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For non-metered pump sales, since the Department was not
provided with daily cash register Z-tapes, daily sales reports, or monthly
sales reports documenting non-metered sales, the Department disallowed all
non-metered exempt sales. For metered gasoline pump and diesel fuel sales, a
fuel accountability study was conducted using information the Department
obtained from Taxpayer's fuel distributor, showing how much fuel was sold to
Taxpayer. The gasoline and diesel fuel gallons reported on Taxpayer's ST-103MP
return was subtracted from the amount of gasoline and diesel fuel gallons
purchased from the supplier to arrive at the gallons of gasoline and diesel
fuel which were unaccounted for. The reported sales were divided by the
reported gallons, on the taxpayers ST-103MP returns, to arrive at a price per
gallon. The unaccounted for gallons from the fuel accountability report were
then multiplied by the price per gallon to arrive at the corresponding
unaccounted for sales. Sales tax was then assessed on the unaccounted for sales
of gasoline and diesel fuel.
For credit on the collection of prepaid sales tax, the
amount of prepaid sales tax allowable to claim was determined by listing all
monthly fuel purchases and the corresponding prepaid sales tax collected by the
supplier. A fuel accountability study was also used to verify that all fuel was
reported, which was discussed above. Adjustments were made by using the prepaid
sales tax credit as the audited amount minus the reported amount on the
taxpayer's ST-103MP returns. This actually resulted in a large credit for
Taxpayer in 2009.
Taxpayer purchased tangible personal property during the Tax
Years, but was unable to provide any check registers, purchase journals, or
ledgers to document purchases, though numerous attempts were made, and
additional time was provided. Taxpayer's income tax returns were requested from
the IRS, which provided the returns for 2008 and 2009. Pursuant to 45 IAC
2.2-3-27, the taxpayer is responsible for retaining documentation to verify
whether or not an item has previously been taxed. Without such documentation,
all items listed on the 1120S income tax returns are considered taxable. No
breakdown of other expenses was provided in the income tax returns. The auditor
found it reasonable that there are both taxable and non-taxable other expenses.
The amount of other expenses subject to tax for the 2008 and 2009 time periods
was estimated at 50 percent taxable and 50 percent non-taxable to accommodate
the taxable and non-taxable other expenses documented in the 1120S income tax
returns. The income tax return for 2010 was not provided by the IRS. The 2010
estimated other deductions were derived by averaging the 2008 and 2009 other
deductions and multiplying by the percentage of months in operation during the
tax year. The 2010 estimated other deductions were then multiplied by the 50
percent taxable amount to arrive at the 2010 total taxable estimated
deductions.
The Department prepared the sales and use tax assessments
based upon authority contained within IC § 6-8.1-5-1(b) which states that
"[i]f the department reasonably believes that a person has not reported
the proper amount of tax due, the department shall make a proposed assessment
of the amount of the unpaid tax on the basis of the best information
available." See also 45 IAC
15-4-1 (permitting the Department access to private sources in performing
the Department's functions).
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Taxpayer has the obligation to prepare a careful,
methodical, and detailed factual presentation of the evidence sufficient to
refute the conclusions contained within the audit. Invoices, without more, do
not speak for themselves, even if they were relevant to the matter at hand,
which they are not. Taxpayer's invoices
proffered after the hearing do not sufficiently refute the information or the
results reached in the Department's audit. Taxpayer failed to meet its burden
of proof to establish that the findings of the audit were incorrect.
