HB 239: "An Act relating to the liability of motor fuel dealers for payment of tax imposed on certain credit transactions involving motor fuel sales or transfers that become worthless debts or on sales or transfers to persons who declare bankruptcy; and providing for an effective date."
00HOUSE BILL NO. 239 01 "An Act relating to the liability of motor fuel dealers for payment of tax 02 imposed on certain credit transactions involving motor fuel sales or transfers that 03 become worthless debts or on sales or transfers to persons who declare 04 bankruptcy; and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. LEGISLATIVE FINDINGS. The legislature finds that 07 (1) the motor fuel tax is an excise tax designed ultimately to be payable by the 08 user of the fuel; for administrative and other reasons, the tax is required to be collected by the 09 motor fuel dealer from the person consuming or using the motor fuel, that is, from the user; 10 (2) in commercial transactions, it is customary to extend reasonable credit 11 terms; this business practice may result in a deferral or delay in the collection of both the debt 12 and the motor fuel tax by the dealer; after the extension of credit to the person to whom the 13 motor fuel is sold or transferred and before full payment by that person, the debt may become 14 wholly or partially worthless;
01 (3) when, during the period between the extension of credit and full payment, 02 the person to whom the motor fuel is sold or transferred becomes a debtor under the federal 03 bankruptcy laws, the automatic stay provisions of federal bankruptcy law preclude the dealer 04 from taking action to collect either the debt or the tax on the unpaid account; the federal 05 bankruptcy laws also determine the portion, if any, of the amount of the debt and tax to be 06 paid to creditors; 07 (4) a motor fuel dealer should not be burdened with the tax remittance 08 obligation if the tax liability on the transaction is significant and the underlying debt becomes 09 worthless or the person to whom the motor fuel has been sold or transferred becomes a debtor 10 under the federal bankruptcy laws; the tax liability and payment responsibility in these 11 situations should remain with the person. 12 * Sec. 2. AS 43.40 is amended by adding a new section to read: 13 Sec. 43.40.025. Handling of tax in a sale or transfer of motor fuel in 14 certain credit transactions. (a) This section applies when a dealer who sells or 15 otherwise transfers motor fuel in a credit transaction in the state subsequently 16 determines that the person to whom the motor fuel was sold or transferred in the credit 17 transaction 18 (1) has become a debtor under 11 U.S.C. (Federal Bankruptcy Act); or 19 (2) has ceased to pay the person's debts in the ordinary course of 20 business or cannot pay the person's debts as they become due, and the dealer treats the 21 person's debt as a worthless debt or partially worthless debt under 26 U.S.C. 166. 22 (b) A dealer is entitled to a credit in an amount equal to the tax remitted to 23 the department for the tax due on the sale or transfer of motor fuel in circumstances 24 described in (a) of this section if 25 (1) under this chapter, the sale or transfer results in a tax liability on 26 the transaction of $500 or more; and 27 (2) the dealer has submitted a statement and remitted the tax due on the 28 transaction under AS 43.40.010(c). 29 (c) The dealer may not claim or obtain a refund of the amount of a credit to 30 which the dealer is entitled under (b) of this section. The dealer may apply the credit 31 authorized by (b) of this section against the motor fuel tax payable under this chapter
01 by the dealer to the state 02 (1) during the month in which the dealer provides written notification 03 to the department of the claim of the credit accompanied by a copy of the bankruptcy 04 petition filed by the person to whom the motor fuel was sold or transferred; or 05 (2) in the first month after the dealer reports to the Internal Revenue 06 Service that the debt of the person to whom the motor fuel was sold or transferred is 07 a worthless debt or partially worthless debt by claiming the debt as a deduction under 08 26 U.S.C. 166. 09 (d) If, as to a credit transaction described in (a) of this section for which a 10 credit was claimed and allowed under (b) and (c) of this section, the person to whom 11 the motor fuel was sold or transferred later makes payment to the dealer of 12 (1) all of the debt due on the transaction, the dealer shall remit payment 13 to the department of the tax as required by AS 43.40.010; 14 (2) a portion of the debt due on the transaction, the dealer shall remit 15 payment to the department of a proportional part of the tax as required by 16 AS 43.40.010. 17 (e) The commissioner may not allow a dealer a credit under this section for 18 the credit transaction debt of a person if the dealer claiming the credit has, within the 19 three-year period immediately before making the claim of the credit, previously 20 submitted a statement under (c)(2) of this section that a credit transaction debt of that 21 person is a worthless debt or partially worthless debt under (c)(2) of this section. 22 (f) This section does not apply to a dealer who sells or otherwise transfers 23 motor fuel in a credit transaction after the dealer knows that the person to whom the 24 motor fuel was sold in the credit transaction has 25 (1) become a debtor under 11 U.S.C. (Federal Bankruptcy Act); or 26 (2) ceased to pay the person's debts in the ordinary course of business 27 or cannot pay the person's debts as they become due and the dealer treats the previous 28 credit transaction debt to the dealer as a worthless debt or partially worthless debt 29 under 26 U.S.C. 166. 30 (g) In this section, "credit transaction" means a transaction by which the 31 payment for motor fuel subject to the tax levied under this chapter is to be made at a
01 future date. 02 * Sec. 3. APPLICABILITY. (a) This Act applies to sales or transfers of motor fuel 03 subject to tax under AS 43.40.010 - 43.40.100 that are made on or after the effective date of 04 this Act. 05 (b) In AS 43.40.025(e), added by sec. 2 of this Act, reference to a previously 06 submitted credit transaction debt means a credit transaction debt that was reported to the 07 Internal Revenue Service as a deduction against income under 26 U.S.C. 166 on or after the 08 effective date of this Act because the credit transaction debt became worthless or partially 09 worthless. 10 * Sec. 4. This Act takes effect July 1, 1997.