Ezel / Tax Rulings / CA

Could a retailer obtain a refund when an account became worthless only after its sales-tax account was closed?

Short answer Yes. The memorandum followed Board practice allowing the refund and read section 6055's deduction procedure as an available remedy, not the exclusive one.
State
CA
Ruling
Annotation 130.0093.500
Tax type
Sales and Use Tax
Issued
1978-10-30
Issued by
California State Board of Equalization
Requested by
Board staff asking whether a closed-out retailer could receive a refund for debts that later became bad
Topics
bad debts refund claim retailer liability sales tax
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1978. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1978
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an October 30, 1978 California State Board of Equalization internal memorandum applying the Board's then-current practice to a debt that became worthless after the retailer's account closeout. It gives a short statutory interpretation of section 6055 and does not describe the underlying debt, refund amount, proof, or procedural history. Current closeout, limitations, bad-debt, deduction, refund, and sales-tax rules may differ. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

The Board's practice was to refund tax when a retailer's debt became bad only after its sales-tax account had been closed, and the memorandum said this taxpayer should receive the same treatment.

It relied on section 6055's statement that the retailer is relieved from sales-tax liability. The remainder of the section could describe a deduction procedure that was available but not exclusive, allowing a refund when there was no open account against which to take the deduction.

Citations and references

  • California Revenue and Taxation Code section 6055 (as cited and partially quoted)

Source

Original ruling text

State of California

Memorandum

To:

Mr. Donald J. Hennessy

From:

T. P. Putnam

Subject:

Bad Debts Arising After Close Out
B--- Inc.

Board of Equalization

130.0093.500

October 30, 1978

SR -- XX-XXXXXX-010

Since tThe Board’s actual practice has been to allow refunds on debts which become bad after close out,. I agree that this taxpayer should have the benefit of the same interpretation. I believe [The] justification for this interpretation can be found in the first sentence of Section 6055, to the effect that the retailer “is relieved from liability for sales tax …” The rest of the section may be taken as describing a remedy which, though available, is not exclusive.

TPP:po
Attch: File
cc:

D. F. Brady
J. H. Murray

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