Why can wholesalers claim a bad debt deduction?
Suppliers are required to act as creditors for the motor fuel taxes on sales to approved eligible purchasers. The bad debt deduction results when an approved eligible purchaser defaults in the payment of motor fuel taxes to a supplier on a deferred payment agreement. Wholesalers are not required to extend credit through deferred payment agreements. Wholesalers can choose not to extend credit to customers or can rescind offers of credit to collect the taxes due.
