88R4288 CJD-F     By: Longoria H.B. No. 3389       A BILL TO BE ENTITLED   AN ACT   relating to a refund of motor vehicle sales taxes paid on certain   bad debt.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subchapter C, Chapter 152, Tax Code, is amended   by adding Section 152.049 to read as follows:          Sec. 152.049.  REFUND FOR TAX PAID ON BAD DEBT. (a)  In this   section:                (1)  "Bad debt" means the total principal amount of a   debt remaining unpaid from a retail installment transaction that   was charged off for federal income tax purposes.                (2)  "Lender" means a person:                      (A)  that holds or previously held a retail   account purchased directly from a seller required by this chapter   to collect the sales tax imposed by Section 152.021 who remitted the   tax to the tax assessor-collector; and                      (B)  that:                            (i)  is an authorized lender under Chapter   341, Finance Code; or                            (ii)  holds a motor vehicle sales finance   license under Subchapter F, Chapter 348, Finance Code.                (3)  "Passenger car" means a motor vehicle, including a   motorcycle, used to transport persons and designed to accommodate   10 or fewer passengers, including the operator.                (4)  "Retail installment transaction" has the meaning   assigned by Section 348.001, Finance Code.          (b)  A seller who is required by this chapter to collect the   sales tax imposed by Section 152.021 may file a claim with and is   entitled to receive from the comptroller a refund of sales taxes   paid on the seller's bad debt in the amount computed under   Subsection (c) if:                (1)  the tax was remitted to the tax assessor-collector   on a passenger car sold in a retail installment transaction;                (2)  the seller determines that the account associated   with the debt is uncollectible and worthless; and                (3)  the account associated with the debt is written   off as a bad debt on the accounting books and deductible on the   federal income tax return of the seller.          (c)  The amount of the refund is equal to the amount computed   by:                (1)  allocating the remaining unpaid principal balance   of the account associated with the bad debt between sales tax,   taxable charges, and nontaxable charges in a manner that is   proportional to the allocation of the original unpaid balance of   the account between sales tax, taxable charges, and nontaxable   charges; and                (2)  multiplying the amount of the unpaid principal   balance of the account allocated to taxable charges as determined   under Subdivision (1) by the tax rate prescribed by Section   152.021.          (d)  If the seller assigns the retail installment contract to   a lender in a retail installment transaction, the lender may file a   claim with and is entitled to receive from the comptroller the   refund under Subsection (b), provided that:                (1)  the requirements of Subsection (b) are satisfied   by the seller or the lender; and                (2)  the seller has not received a refund for sales   taxes paid on the bad debt that is the subject of the lender's   claim.          (e)  If after receiving a refund under this section a seller   or lender collects all or part of the principal amount of the bad   debt for which the seller or lender claimed the refund, the seller   or lender shall deduct from the next claim for a refund the seller   or lender files under this section an amount equal to the amount   computed by:                (1)  allocating the amount collected by the seller or   lender between sales tax, taxable charges, and nontaxable charges   in a manner that is proportional to the allocation of the original   unpaid balance of the account between sales tax, taxable charges,   and nontaxable charges; and                (2)  multiplying the amount collected by the seller or   lender allocated to taxable charges as determined under Subdivision   (1) by the tax rate prescribed by Section 152.021.          (f)  This section does not apply to a seller-financed sale.          SECTION 2.  The change in law made by this Act does not   affect tax liability accruing before the effective date of this   Act.  That liability continues in effect as if this Act had not been   enacted, and the former law is continued in effect for the   collection of taxes due and for civil and criminal enforcement of   the liability for those taxes.          SECTION 3.  This Act takes effect September 1, 2023.