the debt within 60 days after 24 the delivery of the cigarettes by providing written notices 25 with one being mailed within 30 days after the delivery and 26 another being mailed within 45 days after delivery, which 27 shall be mailed by certified mail. 28 "Written notice" means notice in writing from the 29 distributor to the retailer which shall include a statement 30 that a portion of the collection is for that amount of taxes 31 charged by the State and represented by the stamp. SB227 Engrossed -2- LRB093 04616 SJM 04669 b 1 "Person" means an actual person and any successor or 2 related party. 3 (b) The Department is authorized to issue credit vouchers 4 for bad debts to applicants meeting the requirements of this 5 Section. Beginning on January 1, 2004, a distributor may 6 submit an application to the Department for a credit voucher 7 in the amount of bad debts from the tax imposed under Section 8 2. The amount of the requested credit must be charged off as 9 uncollectible within 3 years after the stamps were first sold 10 to the distributor. Any claim for a credit voucher in the 11 amount of bad debts from the tax imposed under Section 2 is 12 subject to this statute of limitations and shall not be 13 allowed after 3 years after the stamp is first sold to the 14 distributor. 15 (c) The amount of the credit voucher shall be determined 16 using the following as guidelines: 17 (1) What is the amount of the taxes owed to the 18 distributor? 19 (2) Who owed the amount to the distributor? 20 (3) Is the amount owed greater than $50? 21 (4) Has the distributor received a credit in any 22 other years as a result of a bad debt from this person? 23 If yes, the distributor is not eligible for the voucher 24 provided under this Section. 25 (5) Is the claim for a credit voucher made within 30 26 days after the determination that the debt is a bad debt 27 as defined by this Section? 28 (d) A credit voucher issued under this Section shall have 29 an expiration date of not less than 45 days after issuance. 30 (e) A claim for a credit voucher must be made within 30 31 days after the determination that the debt is a bad debt as 32 defined by this Section. 33 (f) Any claim for a bad debt submitted under this Section 34 must contain all of the following: SB227 Engrossed -3- LRB093 04616 SJM 04669 b 1 (1) A copy of the original invoice that must contain 2 the distributor's legal name and address, as well as the 3 legal name of the retailer. 4 (2) The name of the person who is responsible for 5 the bad debt. 6 (3) Evidence that the cigarettes described in the 7 invoice and containing stamps were received by the person 8 who is responsible for the bad debt. 9 (4) Evidence that the person who is responsible for 10 the bad debt did not pay the distributor for the bad 11 debt. 12 (5) Evidence that the distributor used reasonable 13 collection practices in efforts to collect the bad debt. 14 (6) Evidence that the claim for a credit voucher is 15 made within 30 days after the determination that the debt 16 is a bad debt as defined by this Section. 17 (g) Recapture. 18 (1) A bad debt is reduced by any amounts collected 19 by the distributor from the retailer within the 60-day 20 period with respect to such debt, regardless of whether 21 the amounts so collected are attributable to or 22 designated by the parties or other law as collected with 23 respect to the taxes imposed under Section 2. 24 (2) Any amount subsequently collected by the 25 distributor from the retailer with respect to a debt that 26 gave rise to a credit voucher, regardless of any 27 designation of the parties or other law, shall be treated 28 as reimbursement for the taxes imposed under Section 2. 29 (3) In the case of a partially worthless debt, the 30 amount of the debt attributable to taxes imposed under 31 Section 2 shall be treated to the extent possible, as 32 attributable to the non-worthless portion of such debt. 33 (h) Any person aggrieved by any action of the Department 34 under this Section may protest the action by making a written SB227 Engrossed -4- LRB093 04616 SJM 04669 b 1 request for a hearing within 60 days after the original 2 action. If the hearing is not requested in writing within 60 3 days, the original action is final. 4 (i) An application for a credit voucher under this 5 Section must be signed by the claimant and verified. 6 Section 10. The Cigarette Use Tax Act is amended by 7 adding Section 3-2 as follows: 8 (35 ILCS 135/3-2 new) 9 Sec. 3-2. Credit voucher for bad debts. 10 (a) Definitions. As used in this Section: 11 "Bad debt" means the taxes attributable to any portion of 12 a debt that is related to a sale of cigarettes subject to tax 13 under Section 2 that is not otherwise deductible or 14 excludable for any tax purpose, that has become worthless or 15 uncollectible within 60 days after the delivery of the 16 cigarettes that are represented by a claim. "Bad debt" does 17 not include any interest on the wholesale price of a 18 cigarette, uncollectible amounts on property that remains in 19 the possession of the distributor until the full purchase 20 price is paid, expenses incurred in attempting to collect any 21 account receivable or any portion of the debt recovered, any 22 accounts receivable that have been sold to a third party for 23 collection, or repossessed property. 24 "Reasonable collection practices" means that at least 3 25 attempts are made to collect the debt within 60 days after 26 the delivery of the cigarettes by providing written notices 27 with one being mailed within 30 days after the delivery and 28 another being mailed within 45 days after delivery, which 29 shall be mailed by certified mail. 30 "Written notice" means notice in writing from the 31 distributor to the retailer which shall include a statement 32 that a portion of the collection is for that amount of taxes SB227 Engrossed -5- LRB093 04616 SJM 04669 b 1 charged by the State and represented by the stamp. 2 "Person" means an actual person and any successor or 3 related party. 4 (b) The Department is authorized to issue credit vouchers 5 for bad debts to applicants meeting the requirements of this 6 Section. Beginning on January 1, 2004, a distributor may 7 submit an application to the Department for a credit voucher 8 in the amount of bad debts from the tax imposed under Section 9 2. The amount of the requested credit must be charged off as 10 uncollectible within 3 years after the stamps were first sold 11 to the distributor. Any claim for a credit voucher in the 12 amount of bad debts from the tax imposed under Section 2 is 13 subject to this statute of limitations and shall not be 14 allowed after 3 years after the stamp is first sold to the 15 distributor. 16 (c) The amount of the credit voucher shall be determined 17 using the following as guidelines: 18 (1) What is the amount of the taxes owed to the 19 distributor? 20 (2) Who owed the amount to the distributor? 21 (3) Is the amount owed greater than $50? 22 (4) Has the distributor received a credit in any 23 other years as a result of a bad debt from this person? 24 If yes, the distributor is not eligible for the voucher 25 provided under this Section. 26 (5) Is the claim for a credit voucher made within 30 27 days after the determination that the debt is a bad debt 28 as defined by this Section? 29 (d) A credit voucher issued under this Section shall have 30 an expiration date of not less than 45 days after issuance. 31 (e) A claim for a credit voucher must be made within 30 32 days after the determination that the debt is a bad debt as 33 defined by this Section. 34 (f) Any claim for a bad debt submitted under this Section SB227 Engrossed -6- LRB093 04616 SJM 04669 b 1 must contain all of the following: 2 (1) A copy of the original invoice that must contain 3 the distributor's legal name and address, as well as the 4 legal name of the retailer. 5 (2) The name of the person who is responsible for 6 the bad debt. 7 (3) Evidence that the cigarettes described in the 8 invoice and containing stamps were received by the person 9 who is responsible for the bad debt. 10 (4) Evidence that the person who is responsible for 11 the bad debt did not pay the distributor for the bad 12 debt. 13 (5) Evidence that the distributor used reasonable 14 collection practices in efforts to collect the bad debt. 15 (6) Evidence that the claim for a credit voucher is 16 made within 30 days after the determination that the debt 17 is a bad debt as defined by this Section. 18 (g) Recapture. 19 (1) A bad debt is reduced by any amounts collected 20 by the distributor from the retailer within the 60-day 21 period with respect to such debt, regardless of whether 22 the amounts so collected are attributable to or 23 designated by the parties or other law as collected with 24 respect to the taxes imposed under Section 2. 25 (2) Any amount subsequently collected by the 26 distributor from the retailer with respect to a debt that 27 gave rise to a credit voucher, regardless of any 28 designation of the parties or other law, shall be treated 29 as reimbursement for the taxes imposed under Section 2. 30 (3) In the case of a partially worthless debt, the 31 amount of the debt attributable to taxes imposed under 32 Section 2 shall be treated to the extent possible, as 33 attributable to the non-worthless portion of such debt. 34 (h) Any person aggrieved by any action of the Department SB227 Engrossed -7- LRB093 04616 SJM 04669 b 1 under this Section may protest the action by making a written 2 request for a hearing within 60 days after the original 3 action. If the hearing is not requested in writing within 60 4 days, the original action is final. 5 (i) An application for a credit voucher under this 6 Section must be signed by the claimant and verified. 7 Section 15. The Tobacco Products Tax Act of 1995 is 8 amended by adding Section 10-32 as follows: 9 (35 ILCS 143/10-32 new) 10 Sec. 3-2. Credit voucher for bad debts. 11 (a) Definitions. As used in this Section: 12 "Bad debt" means the taxes attributable to any portion of 13 a debt that is related to a sale of cigarettes subject to tax 14 under Section 10-10 that is not otherwise deductible or 15 excludable for any tax purpose, that has become worthless or 16 uncollectible within 60 days after the delivery of the 17 cigarettes that are represented by a claim. "Bad debt" does 18 not include any interest on the wholesale price of a 19 cigarette, uncollectible amounts on property that remains in 20 the possession of the distributor until the full purchase 21 price is paid, expenses incurred in attempting to collect any 22 account receivable or any portion of the debt recovered, any 23 accounts receivable that have been sold to a third party for 24 collection, or repossessed property. 25 "Reasonable collection practices" means that at least 3 26 attempts are made to collect the debt within 60 days after 27 the delivery of the cigarettes by providing written notices 28 with one being mailed within 30 days after the delivery and 29 another being mailed within 45 days after delivery, which 30 shall be mailed by certified mail. 31 "Written notice" means notice in writing from the 32 distributor to the retailer which shall include a statement SB227 Engrossed -8- LRB093 04616 SJM 04669 b 1 that a portion of the collection is for that amount of taxes 2 charged by the State and represented by the stamp. 3 "Person" means an actual person and any successor or 4 related party. 5 (b) The Department is authorized to issue credit vouchers 6 for bad debts to applicants meeting the requirements of this 7 Section. Beginning on January 1, 2004, a distributor may 8 submit an application to the Department for a credit voucher 9 in the amount of bad debts from the tax imposed under Section 10 10-10. The amount of the requested credit must be charged off 11 as uncollectible within 3 years after the stamps were first 12 sold to the distributor. Any claim for a credit voucher in 13 the amount of bad debts from the tax imposed under Section 14 10-10 is subject to this statute of limitations and shall not 15 be allowed after 3 years after the stamp is first sold to the 16 distributor. 17 (c) The amount of the credit voucher shall be determined 18 using the following as guidelines: 19 (1) What is the amount of the taxes owed to the 20 distributor? 21 (2) Who owed the amount to the distributor? 22 (3) Is the amount owed greater than $50? 23 (4) Has the distributor received a credit in any 24 other years as a result of a bad debt from this person? 25 If yes, the distributor is not eligible for the voucher 26 provided under this Section. 27 (5) Is the claim for a credit voucher made within 30 28 days after the determination that the debt is a bad debt 29 as defined by this Section? 30 (d) A credit voucher issued under this Section shall have 31 an expiration date of not less than 45 days after issuance. 32 (e) A claim for a credit voucher must be made within 30 33 days after the determination that the debt is a bad debt as 34 defined by this Section. SB227 Engrossed -9- LRB093 04616 SJM 04669 b 1 (f) Any claim for a bad debt submitted under this Section 2 must contain all of the following: 3 (1) A copy of the original invoice that must contain 4 the distributor's legal name and address, as well as the 5 legal name of the retailer. 6 (2) The name of the person who is responsible for 7 the bad debt. 8 (3) Evidence that the cigarettes described in the 9 invoice and containing stamps were received by the person 10 who is responsible for the bad debt. 11 (4) Evidence that the person who is responsible for 12 the bad debt did not pay the distributor for the bad 13 debt. 14 (5) Evidence that the distributor used reasonable 15 collection practices in efforts to collect the bad debt. 16 (6) Evidence that the claim for a credit voucher is 17 made within 30 days after the determination that the debt 18 is a bad debt as defined by this Section. 19 (g) Recapture. 20 (1) A bad debt is reduced by any amounts collected 21 by the distributor from the retailer within the 60-day 22 period with respect to such debt, regardless of whether 23 the amounts so collected are attributable to or 24 designated by the parties or other law as collected with 25 respect to the taxes imposed under Section 10-10. 26 (2) Any amount subsequently collected by the 27 distributor from the retailer with respect to a debt that 28 gave rise to a credit voucher, regardless of any 29 designation of the parties or other law, shall be treated 30 as reimbursement for the taxes imposed under Section 31 10-10. 32 (3) In the case of a partially worthless debt, the 33 amount of the debt attributable to taxes imposed under 34 Section 10-10 shall be treated to the extent possible, as SB227 Engrossed -10- LRB093 04616 SJM 04669 b 1 attributable to the non-worthless portion of such debt. 2 (h) Any person aggrieved by any action of the Department 3 under this Section may protest the action by making a written 4 request for a hearing within 60 days after the original 5 action. If the hearing is not requested in writing within 60 6 days, the original action is final. 7 (i) An application for a credit voucher under this 8 Section must be signed by the claimant and verified. 9 Section 99. Effective date. This Act takes effect upon 10 becoming law.