Bad car company credit finance

A company providing automobile financing to retail car dealerships in Maine did not qualify for recovery of Maine sales and use tax for installment contracts that went into default because the company did not conduct retail sales or pay sales tax in the state.

Under the Maine sales and use tax bad debt statute, tax paid by retailers on accounts charged off as worthless may be credited against the tax due on a subsequent report filed within three years. This credit is limited to those who conduct retail sales in the state or who are required to register as retailers in the state. In this case, the finance company paid car dealerships the full amount under the installment contracts including Maine sales tax due, and the dealers remitted the full sales tax amount to the state. The company was not conducting retail sales and it did not pay tax in the state against which the recovery could be credited. The fact that the company took assignment of the loan accounts from the dealers was irrelevant because the assignment did not make the company a retailer and so did not qualify it to obtain the refund. (Chrysler Financial Co., LLC, Maine Superior Court, No. AP-00-41, June 13, 2002.)

Copyright CCH Incorporated: Federal and State Tax Sep 16, 2002
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