Bill Text: NJ A3988 | 2016-2017 | Regular Session | Chaptered
Bill Title: Allows certain fuel dealers and distributors refunds of petroleum products gross receipts tax and credits against motor fuel tax for certain bad debts from sale of fuel.
Spectrum: Moderate Partisan Bill (Republican 6-1)
Status: (Passed) 2016-11-21 - Approved P.L.2016, c.66. [A3988 Detail]
Download: New_Jersey-2016-A3988-Chaptered.html
§1 - C.54:15B-14
§2 - C.54:39-137a
§3 - Note
An Act allowing certain fuel dealers and distributors refunds of petroleum products gross receipts tax and credits against motor fuel tax for certain bad debts from the dealers' and distributors' sale of fuel, supplementing P.L.1990, c.42 (C.54:15B-1 et seq.) and P.L.2010, c.22 (C.54:39-101 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. a. A distributor of motor fuels licensed pursuant to section 33 of P.L.2010, c.22 (C.54:39-133) or a person that has been recognized as a licensed company pursuant to section 6 of P.L.1991, c.181 (C.54:15B-12) shall be allowed a refund for the portion of a bad debt from the sale of fuel that constitutes petroleum products gross receipts tax. The portion of a bad debt from the sale of fuel that constitutes petroleum products gross receipts tax shall be determined from the purchase and sale records concerning the person filing for the refund and shall be that portion of the charge for fuel and the charge for tax that is the charge for tax, without regard to any other charges reflected on the distributor's invoice.
b. As an alternative to applying for a refund, a taxpayer that has been recognized as a licensed company pursuant to section 6 of P.L.1991, c.181 (C.54:15B-12) may elect to receive the value of the portion of a bad debt from the sale of fuel that constitutes petroleum products gross receipts tax by taking a deduction from gallons sold against the payment otherwise required pursuant to section 7 of P.L.1990, c.42 (C.54:15B-7). The reduction of the payment required pursuant to section 7 of P.L.1990, c.42 (C.54:15B-7) shall be applied on the report for the period during which the bad debt is written off as uncollectible in the claimant's books and records and is eligible to be deducted for federal income tax purposes. If the reduction of payment allowed pursuant to this subsection exceeds the amount of petroleum products gross receipts tax otherwise due for the period during which the bad debt is written off, that amount of excess may be carried forward to subsequent periods, as necessary, and applied against liability in those periods.
c. For the purposes of this section:
"Bad debt" means "bad debt" as defined by section 166 of the federal Internal Revenue Code (26 U.S.C. s.166) as the basis for calculating bad debt recovery; provided however, the amount calculated pursuant to section 166 of the federal Internal Revenue Code (26 U.S.C. s.166) shall be adjusted to consider any amount paid on an account to be a payment for motor fuel and petroleum products gross receipts tax, and any charges on the account for anything other than motor fuel and petroleum products gross receipts tax shall be disregarded in calculating the amount of bad debt.
d. If the refund for bad debt pursuant to subsection a. of this section or the deduction from the payment otherwise required pursuant to section 7 of P.L.1990, c.42 (C.54:15B-7) allowed pursuant to subsection b. of this section is taken for a bad debt and the debt is subsequently collected in whole or in part, any amount collected shall be considered payment for motor fuel, petroleum products gross receipts tax, and any associated service charges reflected on the account, and the proportion of the amount collected that is petroleum products gross receipts tax shall be paid and reported on the report filed for the period in which the collection is made.
2. a. A distributor shall be allowed a credit against the payment required pursuant to subsection c. of section 5 of P.L.2010, c.22 (C.54:39-105) for the portion of a bad debt from the sale of motor fuel that constitutes motor fuel tax. The portion of a bad debt from the sale of motor fuel that constitutes motor fuel tax shall be determined from the statements required by subsection a. of section 5 of P.L.2010, c.22 (C.54:39-105) to be delivered with each consignment of fuel to a purchaser and shall be that portion of the charge for fuel and the charge for tax that is the charge for tax, without regard to any other charges reflected on the statement.
b. The credit against the payment required pursuant to subsection c. of section 5 of P.L.2010, c.22 (C.54:39-105) allowed pursuant to subsection a. of this section shall be applied on the report for the period during which the bad debt is written off as uncollectible in the claimant's books and records and is eligible to be deducted for federal income tax purposes. If the amount of the credit allowed pursuant to subsection a. of this section exceeds the amount of motor fuel tax for the period during which the bad debt is written off, that amount of excess credit may be carried forward to subsequent periods, as necessary, and applied against liability in those periods.
c. For the purposes of this section:
"Bad debt" means "bad debt" as defined by section 166 of the federal Internal Revenue Code (26 U.S.C. s.166) as the basis for calculating bad debt recovery; provided however, the amount calculated pursuant to section 166 of the federal Internal Revenue Code (26 U.S.C. s.166) shall be adjusted to consider any amount paid on an account to be a payment for motor fuel and motor fuel tax, and any charges on the account for anything other than motor fuel and motor fuel tax shall be disregarded in calculating the amount of bad debt.
d. If the credit against the payment required pursuant to subsection c. of section 5 of P.L.2010, c.22 (C.54:39-105) allowed pursuant to subsection a. of this section is taken for a bad debt and the debt is subsequently collected in whole or in part, any amount collected shall be considered payment for motor fuel, motor fuel tax, and any associated service charges on the account and the portion of the amount collected that constitutes motor fuel tax shall be paid and reported on the report filed for the period in which the collection is made.
3. This act shall take effect immediately and apply to fuel sold on or after the first day of the third month next following the date of enactment.
STATEMENT
This bill allows motor fuel distributors and heating oil dealers a refund of their petroleum products gross receipts tax for certain "bad debts" on their sales of fuel.
This bill also allows motor fuel distributors a credit against their motor fuel tax due for certain bad debts on their sales of motor fuel.
Motor fuel distributors sell motor fuel to other distributors and to retail dealers for that price they must charge for the fuel plus the State petroleum products gross receipts tax ($0.04 per gallon for gasoline and diesel) and motor fuel tax ($0.105 per gallon for gasoline and $0.135 for diesel fuel). In general, motor fuel distributors purchase motor fuel "tax included" and pass the tax on to their customer. Heating oil dealers generally purchase their fuel "tax free," and must charge their non-exempt customers for the petroleum products gross receipts tax on their sales of heating oil. The distributors and dealers must pay these taxes when they purchase motor fuel and then pass them on to their customers. If a distributor's or dealer's customer goes out of business or fails to pay for some other reason, the distributor of motor fuel is at risk not only on the loss for the cost of the fuel but also on the loss for the taxes.
The petroleum products gross receipts tax and the motor fuels tax are frequently co-collected but are independently administered.
This bill allows a distributor or dealer who has an account that becomes an uncollectible bad debt to claim a refund of petroleum products gross receipts tax for the petroleum products gross receipts tax portion of the bad debt. To make the process as simple as possible, the sellers that are recognized as licensed companies allowed to directly pay petroleum products gross receipts tax on their sales are allowed, in the alternative, to take the refund in the form of a deduction on their tax returns.
This bill allows a motor fuel distributor who has an account that becomes an uncollectible bad debt to claim a credit against motor fuel tax liability for the motor fuel tax portion of the bad debt.
The bill defines that a "bad debt" becomes uncollectible when it becomes a bad debt deduction for federal income tax purposes.
In the case of each tax, if a portion of the bed debt that was previously written off as uncollectible is ultimately collected, a dealer or distributor who was allowed a refund or credit must pay the portion of the amount collected that represents the tax liability.
Allows certain fuel dealers and distributors refunds of petroleum products gross receipts tax and credits against motor fuel tax for certain bad debts from sale of fuel.
