2013 - 2014 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 1,
TO ASSEMBLY BILL 644
March 20, 2014 - Offered by Representative Nygren.
AB644-ASA1,1,4 1An Act to renumber and amend 77.585 (1) (a); to amend 77.585 (1) (b) and
277.585 (1) (c); and to create 77.585 (1) (a) 2. to 6. and 77.585 (1) (bm) of the
3statutes; relating to: sales tax bad debt return adjustments for private label
4credit card bad debt.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB644-ASA1,1 5Section 1. 77.585 (1) (a) of the statutes is renumbered 77.585 (1) (a) (intro.)
6and amended to read:
AB644-ASA1,1,77 77.585 (1) (a) (intro.) In this subsection, "bad:
AB644-ASA1,2,6 81. "Bad debt" means the portion of the sales price or purchase price that the
9seller has previously reported as taxable under this subchapter, and for which the
10seller has paid the tax, and that the seller or lender may claim as a deduction under
11section 166 of the Internal Revenue Code. "Bad debt" does not include financing

1charges or interest, sales or use taxes imposed on the sales price or purchase price,
2uncollectible amounts on tangible personal property or items, property, or goods
3under s. 77.52 (1) (b), (c), or (d) that remain in the seller's possession until the full
4sales price or purchase price is paid, expenses incurred in attempting to collect any
5debt, debts sold or assigned to 3rd parties for collection, not including dual purpose
6credit debts and private label credit debts,
and repossessed property or items.
AB644-ASA1,2 7Section 2. 77.585 (1) (a) 2. to 6. of the statutes are created to read:
AB644-ASA1,2,128 77.585 (1) (a) 2. "Dual purpose credit card" means a credit card that may be
9used as a private label credit card or to make purchases from persons other than the
10seller whose name or logo appears on the card or the seller's affiliates or franchisees,
11if the credit card issuer is able to determine the sales receipts of the seller and the
12seller's affiliates or franchisees apart from any sales receipts of unrelated persons.
AB644-ASA1,2,1613 3. "Dual purpose credit debt" means accounts and receivables that result from
14credit sale transactions using a dual purpose credit card, but only to the extent the
15account or receivable balance resulted from purchases made from the seller whose
16name or logo appears on the card.
AB644-ASA1,2,2217 4.   a. "Lender" means any person who owns a private label credit debt, an
18interest in a private label credit debt, a dual purpose credit debt, or an interest in a
19dual purpose credit debt, if the person purchased the debt or interest directly from
20a seller who remitted the tax imposed under this subchapter or from a third party
21or if the person originated the debt or interest pursuant to the person's contract with
22the seller who remitted the tax imposed under this subchapter or with a third party.
AB644-ASA1,2,2523 b. "Lender" includes any person who is a member of the same affiliated group,
24as defined under section 1504 of the Internal Revenue Code, as a lender or is an
25assignee or other transferee of a lender.
AB644-ASA1,3,3
15. "Private label credit card" means any charge card or credit card that
2identifies a seller's name or logo on the card and that may be used only for purchases
3from that seller or from any of the seller's affiliates or franchisees.
AB644-ASA1,3,74 6. "Private label credit debt" means accounts and receivables that result from
5credit sale transactions using a private label credit card, but only to the extent the
6account or receivable balance resulted from purchases made from the seller whose
7name or logo appears on the card.
AB644-ASA1,3 8Section 3. 77.585 (1) (b) of the statutes is amended to read:
AB644-ASA1,3,219 77.585 (1) (b) A seller may claim as a deduction on a return under s. 77.58 the
10amount of any bad debt that the seller or lender writes off as uncollectible in the
11seller's or lender's books and records and that is eligible to be deducted as a bad debt
12for federal income tax purposes, regardless of whether the seller or lender is required
13to file a federal income tax return. A seller who claims a deduction under this
14paragraph shall claim the deduction on the return under s. 77.58 that is submitted
15for the period in which the seller or lender writes off the amount of the deduction as
16uncollectible in the seller's or lender's books and records and in which such amount
17is eligible to be deducted as bad debt for federal income tax purposes. If the seller
18or lender subsequently collects in whole or in part any bad debt for which a deduction
19is claimed under this paragraph, the seller shall include the amount collected in the
20return filed for the period in which the amount is collected and shall pay the tax with
21the return.
AB644-ASA1,4 22Section 4. 77.585 (1) (bm) of the statutes is created to read:
AB644-ASA1,4,223 77.585 (1) (bm) For purposes of par. (b), a seller may compute the seller's bad
24debt deduction using an estimate, if the department approves the method for
25computing the estimate. The department may audit the seller's books and records

1to review the estimate and adjust the estimate as necessary to reflect the actual
2allowable bad debt amount.
AB644-ASA1,5 3Section 5. 77.585 (1) (c) of the statutes is amended to read:
AB644-ASA1,4,124 77.585 (1) (c) For purposes of computing a bad debt deduction or reporting a
5payment received on a previously claimed bad debt, any payment made on a debt or
6on an account is applied first to the price of the tangible personal property, or items,
7property, or goods under s. 77.52 (1) (b), (c), or (d), or service sold, and the
8proportionate share of the sales tax on that property, or items, property, or goods
9under s. 77.52 (1) (b), (c), or (d), or service, and then to interest, service charges, and
10other charges related to the sale. If payment is received on an account for which the
11balance reflects multiple sales transactions, the payment is applied to the sales
12transactions in the same order in which the sales transactions occurred.
AB644-ASA1,6 13Section 6. Effective date.
AB644-ASA1,4,1414 (1) This act takes effect on July 1, 2015.
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