Washington Bad Debt Tax Credit Schedule B

Bad Debt Tax Credit Schedule B
REV 40-0011-1
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B
L
O
C
K

Attached
,

Tax Return

1

SCHEDULE B
ATTACH TO COMBINED EXCISE TAX RETURN

B
L
O
C
K

NAME

2

CITY, STATE, ZIP

ACCOUNT ID

FIRM NAME
STREET ADDRESS

CREDIT FOR SALES TAXES PAID ON BAD DEBTS
INSTRUCTIONS

1. When to File Schedule B
Complete Schedule B only if the sales tax rate at the time of sale is different from the current rate. When the rates are the same,
take a bad debt deduction on the retailing B&O and retail sales tax lines.
2. Bad Debts
a) Bad debt credits occur when income reported by a taxpayer is not received. Taxpayers may claim a credit for the tax
reporting period on which the debt is written off as uncollectable. A bad debt tax credit is allowed only for retail sales tax
which has been remitted to the department but has become uncollectible and written off for IRS purposes.
b) Credits, refunds, and deductions for bad debts are based on federal standards for worthlessness under section 166 of the
Internal Revenue Code. If a federal income tax return is not required to be filed, the taxpayer is eligible for a bad debt
credit, refund, or deduction on the Washington tax return if the taxpayer would be eligible for the federal bad debt
deduction.
c) If a debt has been partially paid, a credit is allowed for only the uncollected portion of the debt.
d) Reserve Method – Businesses using the Reserve Method for bad debts may take a credit for bad debts when:
 The reserve method of reporting bad debts is allowed for Federal Tax purposes by the Internal Revenue
Service; or
 When permission is granted by the Department of Revenue.
e) No credit may be claimed for bad debts written off more than four years prior to the current year.
3. To Complete This Form
a) Block 1: Enter the reporting period from page one of the tax return you are about to file.
b) Block 2: Enter the name and address of the business. Important: include your Account ID.
c) Sales transactions should be grouped by date of sale and then sorted by location code (see the location code list online at
dor.wa.gov. Enter “location codes” into the search box of the main menu.).
d) Column 1: Enter the sale month and year as numbers (e.g. November 2009 = 11/09).
e) Column 2: Enter the location code of the sale. If sales were made during this month in multiple locations, use a different line
for each location code.
f) Column 3: Enter the taxable value of sales claimed as bad debts for each location code.
g) Column 6: Enter the total amount of state and local sales taxes paid to the state [on the bad debts listed] for each location
code.
h) Columns 4 & 5: For each tax entry in column 6, break the tax amount into the state and local sales tax portions. Include any
King County Food & Beverage and RTA, if applicable.
i) If you need more space, use the back of this sheet. You may photocopy the form for more sheets. Write your Tax
Registration Number on each page.
j) Total all column 6 entries. Enter this amount in the “Total” block on this form and on the “BAD DEBT TAX CREDIT” line on
the Combined Excise Tax Return.
k) Attach Schedule B behind the Combined Excise Tax Return.
Column 1

Column 2

Date Of
Sale
(MM/YY)

4 Digit
Location
Code

Column 3

Value of Sale
Written Off

Column 4

State Sales
Tax Claimed

Column 5

Column 6

Local Sales
Tax Claimed

Total State And
Local Taxes
Claimed

For Department
Use Only

For Department
Use Only

$0.00

$0.00
$0.00
$0.00

$0.00
SUB-TOTAL

$0.00

Signature
Phone
REV 40 0011-1 (6/25/19)

COMBINED TOTAL [801]
All sales taxes claimed:

0.00

Post to BAD DEBT CREDIT line
on Combined Excise Tax Return.

Page

B
L
O
C
K

of

Attached To
,

Tax Return

1

SCHEDULE B
ATTACH TO COMBINED EXCISE TAX RETURN

Column 1

Column 2

Date Of
Sale
(MM/YY)

4 Digit
Location
Code

Column 3

Value of Sale
Written Off

B
L
O
C
K

NAME

2

CITY, STATE, ZIP

ACCOUNT ID

FIRM NAME
STREET ADDRESS

Column 4

State Sales
Tax Claimed

Column 5

Column 6

Local Sales
Tax Claimed

Total State And
Local Taxes
Claimed

SUB-TOTAL

For Department
Use Only

For Department
Use Only

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

For tax assistance or to inquire about the availability of this document in an alternate format, please call 360-705-6705.
Teletype (TTY) users may use the Washington State Relay Service by calling 711.
REV 40 0011-(6/25/19)

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