Rule 560-12-1-.06 - Cash or Accrual Basis(1)(a) Any person taxable under the Act for both cash and credit sales may report such sales on either the cash or accrual basis of accounting. Those persons reporting on the accrual basis shall report and remit the tax due on all transactions, whether credit or cash, occurring during the reporting period. The first return filed under the Act shall be deemed an election as to the method of reporting such sales. Provided, however, for the purposes of reporting under the Act, any person who takes a note or other written contract to pay and subsequently sells, assigns or transfers such contract, with or without recourse, shall be deemed to have received cash payment at the time of such sale or discount.(b) when any dealer sells, discounts or otherwise disposes of his accounts receivable, or discontinues business, such dealer shall include in his sales and use tax report for the current month the gross amount of such original sales on which sales tax has not been previously remitted to the State, irrespective of the sales price of such accounts.(2) After such election shall have been made, no person taxable under the Act shall change to any other basis without first: (a) Making written application to the Commissioner to do so stating reasons therefore in full detail.(b) Being granted permission by the Commissioner to change to such other basis and complying with such reasonable conditions, if any, as the Commissioner may attach to his approval.(3) Any person under the accrual basis may claim bad debt deductions where all the surrounding and attending circumstances indicate that such debt is worthless and uncollectible, and legal action to enforce payment would in all probability not result in the satisfaction of execution on a judgment. Any such taxpayer requesting claim for allowance for bad debts must accompany the return with a schedule showing, as to each debt claimed to be worthless and charged off, the amount of said debt together with the name of the person or persons owing such debt, when each was created, when each became due, what efforts were made to collect the same and why they were actually determined to be worthless. Such taxpayers who have established the reserve method of treating bad debts and who maintain proper reserve accounts for bad debts, or who adopt the reserve method of treating bad debts, may deduct from gross sales a reasonable amount for bad debts in lieu of a deduction for specific bad debt items.(4) what constitutes a reasonable addition to the reserve for bad debts must be determined in the light of the facts surrounding the particular class of business and in light of general conditions of business experience, and the Commissioner, if he deems any addition to a reserve for bad debts unreasonable, may require such taxpayer to list said individual bad debts as heretofore provided.(5) Any collection of bad debts previously taken as deductions shall be included in gross sales for the period in which the collection is made.Ga. Comp. R. & Regs. R. 560-12-1-.06
Ga. L. 1937-38, Extra Sess., pp. 77, et seq., as amended; Ga. Code Ann., Secs. 92-8405, 8406, 8409, 8427; Ga. L. 1951, pp. 360,385; Ga. Code Ann., Sec. 92-3438a.
Original Rule was filed on June 30, 1965.Amended: Filed August 26, 1974; effective September 15, 1974.