Bill Text: TX HB3389 | 2023-2024 | 88th Legislature | Introduced
Bill Title: Relating to a refund of motor vehicle sales taxes paid on certain bad debt.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2023-05-01 - Left pending in committee [HB3389 Detail]
Download: Texas-2023-HB3389-Introduced.html
88R4288 CJD-F | ||
By: Longoria | H.B. No. 3389 |
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relating to a refund of motor vehicle sales taxes paid on certain | ||
bad debt. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subchapter C, Chapter 152, Tax Code, is amended | ||
by adding Section 152.049 to read as follows: | ||
Sec. 152.049. REFUND FOR TAX PAID ON BAD DEBT. (a) In this | ||
section: | ||
(1) "Bad debt" means the total principal amount of a | ||
debt remaining unpaid from a retail installment transaction that | ||
was charged off for federal income tax purposes. | ||
(2) "Lender" means a person: | ||
(A) that holds or previously held a retail | ||
account purchased directly from a seller required by this chapter | ||
to collect the sales tax imposed by Section 152.021 who remitted the | ||
tax to the tax assessor-collector; and | ||
(B) that: | ||
(i) is an authorized lender under Chapter | ||
341, Finance Code; or | ||
(ii) holds a motor vehicle sales finance | ||
license under Subchapter F, Chapter 348, Finance Code. | ||
(3) "Passenger car" means a motor vehicle, including a | ||
motorcycle, used to transport persons and designed to accommodate | ||
10 or fewer passengers, including the operator. | ||
(4) "Retail installment transaction" has the meaning | ||
assigned by Section 348.001, Finance Code. | ||
(b) A seller who is required by this chapter to collect the | ||
sales tax imposed by Section 152.021 may file a claim with and is | ||
entitled to receive from the comptroller a refund of sales taxes | ||
paid on the seller's bad debt in the amount computed under | ||
Subsection (c) if: | ||
(1) the tax was remitted to the tax assessor-collector | ||
on a passenger car sold in a retail installment transaction; | ||
(2) the seller determines that the account associated | ||
with the debt is uncollectible and worthless; and | ||
(3) the account associated with the debt is written | ||
off as a bad debt on the accounting books and deductible on the | ||
federal income tax return of the seller. | ||
(c) The amount of the refund is equal to the amount computed | ||
by: | ||
(1) allocating the remaining unpaid principal balance | ||
of the account associated with the bad debt between sales tax, | ||
taxable charges, and nontaxable charges in a manner that is | ||
proportional to the allocation of the original unpaid balance of | ||
the account between sales tax, taxable charges, and nontaxable | ||
charges; and | ||
(2) multiplying the amount of the unpaid principal | ||
balance of the account allocated to taxable charges as determined | ||
under Subdivision (1) by the tax rate prescribed by Section | ||
152.021. | ||
(d) If the seller assigns the retail installment contract to | ||
a lender in a retail installment transaction, the lender may file a | ||
claim with and is entitled to receive from the comptroller the | ||
refund under Subsection (b), provided that: | ||
(1) the requirements of Subsection (b) are satisfied | ||
by the seller or the lender; and | ||
(2) the seller has not received a refund for sales | ||
taxes paid on the bad debt that is the subject of the lender's | ||
claim. | ||
(e) If after receiving a refund under this section a seller | ||
or lender collects all or part of the principal amount of the bad | ||
debt for which the seller or lender claimed the refund, the seller | ||
or lender shall deduct from the next claim for a refund the seller | ||
or lender files under this section an amount equal to the amount | ||
computed by: | ||
(1) allocating the amount collected by the seller or | ||
lender between sales tax, taxable charges, and nontaxable charges | ||
in a manner that is proportional to the allocation of the original | ||
unpaid balance of the account between sales tax, taxable charges, | ||
and nontaxable charges; and | ||
(2) multiplying the amount collected by the seller or | ||
lender allocated to taxable charges as determined under Subdivision | ||
(1) by the tax rate prescribed by Section 152.021. | ||
(f) This section does not apply to a seller-financed sale. | ||
SECTION 2. The change in law made by this Act does not | ||
affect tax liability accruing before the effective date of this | ||
Act. That liability continues in effect as if this Act had not been | ||
enacted, and the former law is continued in effect for the | ||
collection of taxes due and for civil and criminal enforcement of | ||
the liability for those taxes. | ||
SECTION 3. This Act takes effect September 1, 2023. |