DEPARTMENT OF STATE REVENUE
40-20060305.LOF
Letter of Findings: 06-0305
Utility Receipts Tax
For Tax Year 2005
NOTICE: Under IC § 4-22-7-7, this document is required to be published in the Indiana Register and is effective on its date of publication. It shall remain in effect until the date it is superseded or deleted by the publication of a new document in the Indiana Register. The publication of the document will provide the general public with information about the Department's official position concerning a specific issue.
ISSUE
I. Utility Receipts Tax–Bad Debt Deduction
Authority: IC § 6-2.3-1-4; IC § 6-2.3-5-2
Taxpayer protests the Department's disallowance of a bad debt deduction
STATEMENT OF FACTS
Taxpayer is a telecommunications company. Taxpayer uses an accrual method of accounting. During 2005, Taxpayer deducted certain bad debts and included bad debts previously deducted–but eventually recovered–on its utility receipts tax return. However, the Indiana Department of Revenue ("Department") determined that Taxpayer did not report recoveries of bad debts previously deducted. The Department assessed additional tax, interest, and penalty, which Taxpayer protested.
DISCUSSION
I. Utility Receipts Tax–Bad Debt Deduction
Taxpayer asserts that it reported the proper amount of bad debts on its utility receipts tax return. Under IC § 6-2.3-5-2 "[e]ach taxable year, a taxpayer that reports the taxpayer's gross receipts on an accrual basis is entitled to deduct bad debts from the taxpayer's gross receipts in the same manner provided in
IC 6-2.5-6-9." Bad debts previously deducted by a taxpayer are considered gross receipts of a taxpayer under §
IC 6-2.3-1-4. Taxpayer has provided sufficient information to conclude that the figures it reported as a bad debt deduction and as bad debt recoveries on its original return were proper.
FINDING
Taxpayer's protest is sustained.
Posted: 04/18/2007 by Legislative Services Agency
DIN: 20070418-IR-045070204NRA
Composed: May 05,2024 6:39:23AM EDT
A
PDF version of this document.
