Washington Department of Revenue has issued an emergency amended rule (Rule 196), which limites application of bad debt refunds.
The new law which amends rule WAC 458-20-196, states that Washington’s sales tax “bad debt” deduction may only be claimed by the actual seller after June 30, 2010
The new law clarifies that the seller’s right to claim a credit or refund is not assignable. If the original seller in the transaction that generated the bad debt has sold or assigned the bad debt instrument to a third-party with recourse, the original seller may claim a credit or refund under statute, but only after the debt instrument is reassigned by the third-party to the original seller.
The amended rule specifically recognizes that only the original seller in the transaction that generated the bad debt, or a certified service provider used by the seller, may claim a retail sales/use tax credit or refund on or after July 1, 2010.
