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5.16.128 Deduction of bad debts.
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A. A person filing a return under WMC 5.16.120 may deduct sales found to be worthless. The bad debt may be deducted when it meets the following:

1. The sales tax was paid on an accrual basis; and

2. Is written off as uncollectible in the person’s books and records; and

3. Qualifies as a deduction for federal income tax purposes under the Internal Revenue Code of 1986.

B. If the amount of bad debt exceeds the amount of taxable sales during the period that the bad debt is written off, a person may file a refund claim with the city.

C. If a bad debt deducted under subsection (A) of this section is subsequently collected, the person who claimed the deduction shall pay the tax levied under WMC 5.16.030 on the amount collected. For purposes of this subsection, any payments made on a debt or account are applied:

1. First to the taxable price of the property or service and the tax levied under WMC 5.16.030 on the property or service; then

2. To interest, service charges, and any other charges. (Ord. 16-14 § 10, 2016)