Texas 2023 - 88th Regular

Texas House Bill HB3389 Compare Versions

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1	1	88R4288 CJD-F
2	2	By: Longoria H.B. No. 3389
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to a refund of motor vehicle sales taxes paid on certain
8	8	bad debt.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. Subchapter C, Chapter 152, Tax Code, is amended
11	11	by adding Section 152.049 to read as follows:
12	12	Sec. 152.049. REFUND FOR TAX PAID ON BAD DEBT. (a) In this
13	13	section:
14	14	(1) "Bad debt" means the total principal amount of a
15	15	debt remaining unpaid from a retail installment transaction that
16	16	was charged off for federal income tax purposes.
17	17	(2) "Lender" means a person:
18	18	(A) that holds or previously held a retail
19	19	account purchased directly from a seller required by this chapter
20	20	to collect the sales tax imposed by Section 152.021 who remitted the
21	21	tax to the tax assessor-collector; and
22	22	(B) that:
23	23	(i) is an authorized lender under Chapter
24	24	341, Finance Code; or
25	25	(ii) holds a motor vehicle sales finance
26	26	license under Subchapter F, Chapter 348, Finance Code.
27	27	(3) "Passenger car" means a motor vehicle, including a
28	28	motorcycle, used to transport persons and designed to accommodate
29	29	10 or fewer passengers, including the operator.
30	30	(4) "Retail installment transaction" has the meaning
31	31	assigned by Section 348.001, Finance Code.
32	32	(b) A seller who is required by this chapter to collect the
33	33	sales tax imposed by Section 152.021 may file a claim with and is
34	34	entitled to receive from the comptroller a refund of sales taxes
35	35	paid on the seller's bad debt in the amount computed under
36	36	Subsection (c) if:
37	37	(1) the tax was remitted to the tax assessor-collector
38	38	on a passenger car sold in a retail installment transaction;
39	39	(2) the seller determines that the account associated
40	40	with the debt is uncollectible and worthless; and
41	41	(3) the account associated with the debt is written
42	42	off as a bad debt on the accounting books and deductible on the
43	43	federal income tax return of the seller.
44	44	(c) The amount of the refund is equal to the amount computed
45	45	by:
46	46	(1) allocating the remaining unpaid principal balance
47	47	of the account associated with the bad debt between sales tax,
48	48	taxable charges, and nontaxable charges in a manner that is
49	49	proportional to the allocation of the original unpaid balance of
50	50	the account between sales tax, taxable charges, and nontaxable
51	51	charges; and
52	52	(2) multiplying the amount of the unpaid principal
53	53	balance of the account allocated to taxable charges as determined
54	54	under Subdivision (1) by the tax rate prescribed by Section
55	55	152.021.
56	56	(d) If the seller assigns the retail installment contract to
57	57	a lender in a retail installment transaction, the lender may file a
58	58	claim with and is entitled to receive from the comptroller the
59	59	refund under Subsection (b), provided that:
60	60	(1) the requirements of Subsection (b) are satisfied
61	61	by the seller or the lender; and
62	62	(2) the seller has not received a refund for sales
63	63	taxes paid on the bad debt that is the subject of the lender's
64	64	claim.
65	65	(e) If after receiving a refund under this section a seller
66	66	or lender collects all or part of the principal amount of the bad
67	67	debt for which the seller or lender claimed the refund, the seller
68	68	or lender shall deduct from the next claim for a refund the seller
69	69	or lender files under this section an amount equal to the amount
70	70	computed by:
71	71	(1) allocating the amount collected by the seller or
72	72	lender between sales tax, taxable charges, and nontaxable charges
73	73	in a manner that is proportional to the allocation of the original
74	74	unpaid balance of the account between sales tax, taxable charges,
75	75	and nontaxable charges; and
76	76	(2) multiplying the amount collected by the seller or
77	77	lender allocated to taxable charges as determined under Subdivision
78	78	(1) by the tax rate prescribed by Section 152.021.
79	79	(f) This section does not apply to a seller-financed sale.
80	80	SECTION 2. The change in law made by this Act does not
81	81	affect tax liability accruing before the effective date of this
82	82	Act. That liability continues in effect as if this Act had not been
83	83	enacted, and the former law is continued in effect for the
84	84	collection of taxes due and for civil and criminal enforcement of
85	85	the liability for those taxes.
86	86	SECTION 3. This Act takes effect September 1, 2023.