Maine –Revised Guidance for Bad Debt Credit Calculation

SALT Report 3225 – Maine issued revised guidance on January 22, 2014.  Retailers are responsible to remit sales tax to the state whether or not the retailer has received payment from the customer.   Bulletin No. 29 – Credit for Certain Bad Debts  sets forth examples and calculations under various circumstances. Certain requirements apply when calculating a bad debt credit:

  1. A credit must be claimed within three years of charge-off.
  2. No credits for amounts not actually charged off.
  3. Credit is allowable for taxable sales previously reported.
  4. Information must be retained to support credit.
  5. Tax is due on amounts subsequently collected.

Please not that credits may not be available for “repossession of property sold under a conditional sales contract.”

As usual with sales and use tax, documentation is a key element of the credit.  The bulletin reminds “retailers claiming the credit must maintain adequate and complete records showing” date of sale, name and address of purchaser, amount paid by customer to retailer, amount paid by retailer to state, all payments and credits to customer and evidence of write-off.

For Further Information:

Bulletin No. 29 – Credit for Certain Bad Debts