TAX NEWS - 2010

Florida Tax: Communications Services Tax - Changes to Reporting Credits for Bad Debts

Changes to Reporting Credits for Bad Debts

Dealers may report credits for bad debts by netting the credit directly against communications services tax due. Dealers may use a proportional allocation method based on current gross sales to determine the amount of bad debt attributable to the state or local jurisdiction. Dealers may also use other reasonable allocation methods approved by the Department.

Previously, dealers were required to report credits for bad debts by using the correct adjustment schedule of the Florida Communications Services Tax Return (Form DR-700016, Schedule III for direct-to-home satellite providers; Schedule IV for all other providers). Dealers may continue to use the appropriate adjustment schedule or may net the bad debt credit against tax due on Schedule I or Schedule II (for direct-to-home satellite providers).

The law change is retroactive to July 1, 2000. However, the retroactive effective date does not create the right to a refund, or require a governmental entity to refund any tax, penalty, or interest remitted to the Department before July 1, 2010.


Time Limit for Reporting Bad Debts Has Not Changed

Dealers must claim a credit or apply for a refund of bad debts within 12 months following the last day of the calendar year for which the bad debt was charged off on the dealer's federal income tax return. For more information about the time limit for claiming a credit or applying for a refund for bad debts, see TIP 04A19-01. TIP 04A19-01 is available on our web site at www.myflorida.com/dor.

A credit or refund is available only for specific accounts that have been written off.


Reporting Other Credits

Credits, other than credits for bad debts, must still be reported using the correct adjustment schedule (Form DR-700016, Schedule III for direct-to-home satellite providers; Schedule IV for all other providers).


Documentation

Regardless of the method used to report bad debt credits or other types of credits reported on the adjustment schedule, dealers must keep records to support all credit amounts reported.

References:  Section 202.29, Florida Statutes; Section 1, Chapter 2010-83 Laws of Florida (HB 281)