Wis. Admin. Code § Tax 4.12 — Uncollected motor vehicle fuel taxes and repossessions

Tax 4.12(1) (1) Purpose. This section clarifies when and how a supplier required to be licensed by the department may recover the motor vehicle fuel tax from the department when a purchaser is unable to pay the tax to the supplier. This section also clarifies when and how a wholesaler distributor may recover the motor vehicle fuel tax from the department when the wholesaler distributor is unable to collect the tax from another wholesaler distributor or a retail dealer.

Tax 4.12(2) (2) Statutes. Under s. 78.01 (2s) , Stats., a supplier is not liable for the tax on motor vehicle fuel when the supplier is unable to recover the tax from a purchaser. With proper documentation, the supplier may claim a tax deduction on a later remittance of taxes. A wholesaler distributor may file a refund claim with the department to recover the tax on uncollectable accounts covering sales to other wholesaler distributors and retail dealers.

Tax 4.12(3) (3) Procedure.

Tax 4.12(3)(a) (a) Tax imposed. A supplier shall pay the motor vehicle fuel tax to the department by the 15th day of the month after the month in which the fuel is received, as described in s. 78.07 , Stats., irrespective of whether the sale is for cash or credit.

Tax 4.12(3)(b) (b) Bad debts.

Tax 4.12(3)(b)1. 1. ‘Deduction from measure of tax.’ A supplier is relieved from the liability for motor vehicle fuel tax on accounts which have become worthless and which have met the requirements to be charged off for income or franchise tax purposes. The bad debt tax deduction shall be reported and claimed on the supplier’s monthly tax report for the month in which the account becomes worthless. However, if a supplier is out of business when the account becomes worthless, a bad debt deduction may be claimed on the last return filed by that business or through a refund claim filed with the department. A wholesaler distributor may claim a bad debt tax deduction for the amount of tax liability for motor vehicle fuel tax on sales to other wholesaler distributors or retail dealers on accounts which have become worthless and which have met the requirements to be charged off for income or franchise tax purposes by filing a refund claim with the department. A claim for refund relating to a worthless account must be filed within 4 years of the 15th day of the 4th month following the close of the supplier’s or wholesaler distributor’s calendar or fiscal year within which the account becomes worthless.

Tax 4.12(3)(b)2. 2. ‘Recovery of bad debts charged off.’ If a bad debt deduction has been claimed by a supplier or wholesaler distributor for an account found worthless and charged off and the account is thereafter in whole or in part collected by the supplier or wholesaler distributor, the bad debt deduction shall be repaid to the department. A supplier shall report the amount so collected in the first tax report, form MF-002, filed after the collection, and the tax on the amount collected shall be paid with the report. A wholesaler distributor shall file a corrected refund claim and pay the tax collected within 30 days of collection.

Tax 4.12(3)(b)3. 3. ‘Amount deductible.’

Tax 4.12(3)(b)3.a. a. A deduction may only be claimed for the unpaid amount of tax on an account found worthless and charged off. The total amount charged off may include the cost of the fuel, interest, financing or insurance costs in addition to the tax amount. To determine the unpaid amount of tax to be deducted, all payments and credits to the account shall be prorated to the various components of the total amount that the purchaser contracted to pay.

Tax 4.12(3)(b)3.b. b. No deduction may be allowed for expenses incurred by a supplier or wholesaler distributor in attempting to collect any account receivable, or for that portion of a debt recovered that is reclaimed by or paid to a third party as compensation for services rendered in collecting the account.

Tax 4.12(3)(b)4. 4. ‘Special situations.’ A purchaser of receivables may not claim a bad debt deduction for the motor vehicle fuel tax on receivables that subsequently become worthless.

Tax 4.12(3)(b)5. 5. ‘Repossessions.’ When motor vehicle fuel is repossessed a tax deduction may be allowed only to the extent that the supplier or wholesaler distributor sustains a net loss upon which tax was paid.

Tax 4.12(3)(c) (c) Tax rate change. If a deduction for uncollectible tax is claimed in a period when the tax rate is different from the tax rate in effect when the tax was reported on the tax report, an adjustment to the gallons claimed shall be made to compensate for the tax rate differential. The number of gallons to claim is computed by dividing the old tax rate by the new tax rate and multiplying that percentage by the gallons sold.