(1) (a) In this subsection, “bad debt” means the portion of the sales price or purchase price that the seller has previously reported as taxable under this subchapter, and for which the seller has paid the tax, and that the seller may claim as a deduction under section 166 of the Internal Revenue Code. “Bad debt” does not include financing charges or interest, sales or use taxes imposed on the sales price or purchase price, uncollectible amounts on tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) that remain in the seller’s possession until the full sales price or purchase price is paid, expenses incurred in attempting to collect any debt, debts sold or assigned to 3rd parties for collection, and repossessed property or items. (b) A seller may claim as a deduction on a return under s. 77.58 the amount of any bad debt that the seller writes off as uncollectible in the seller’s books and records and that is eligible to be deducted as a bad debt for federal income tax purposes, regardless of whether the seller is required to file a federal income tax return. A seller who claims a deduction under this paragraph shall claim the deduction on the return under s. 77.58 that is submitted for the period in which the seller writes off the amount of the deduction as uncollectible in the seller’s books and records and in which such amount is eligible to be deducted as bad debt for federal income tax purposes. If the seller subsequently collects in whole or in part any bad debt for which a deduction is claimed under this paragraph, the seller shall include the amount collected in the return filed for the period in which the amount is collected and shall pay the tax with the return. (c) For purposes of computing a bad debt deduction or reporting a payment received on a previously claimed bad debt, any payment made on a debt or on an account is applied first to the price of the tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or service sold, and the proportionate share of the sales tax on that property, or items, property, or goods under s. 77.52 (1) (b) , (c), or (d), or service, and then to interest, service charges, and other charges related to the sale. (d) A seller may obtain a refund of the tax reported for any bad debt amount deducted under par. (b) that exceeds the amount of the seller’s taxable sales as provided under s. 77.59 (4), except that the period for making a claim as determined under s. 77.59 (4) begins on the date on which the return on which the bad debt could be claimed would have been required to be submitted to the department under s. 77.58. (e) If a seller is using a certified service provider, the certified service provider may claim a bad debt deduction under this subsection on the seller’s behalf if the seller has not claimed and will not claim the same deduction. A certified service provider who receives a bad debt deduction under this subsection shall credit that deduction to the seller and a certified service provider who receives a refund under this subsection shall submit that refund to the seller. (f) If a bad debt relates to the retail sales of tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or taxable services that were sourced to this state and to one or more other states, as determined under s. 77.522, the total amount of such bad debt shall be apportioned among the states to which the underlying sales were sourced in a manner prescribed by the department to arrive at the amount of the deduction under par. (b). 4750 and 9437 (2L), and 2017 Wis. Act 59, ss. 2265 and 9438 (2), to read: (1) (a) In this subsection: 1. “Bad debt” means the portion of the sales price or purchase price that the seller has previously reported as taxable under this subchapter, and for which the seller has paid the tax, and that the seller or lender may claim as a deduction under section 166 of the Internal Revenue Code. “Bad debt” does not include financing charges or interest, sales or use taxes imposed on the sales price or purchase price, uncollectible amounts on tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) that remain in the seller’s possession until the full sales price or purchase price is paid, expenses incurred in attempting to collect any debt, debts sold or assigned to 3rd parties for collection, not including dual purpose credit debts and private label credit debts, and repossessed property or items. 2. “Dual purpose credit card” means a credit card that may be used as a private label credit card or to make purchases from persons other than the seller whose name or logo appears on the card or the seller’s affiliates or franchisees, if the credit card issuer is able to determine the sales receipts of the seller and the seller’s affiliates or franchisees apart from any sales receipts of unrelated persons. 3. “Dual purpose credit debt” means accounts and receivables that result from credit sale transactions using a dual purpose credit card, but only to the extent the account or receivable balance resulted from purchases made from the seller whose name or logo appears on the card. 4. a. “Lender” means any person who owns a private label credit debt, an interest in a private label credit debt, a dual purpose credit debt, or an interest in a dual purpose credit debt, if the person purchased the debt or interest directly from a seller who remitted the tax imposed under this subchapter or from a third party or if the person originated the debt or interest pursuant to the person’s contract with the seller who remitted the tax imposed under this subchapter or with a third party. b. “Lender” includes any person who is a member of the same affiliated group, as defined under section 1504 of the Internal Revenue Code, as a lender or is an assignee or other transferee of a lender. 5. “Private label credit card” means any charge card or credit card that identifies a seller’s name or logo on the card and that may be used only for purchases from that seller or from any of the seller’s affiliates or franchisees. 6. “Private label credit debt” means accounts and receivables that result from credit sale transactions using a private label credit card, but only to the extent the account or receivable balance resulted from purchases made from the seller whose name or logo appears on the card. (b) A seller may claim as a deduction on a return under s. 77.58 the amount of any bad debt that the seller or lender writes off as uncollectible in the seller’s or lender’s books and records and that is eligible to be deducted as a bad debt for federal income tax purposes, regardless of whether the seller or lender is required to file a federal income tax return. A seller who claims a deduction under this paragraph shall claim the deduction on the return under s. 77.58 that is submitted for the period in which the seller or lender writes off the amount of the deduction as uncollectible in the seller’s or lender’s books and records and in which such amount is eligible to be deducted as bad debt for federal income tax purposes. If the seller or lender subsequently collects in whole or in part any bad debt for which a deduction is claimed under this paragraph, the seller shall include the amount collected in the return filed for the period in which the amount is collected and shall pay the tax with the return. (bm) For purposes of par. (b), a seller may compute the seller’s bad debt de- SALES AND USE TAXES; MANAGED FOREST LANDS; OTHER TAXES duction using an estimate, if the department approves the method for computing the estimate. The department may audit the seller’s books and records to review the estimate and adjust the estimate as necessary to reflect the actual allowable bad debt amount. (c) For purposes of computing a bad debt deduction or reporting a payment received on a previously claimed bad debt, any payment made on a debt or on an account is applied first to the price of the tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or service sold, and the proportionate share of the sales tax on that property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or service, and then to interest, service charges, and other charges related to the sale. If payment is received on an account for which the balance reflects multiple sales transactions, the payment is applied to the sales transactions in the same order in which the sales transactions occurred. (d) A seller may obtain a refund of the tax reported for any bad debt amount deducted under par. (b) that exceeds the amount of the seller’s taxable sales as provided under s. 77.59 (4), except that the period for making a claim as determined under s. 77.59 (4) begins on the date on which the return on which the bad debt could be claimed would have been required to be submitted to the department under s. 77.58. (e) If a seller is using a certified service provider, the certified service provider may claim a bad debt deduction under this subsection on the seller’s behalf if the seller has not claimed and will not claim the same deduction. A certified service provider who receives a bad debt deduction under this subsection shall credit that deduction to the seller and a certified service provider who receives a refund under this subsection shall submit that refund to the seller. (f) If a bad debt relates to the retail sales of tangible personal property, or items, property, or goods under s. 77.52 (1) (b), (c), or (d), or taxable services that were sourced to this state and to one or more other states, as determined under s. 77.522, the total amount of such bad debt shall be apportioned among the states to which the underlying sales were sourced in a manner prescribed by the department to arrive at the amount of the deduction under par. (b). (1g) A marketplace provider who collects and remits tax on behalf of a marketplace seller under s. 77.523 may claim a bad debt deduction under this subsection if either the marketplace provider or marketplace seller may claim a deduction under section 166 of the Internal Revenue Code for the sales transaction. A marketplace seller may not claim a deduction under this subsection for the same transaction. (2) If a lessor of tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) has reimbursed the vendor for the sales tax on the sale of the property, items, or goods by the vendor to the lessor, the tax due from the lessor on the rental receipts may be offset by a credit equal to the tax otherwise due on the rental receipts from the property, items, or goods for the reporting period. The credit shall expire when the cumulative rental receipts equal the sales price upon which the vendor paid sales taxes to this state. (3) If a purchaser of tangible personal property or items, property, or goods under s. 77.52 (1) (b) , (c), or (d) has reimbursed the vendor of the property, items, or goods for the sales tax on the sale and subsequently, before making any use of the property, items, or goods other than retention, demonstration, or display while holding it for sale or rental, makes a taxable sale of the property, items, or goods the tax due on the taxable sale may be offset by the tax reimbursed. (4) A seller may claim a deduction on any part of the sales price or purchase price that the seller refunds in cash or credit as a result of returned tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) or adjustments in the sales price or purchase price after the sale has been completed, if the seller has included the refunded price in a prior return made by the seller and has paid the tax on such price, and if the seller has returned to the purchaser in cash or in credit all tax previously paid by the purchaser on the amount of the refund at the time of the purchase. A deduction under this subsection shall be claimed on the return for the period in which the refund is paid. (5) No reduction in the amount of tax payable by the retailer is allowable in the event that tangible personal property or items, property, or goods under s. 77.52 (1) (b), (c), or (d) sold on credit are repossessed except where the entire consideration paid by the purchaser is refunded to the purchaser or where a credit for a worthless account is allowable under sub. (1). (6) A purchaser who is subject to the use tax on the storage, use, or other consumption of fuel may claim a deduction from the purchase price that is subject to the use tax for fuel taxes refunded by this state or the United States to the purchaser that is included in the purchase price of the fuel. (7) For sales tax purposes, if a retailer establishes to the department’s satisfaction that the sales tax has been added to the total amount of the sales price and has not been absorbed by the retailer, the total amount of the sales price shall be the amount received exclusive of the sales tax imposed. (8) (a) A sale or purchase involving transfer of ownership of tangible personal property, or items or property under s. 77.52 (1) (b) or (c), is completed at the time when possession is transferred by the seller or the seller’s agent to the purchaser or the purchaser’s agent. For purposes of this paragraph, a common carrier or the U.S. postal service shall be considered the agent of the seller, regardless of any f.o.b. point and regardless of the method by which freight or postage is paid. (b) 1. Except as provided in subd. 2., a sale or purchase involving a digital good under s. 77.52 (1) (d) is completed at the time when possession is transferred by the seller or the seller’s agent to the purchaser or the purchaser’s agent or when the digital good is first used, whichever comes first. 2. A sale or purchase of a product transferred electronically, including a digital good under s. 77.52 (1) (d), that is sold by subscription, is completed at the time when the payment for the subscription is due to the seller. For purposes of this subdivision, “subscription” means an agreement with a seller that grants the consumer the right to obtain products transferred electronically from within one or more product categories having the same tax treatment, in a fixed quantity or for a fixed period of time, or both. (10) A retailer who receives an exemption certificate that complies with s. 77.52 (14) after reporting a sale covered by the exemption certificate as taxable, having paid the tax to the department, and having returned to the buyer in cash or in credit all tax previously paid by the buyer, may claim a deduction on the return filed for the reporting period in which the exemption certificate is received, for the sales price or purchase price previously reported as taxable. This subsection does not apply if the reporting period in which the exemption certificate is received is in a taxable year of the retailer that is subsequent to the taxable year of the retailer in which the sale covered by the exemption certificate occurred. For purposes of this subsection, the taxable year of the retailer is the same as the retailer’s taxable year under ch. 71. (11) A marketplace seller may claim as a deduction on a return under s. 77.58 the amount of the sales price for which the marketplace seller received notification under s. 77.523 (2).
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