Missouri Code of State Regulations — Title 12 (Department of Revenue)
12 CSR 10-102.100
Bad Debts Credit or Refund
PURPOSE: sections 144.190 and 144.696, RSMo provide for refund of overpayments. Section 144.220, RSMo sets forth the law on the statute of limitations. This rule explains how to claim a credit or refund for tax paid on a sale that has become a bad debt.
# (1)
In general, a seller may file for a credit or refund within the ten- (10-) year statute of limitations when sales are written off as bad debts.
# (2)
Definition of Terms.
# (A)
Bad debt is a sale that has been written off for state or federal income tax purposes. In order to qualify for a bad debt deduction for sales or use tax purposes, a sale must have been previously reported as taxable.
# (B)
Accrual or gross sales reporting method means a seller reports the sale and remits the tax at the time of the sale. The receipts are not received from the buyer until a later date.
Therefore, a timing difference occurs between the time that the sale, with applicable sales tax, is reported to the state and the time that the seller receives payment from the buyer.
# (3)
Basic Application of the Law.
# (A)
A seller may file for a refund or credit within the ten- (10-) year statute of limitations for those sales written off as bad debts if the sales were reported using the accrual or gross sales method. This period is calculated from the due date of the return or the date the tax was paid, whichever is later.
# (B)
If a bad debt credit or refund is given and the debt is later collected, that amount must be reported on the next return as a taxable sale.
# (4)
Examples.
# (A)
A retailer reports and pays sales tax on the accrual or gross sales method. The retailer determines some sales to customers are not collectible and writes them off as bad debts for income tax purposes. The retailer requests a credit or refund from the state within the ten- (10-) year statute of limitations.
The credit or refund would be granted.
# (B)
A retailer reports and pays sales tax on the accrual or gross sales method. The retailer determines some sales to customers are not collectible and writes them off as bad debts for income tax purposes. The retailer requests a credit or refund from the state eleven (11) years after the sale was reported and the tax was remitted to the state. The credit or refund would be denied.
AUTHORITY: section 144.270, RSMo 2016.* This rule originally filed as 12 CSR 10-115.100. Original rule filed April 19, 2000, effective Oct.
30, 2000. Changed to 12 CSR 10-102.100 Dec. 31, 2000. Amended:
Filed Jan. 2, 2020, effective July 30, 2020. Amended: Filed Oct. 28, (3/31/26) Denny Hoskins 2020, effective May 30, 2021.
*Original authority: 144.270, RSMo 1939, amended 1941, 1943, 1945, 1947, 1955, 1961, 2008.
Amendment history
AUTHORITY: section 144.270, RSMo 2016.* This rule originally filed as 12 CSR 10-115.100. Original rule filed April 19, 2000, effective Oct. 30, 2000. Changed to 12 CSR 10-102.100 Dec. 31, 2000. Amended: Filed Jan. 2, 2020, effective July 30, 2020. Amended: Filed Oct. 28, (3/31/26) Denny Hoskins 2020, effective May 30, 2021. *Original authority: 144.270, RSMo 1939, amended 1941, 1943, 1945, 1947, 1955, 1961, 2008.
Source: view the official PDF
In this chapter (5 sections)
- 12 CSR 10-102.016 · Refunds and Credits
- 12 CSR 10-102.100 · Bad Debts Credit or Refund
- 12 CSR 10-102.110 · Protest Payments, Protest Overpayments, and Protest…
- 12 CSR 10-102.160 · Effect of Saturday, Sunday, or Holiday on Payment…
- 12 CSR 10-102.554 · Filing Protest Payment Returns