If a vendor goes out of business, is it possible to take a credit on your sales and use tax return in a future period?


The answer to your question will likely depend on the state because each state has different regulations for their sales and use tax code. In researching for instance in the state of Georgia, there does not seem to be a credit for bad debt. As far as the state is concerned, the exchange of product or services has occurred, resulting in a situation where sales or use tax is charged. The state does not appear to be interested in taking the credit risk and of course wants its money, so it either gets it with the sales tax or the use tax. We recommend that you check with your tax advisor on the specific state or states where you have had the bad debt issue. See State Tax Agencies on TAPN for links to the various state sites for sales and use tax and contact information.

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