HOUSE BILL No. 4509


     March 13, 1997, Introduced by Reps. Dobb, Galloway, Hammerstrom, Whyman, Green, Brackenridge, Wetters, Middaugh, Rhead, Crissman, Raczkowski, Bodem, Freeman, Profit, Martinez, Kukuk, Walberg, Gustafson, Cassis, McBryde, Baade, Jellema, Agee, Goschka, Middleton, Olshove, Wallace, Wojno, Hanley, London, DeVuyst, Law, Palamara, Gernaat,
Llewellyn and Perricone and referred to the Committee on Tax Policy.


        A bill to amend 1937 PA 94, entitled

   "Use tax act,"

   (MCL 205.91 to 205.111) by adding section 8.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         SEC. 8.  (1) A SELLER REQUIRED TO COLLECT THE TAX UNDER THIS

 2    ACT WHO PROVIDES A SERVICE DESCRIBED UNDER SECTION 3A(A) OR (C)

 3    MAY DEDUCT THE AMOUNT OF AN UNCOLLECTIBLE ACCOUNT FROM THE AMOUNT

 4    OF THE PRICE OF SERVICES USED TO DETERMINE THE TOTAL TAX LIABIL-

 5    ITY UNDER THIS ACT.  THE AMOUNT OF THE PRICE UPON WHICH THE TAX

 6    LIABILITY IS CALCULATED MUST BE CHARGED OFF AS UNCOLLECTIBLE ON

 7    THE BOOKS OF THE SELLER.  IF THE SELLER PROVIDES TAXABLE AND NON-

 8    TAXABLE SERVICES, THE DEDUCTION SHALL EQUAL THE FULL AMOUNT OF

 9    THE UNCOLLECTIBLE ACCOUNT ONLY IF THE UNCOLLECTIBLE ACCOUNT IS

10    DOCUMENTED AS A TAXABLE TRANSACTION IN THE SELLER'S RECORDS.  IF

11    DOCUMENTATION IS NOT AVAILABLE, THE MAXIMUM DEDUCTION FOR ANY


   00140'97                                                 CSC
                                              2

 1    UNCOLLECTIBLE ACCOUNT IS EQUAL TO THE AMOUNT DETERMINED BY

 2    MULTIPLYING THE UNCOLLECTIBLE ACCOUNT BY THE QUOTIENT OF THE

 3    PRICE OF SERVICES TAXED UNDER THIS ACT PROVIDED DURING THE IMME-

 4    DIATELY PRECEDING CALENDAR YEAR DIVIDED BY THE PRICE OF ALL SERV-

 5    ICES PROVIDED DURING THE IMMEDIATELY PRECEDING CALENDAR YEAR

 6    WHETHER TAXED OR NOT TAXED UNDER THIS ACT.

 7         (2) IF A PERSON PAYS ALL OR A PART OF AN UNCOLLECTIBLE

 8    ACCOUNT AFTER THE SELLER HAS CLAIMED A DEDUCTION, THE SELLER IS

 9    LIABLE FOR THE AMOUNT OF TAXES DEDUCTED FOR THAT PORTION OF THE

10    UNCOLLECTIBLE ACCOUNT AND SHALL REMIT THE TAXES IN HIS OR HER

11    NEXT PAYMENT TO THE DEPARTMENT.

12         (3) THE DEPARTMENT MAY REQUIRE SUPPORTING EVIDENCE FOR ANY

13    CLAIM OF AN UNCOLLECTIBLE ACCOUNT UNDER THIS SECTION.

14         (4) AS USED IN THIS SECTION, "UNCOLLECTIBLE ACCOUNT" MEANS

15    ANY PORTION OF A DEBT RELATED TO THE PROVISION OF A SERVICE FOR

16    WHICH THE PRICE IS NOT DEDUCTIBLE OR EXCLUDABLE THAT HAS BECOME

17    WORTHLESS OR UNCOLLECTIBLE IN THE TIME PERIOD BETWEEN THE DATE

18    WHEN TAXES ACCRUE TO THE STATE FOR THE SELLER'S IMMEDIATELY PRE-

19    CEDING USE TAX RETURN AND THE DATE WHEN TAXES ACCRUE TO THE STATE

20    FOR THE CURRENT RETURN AND THAT IS ELIGIBLE TO BE CLAIMED OR

21    COULD BE ELIGIBLE TO BE CLAIMED IF THE SELLER KEPT ACCOUNTS ON AN

22    ACCRUAL BASIS AS A DEDUCTION UNDER SECTION 166 OF THE INTERNAL

23    REVENUE CODE.  AN UNCOLLECTIBLE ACCOUNT DOES NOT INCLUDE ANY

24    INTEREST ON THE PRICE, EXPENSES INCURRED IN ATTEMPTING TO COLLECT

25    ANY ACCOUNT RECEIVABLE OR ANY PORTION OF THE DEBT RECOVERED, OR

26    ANY ACCOUNT RECEIVABLE THAT HAS BEEN SOLD TO A THIRD PARTY.





   00140'97          Final page.                            CSC