2. a. A distributor shall be allowed a credit against the payment required pursuant to subsection c. of section 5 of P.L.2010, c.22 (C. 54:39-105) for the portion of a bad debt from the sale of motor fuel that constitutes motor fuel tax. The portion of a bad debt from the sale of motor fuel that constitutes motor fuel tax shall be determined from the statements required by subsection a. of section 5 of P.L.2010, c.22 (C. 54:39-105) to be delivered with each consignment of fuel to a purchaser and shall be that portion of the charge for fuel and the charge for tax that is the charge for tax, without regard to any other charges reflected on the statement.

b. The credit against the payment required pursuant to subsection c. of section 5 of P.L.2010, c.22 (C. 54:39-105) allowed pursuant to subsection a. of this section shall be applied on the report for the period during which the bad debt is written off as uncollectible in the claimant’s books and records and is eligible to be deducted for federal income tax purposes. If the amount of the credit allowed pursuant to subsection a. of this section exceeds the amount of motor fuel tax for the period during which the bad debt is written off, that amount of excess credit may be carried forward to subsequent periods, as necessary, and applied against liability in those periods.

c. For the purposes of this section:

“Bad debt” means “bad debt” as defined by section 166 of the federal Internal Revenue Code (26 U.S.C. § 166) as the basis for calculating bad debt recovery; provided however, the amount calculated pursuant to section 166 of the federal Internal Revenue Code (26 U.S.C. § 166) shall be adjusted to consider any amount paid on an account to be a payment for motor fuel and motor fuel tax, and any charges on the account for anything other than motor fuel and motor fuel tax shall be disregarded in calculating the amount of bad debt.

d. If the credit against the payment required pursuant to subsection c. of section 5 of P.L.2010, c.22 (C. 54:39-105) allowed pursuant to subsection a. of this section is taken for a bad debt and the debt is subsequently collected in whole or in part, any amount collected shall be considered payment for motor fuel, motor fuel tax, and any associated service charges on the account and the portion of the amount collected that constitutes motor fuel tax shall be paid and reported on the report filed for the period in which the collection is made.

L.2016, c.66, s.2.