Louisiana Denies Dillard’s Refund Claim for Sales Tax on Bad Debt Purchases

• Dillard’s department store was denied a refund of sales tax remitted for purchases made with store credit cards
• The store had an agreement with Wells Fargo Bank, NA for store-branded credit cards
• When customers failed to pay off their store credit cards, Wells Fargo would write off bad debts on their federal return
• Dillard’s submitted a refund claim for taxes remitted on bad debt, which was initially granted but later determined to be invalid
• The Louisiana Court of Appeals upheld the Department’s claim that Dillard’s did not have the right to claim a refund for taxes paid on bad debt
• The court pointed to Louisiana’s statute defining the terms of refunds for bad debts, stating that refunds are not authorized for bad debts on sales financed by lending institutions
• Taxpayers should examine statutes, regulations, and department policy to ensure they are allowed to claim tax overpaid

Source: salestaxinstitute.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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