Current through Reg. 50, No. 26; June 27, 2025
(a) Bad Debt Deductions. A licensed
distributor, supplier, permissive supplier, or compressed natural gas and
liquefied natural gas dealer may file a claim for refund on the monthly return
of taxes paid on fuel that was sold on account that is later determined to be
uncollectible, worthless, and previously written off as bad debt at the time
that the distributor, supplier, permissive supplier, or compressed natural gas
and liquefied natural gas dealer held an active license.
(1) The claim for refund must be in writing,
state the fuel type (gasoline, diesel, compressed natural gas, or liquefied
natural gas), state the beginning and ending date of sales on which the bad
debt is claimed, the number of gallons, and the dollar amount of bad debts. The
licensed distributor, supplier, permissive supplier, or compressed natural gas
and liquefied natural gas dealer must establish the bad debt amount by
providing information on the form required by the comptroller. Required
information includes but is not limited to the following:
(A) the date of sale or invoice
date;
(B) invoice fuel amount and
invoice fuel tax amount;
(C) the
name and address of the purchaser, and if applicable, the license number of the
purchaser;
(D) all payments or
credits applied to the account of the purchaser; and
(E) uncollected amounts in the purchaser's
account that were written off as bad debt in the distributor's, supplier's,
permissive supplier's, or compressed natural gas and liquefied natural gas
dealer's, records, including the number of gallons of fuel represented by the
motor fuel portion of the bad debt.
(2) All payments and credits made by the
purchaser must be applied to the purchaser's account to determine the bad debt
amount, and if the purchaser's account also contains purchases of goods other
than motor fuel, then the payments and credits to that account should be
applied ratably between motor fuel, including tax, and other goods sold to the
purchaser. The comptroller will only allow a claim for refund of tax on the
number of gallons represented by the motor fuel portion of the bad debt. The
maximum amount of refund claimed cannot exceed the tax paid on the fuel sold on
account that has been written off as a bad debt.
(3) A claim for refund of taxes based on a
bad debt must be filed within four years from the date the account is entered
in the distributor's, supplier's, permissive supplier's, or compressed natural
gas and liquefied natural gas dealer's books as a bad debt.
(b) Accelerated Credit. If a
licensed supplier or permissive supplier reported and remitted taxes on a tax
return for fuel sold on account to a purchaser who is licensed as a distributor
or importer at the time of the transaction and who subsequently fails to pay
the taxes to the seller, the licensed supplier or permissive supplier may take
a credit against tax liability on a subsequent tax return if the licensed
supplier or permissive supplier notifies the comptroller of the default.
(1) The notification to the comptroller for
credits claimed before June 19, 2009, must be made no later than 60 days after
the date of default. The notification to the comptroller for credits claimed on
or after June 19, 2009, must be made no later than 15 days after the date of
default.
(2) The notification to
the comptroller may be made by taking a credit on an original or amended return
or in writing. If the notification is in writing the credits may be taken
beginning with the return for the reporting month in which the notification is
made. When credits are taken on a return, the licensed supplier or permissive
supplier must submit with that return information required by the
comptroller.
(3) A licensed
supplier or permissive supplier who fails to notify the comptroller of the
default within the prescribed period in paragraph (1) of this subsection cannot
take a credit on a return, but may seek a refund of taxes based on bad debts
subject to the requirements provided by subsection (a) of this
section.
(4) For credits claimed
before June 19, 2009, all payments and credits made by the purchaser must be
applied to the purchaser's account to determine that non-payment amount, and if
the purchaser's account contains the purchase of goods or items other than
motor fuel, then the payments and credits to that account should be applied
ratably between motor fuel, including tax, and other goods or items sold to the
purchaser. The comptroller will only allow a credit of tax on the number of
gallons represented by the motor fuel portion of the unpaid amount. The maximum
amount of credit taken cannot exceed the tax paid on the fuel sold on account
that has been unpaid. For credits claimed on or after June 19, 2009, the
supplier or permissive supplier may claim credit on the amount of the deferred
tax payment defaulted by the distributor or importer.
(5) If the notification of default was timely
made to the comptroller as prescribed by paragraph (1) of this subsection,
credits for taxes that were not collected from the licensed purchaser must be
taken within four years from the date of default.
(6) A distributor or importer whose right to
defer payment of tax to a supplier or permissive supplier has been suspended
before June 19, 2009, may seek reinstatement of the right to defer payment when
all motor fuel tax liability has been satisfied and considered in good standing
with the comptroller. The distributor or importer must request that the
comptroller issue a notice of good standing for motor fuel taxes.
(7) A distributor or importer on which a
supplier or permissive supplier has notified the comptroller of default of the
deferred tax payment on or after June 19, 2009, loses the right to defer
payment of tax to that supplier or permissive supplier for one year following
the date that the supplier or permissive supplier notified the comptroller of
default. The distributor or importer may seek reinstatement of the right to
defer payment if the supplier or permissive supplier erroneously claimed a
credit or the default was due to circumstances beyond the distributor's or
importer's control, such as a bank error. Request for reinstatement of the
right to defer taxes should be made to the comptroller in writing.
(c) Credit card sales. The refund
for bad debts or credit for non-payment of taxes allowed under this section
does not apply to sales of fuel that is delivered into the supply tank of a
motor vehicle or motorboat when payment is made through the use and acceptance
of a credit card. For purpose of this section, a credit card is defined as any
card, plate, key, or like device by which credit is extended to and charged to
the purchaser's account. Sales made through the use and acceptance of a fuel
access card, where the only use of the access card is to record the quantity
and type of fuel or other information acquired merely for the purpose of
reconciling accounts and no credit is extended to the holder are eligible for
the bad debt credit. Credit sales to commercial or agricultural customers at
locations not open to the general public are eligible for the bad debt
credit.
(d) A supplier, permissive
supplier, distributor, or compressed natural gas and liquefied natural gas
dealer who collects all or part of an account that was written off as a bad
debt for which a refund was sought under subsection (a) of this section or who
collects all or part of the unpaid tax after a credit was taken under
subsection (b) of this section, must report and remit the collected amount on
an amended return for the reporting period in which the bad debt was originally
claimed. The comptroller may assess a deficiency, including 10% penalty at the
rate provided by Tax Code, §
111.060, if the amount
recovered is not reported and tax is not paid to the state during the month in
which the recovery is made. Interest will accrue from the date the credit was
taken.
(e) If the comptroller
determines that a taxpayer obtained a refund from the comptroller or took a
credit on a return when he knew or should reasonably have known that the
account or tax was collectible, the comptroller may issue a deficiency for the
tax plus 10% penalty and interest imposed from the date the refund was granted
or the credit taken. In addition, other penalties provided by this section or
by Tax Code, Chapters 111 or 162, may be imposed.
(f) The comptroller may issue a deficiency
assessment for tax, plus penalty and interest applicable under Tax Code,
Chapter 111, against the purchaser whose account was the subject of a refund
for bad debt obtained or a credit claimed by a distributor, supplier,
permissive supplier, or compressed natural gas and liquefied natural gas
dealer.
(g) Criminal and civil
penalties for issuing bad checks.
(1) A
person commits an offense if he issues a check to a licensed distributor,
licensed supplier, or permissive supplier for the payment of fuel knowing that
his account with the bank on which the check is drawn has insufficient funds
and if the payment is for an obligation that includes tax imposed by Tax Code,
Chapter 162, that is required to be collected by the licensed distributor,
licensed supplier, or permissive supplier. The offense is a Class C
misdemeanor.
(2) If a licensed
distributor, licensed supplier, or permissive supplier receives an insufficient
fund check causing a refund to be sought or a credit taken in accordance with
the provisions in this section, the licensed distributor, licensed supplier, or
permissive supplier may notify the comptroller of the receipt of the
insufficient fund check. When making the notification, a photocopy of both
sides of the returned check should be furnished.
(3) A person who issues an insufficient fund
check to a licensed distributor, licensed supplier, or permissive supplier for
payment of an obligation that includes tax imposed by Tax Code, Chapter 162,
that is required to be collected by the licensed distributor, licensed
supplier, or permissive supplier may be assessed a penalty equal to 100% of the
total amount of tax not paid to the licensed distributor, licensed supplier, or
permissive supplier. This penalty is in addition to any penalties, interest,
and collection actions authorized by the Tax Code.
