Sectional Analysis for HB 239

"An Act relating to the liability of motor fuel dealers for payment of tax imposed on certain credit transactions involving motor fuel sales or transfers that become worthless debt or on sales or transfers to persons who declare bankruptcy; and providing for an effective date"

Section 1: Explains the normal operating procedure for commercial transactions related to fuel sales. This explanation describes the reason for the tax, determining when the debt is worthless or partially worthless, and the impact upon the motor fuel dealer.

Section 2: Adds the following new section to AS 43.40, Motor Fuel Tax:

43.40.025(a) states when the dealer will be able to determine if a debt is wholly or partially worthless. AS 43.40.025(a)(1) and (2) are trigger mechanisms that determine the value of a debt owed to the fuel dealer.

43.40.025(b) explains the entitlement of credit on a worthless or partially worthless debt and the limitations for qualification.

43.40.025(c) explains that the fuel may not claim a refund but may use the entitlement as a credit toward future motor fuel tax debts. Sections 2(c)(1) and (2) state when the dealer may take the tax credit, and the procedures required before claiming the credit.

43.40.025(d) states that when a partially or wholly worthless debt that is collected at a later date, the dealer shall return payment to the Department of Revenue for all credit received.

43.25.40(e) requires a three-year period of time between requesting a credit for a partially or wholly worthless debt originating from the same person.

43.40.025(f) disallows the collection of a credit if the fuel dealer knows that a person to whom the fuel was sold has become a debtor under 11 USC or has ceased to pay the person’s debts in an ordinary manner.

43.40.025(g) defines "credit transaction."

Section 3: (a) states that this act applies to sales or transfers of motor fuel sale or transfers under AS 43.40.010-43.40.100. Section 3(b) states that the filing with the Internal Revenue Service as a deduction of income for applicability must be filed on or after the effective date of this legislation.

Section 4: provides the effective date of the legislation.

HB239/SA/1/20/98