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Schedule A

Additional Information Required For Bad Debt Credit Instructions

• Complete Schedule A to apply for a credit for a bad debt.

• A separate Schedule A must be completed for each invoice charged-off.

• Credit is only valid for cigarette stamps.

• The following must be attached to Schedule A:

1 Copy of unpaid invoice. Invoice must contain:

- Customer name;

- Customer address;

- Customer phone;

- Invoice number;

- Invoice date (must be at least 75 days earlier than date of application);

- Invoice amount;

- Delivery date; and

- Number of cartons of cigarettes shipped.

2 Copy of delivery receipt

3 Copy of at least two collection letters to customer. At least one of the collection letters must be a “Demand for Payment”

sent by Certified Mail at least 45 days after the date of the invoice. In lieu of the collection letters, the stamping agent

may submit a copy of a judgement.

• “Bad debt” means the taxes attributable to any portion of a debt that is related to a sale of cigarettes that has become

worthless or uncollectible in the time period between the date when taxes accrue to the department for the stamping agent’s

preceding tax return and the date when the taxes accrue to the department for the present return, and that is eligible to

be claimed, or could be eligible to be claimed if the stamping agent kept accounts on an accrual basis, as a deduction

pursuant to section 166 of the Internal Revenue Code.

• A bad debt does not include:

- Any interest on the wholesale price of cigarettes;

- Uncollectible amounts on property that remain in the possession of the stamping agent until the full purchase price

is paid;

- Expenses incurred in attempting to collect any account receivable or any portion of the debt recovered;

- Any accounts receivable that have been sold to a third party for collection; nor

- Repossessed property.

• Any bad debt credit claimed on Form TT-12 must also be reported on Form TT-13/TT-14, Monthly Report of Cigarette

Stamping Agent.

• If all or part of a bad debt with respect to which a stamping agent claimed a deduction is recovered, the stamping agent

shall be liable for the amount of taxes deducted in connection with that portion of the debt for which payment is received

and shall include this amount on its next Order for Virginia Cigarette Tax Stamps, (Form TT-2 line 9).

• A subsequent recovery on an invoice should be calculated as follows:

(cigarette tax/total invoice) X amount of invoice recovered = tax payable

• A credit will only be granted for debts which have been deemed worthless or uncollectible on or after July 1, 2006.

Form Tt-12 - Virginia Application For Tobacco Tax Credit Certificate - Virginia Department Of Taxation Page 3