(1) In computing tax there may be deducted from the measure of tax bad debts, as that term is used in 26 U.S.C. § 166, as amended or renumbered as of January 1, 2003, on which tax was previously paid.

(2) For purposes of this section, “bad debts” do not include:

(a) Amounts due on property that remains in the possession of the seller until the full purchase price is paid;

(b) Expenses incurred in attempting to collect debt;

(c) Sales or use taxes payable to a seller; and

(d) Repossessed property.

(3) If a deduction is taken for a bad debt and the debt is subsequently collected in whole or in part, the tax on the amount collected must be paid and reported on the return filed for the period in which the collection is made.

(4) Payments on a previously claimed bad debt must be applied under RCW 82.08.037(4) and 82.12.037, according to such rules as the department may prescribe.

Retroactive effective date—Effective date—2004 c 153: See note following RCW 82.08.0293.

Intent—1980 c 37: See note following RCW 82.04.4281.