26-57-211. Wholesaler to pay taxes — Reports and remittance of tax — Definition.

26-57-211. Wholesaler to pay taxes — Reports and remittance of tax — Definition. (a)(1)(A) The taxes levied by this subchapter shall be reported and paid by wholesalers permitted under § 26-57-214. (B) However, retailers shall be liable for reporting and paying these taxes when a retailer purchases tobacco products directly from a manufacturer or from a wholesaler or distributor not permitted under § 26-57-214. (2)(A) A taxpayer who fails to report and remit the tobacco tax due on tobacco products purchased from manufacturers, distributors, or wholesalers who are not permitted under § 26-57-214 shall be subject to the following penalties: (i) Five percent (5%) of the total tobacco tax due for the first offense; (ii) Twenty percent (20%) of the total tobacco tax due for the second offense; and (iii) Twenty-five percent (25%) of the total tobacco tax due for the third and any subsequent offenses. (B) In addition, the taxpayer's retail permit shall be revoked for a period of ninety (90) days for the third and any subsequent offenses. (3) This subsection does not affect § 26-57-228. (4) As provided in § 26-57-244, the Secretary of the Department of Finance and Administration may make a direct assessment of excise tax against a person in possession of an untaxed tobacco product or unstamped cigarettes. (b)(1) On or before the fifteenth day of each month, every wholesaler shall file a report for the previous month's tax collections with the secretary. (2) The report shall provide the information prescribed by the secretary. (c)(1)(A)(i) When the report under subsection (b) of this section is filed, the wholesaler shall remit to the secretary with the report ninety-eight percent (98%) of the tax due for the previous month. (ii) The discount of two percent (2%) under subdivision (c)(1)(A)(i) of this section does not apply to taxes due under § 26-57-804 or § 26-57-805. (B) If the stamps deputy fails to remit the tax on or before the twentieth day of each applicable month, the wholesaler forfeits his or her claim to the discount described in subdivision (c)(1)(A) of this section, and the wholesaler shall remit to the secretary one hundred percent (100%) of the amount of tax due, plus any penalty or interest due. (2) If the payment of any tax due becomes delinquent, the taxpayer shall remit the full amount of the tax due plus penalty. (d)(1) The secretary may add a penalty of ten percent (10%) of the tax due to the tax due for the failure to file a report or for the failure to remit the taxes at the time required, or for both. (2) If the secretary determines there has been an attempt to evade the tax, a penalty of not more than fifty percent (50%) of the tax due shall be added to the tax due. (e)(1)(A) In computing the amount of tax due under this subchapter and any act supplemental to this subchapter, a wholesaler may deduct the cost of cigarette tax stamps and tobacco taxes lost through bad debts. (B) Any deduction taken or refund paid attributable to bad debts shall not include interest. (C) A bad debt incurred for a sale made before August 13, 1993, shall not be deducted. (D) A bad debt must be deducted within three (3) years of the date of the sale for which the debt was incurred. (E) If a deduction is taken for a bad debt and the taxpayer subsequently collects the debt in whole or in part, the tax on the amount so collected shall be paid and reported on the next return due after the collection. (2)(A) As used in this section, “bad debt” means any cigarette or tobacco tax that the wholesaler legally claims as a bad debt deduction for federal income tax purposes. (B) “Bad debt” includes without limitation a worthless check, a worthless credit card payment, and an uncollectible credit account. (C) “Bad debt” does not include financing charges or interest, an uncollectible amount on property that remains in the possession of the taxpayer or vendor until the full purchase price is paid, expenses incurred in attempting to collect any debt, a debt sold or assigned to a third party for collection, and repossessed property.