Ga. Comp. R. & Regs. R. 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.
Notes
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