Ohio Governor Mike DeWine signed House Bill 223 into law just prior to year’s end. This bill allows vendors to deduct sales tax for bad debts on private label, company credit cards. In addition, that bad debt would be charged off as uncollectible by credit account lenders.
Bad debt was defined in this bill as “any debt that has become worthless or uncollectible in the time period between a vendor’s preceding return and the present return, has been uncollected for at least six months, and that may be claimed as a deduction pursuant to Internal Revenue Code of 1954…Section 166.” The deductibility of the debt for federal income tax purposes shall be determined with respect to the lender instead of the vendor.
A private label credit account means “a credit account that carries, refers to, or is branded with the name of a vendor and for which the lender, when establishing the consumer’s credit limit, complied with all Ohio and federal laws that are intended to protect consumers.”
Several retailers had testified to support this piece of legislation, which will go into effect 90 days after filing with the Secretary of State.
Please reach out to your Ryan tax professionals to determine the impact of this Ohio tax change to your business.
TECHNICAL INFORMATION CONTACTS:
Jim Payerle
Principal
Ryan
216.685.9448
jim.payerle@ryan.com
Brian Stromen
Principal
Ryan
763.445.4200
brian.stromen@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.
- Topics
- James R. Payerle
- Transaction Tax
- Ohio