...
Taxpayer protests the imposition of sales tax related to these additional sales of diesel, gasoline, and convenience store items.
A. Convenient Store Food Items: Exempt Retail Sales.
Pursuant to IC § 6-2.5-5-20, sales of "food and food ingredients for human consumption" are exempt from sales tax. Taxpayer's convenient store sales items that would be considered exempt under this provision. Taxpayer on, its sales tax returns, reported a certain amount of sales as "exempt food item" sales because Taxpayer considered the transactions to be exempt under this provision.
After reviewing the Taxpayer's available documentation, the Department accepted the amount of Taxpayer's reported "exempt food item" sales for the 2010 and 2011 tax years. However, the Department determined that the Taxpayer had reported an amount reported for the 2009 tax years that was too high, and decreased the amount that Taxpayer reported as "exempt food item" sales for the 2009 tax year to fifteen percent of its convenient store sales.
Taxpayer asserts that it should be allowed to consider a greater percentage of its sales as "exempt food item" sales for the 2010 and 2011 tax years. Taxpayer maintains that the amount of "exempt food item" sales that it originally report for the 2010 and 2011 tax years were underreported by Taxpayer. Taxpayer argues that it should be allowed the same percentage of "exempt food item" sales for the 2010 and 2011 tax years that the Department allowed for the 2009 tax year.
...
...
However, the Department declines Taxpayer's invitation. Taxpayer has neither provided sales documentation to support the adjustment nor cited to any statutes, regulations, or case law that would allow the Department to make such an adjustment. Therefore, Taxpayer has not established that the proposed assessments are wrong, and has not met the burden imposed under IC § 6-8.1-5-1(c). Based upon the information available, the Department finds no reason to disagree with the audit's conclusion that the amounts originally reported for the "exempt food item" sales for the 2010 and 2011 tax years should not be adjusted.
Accordingly, Taxpayer's protest to the imposition of sales tax from not allowing a higher percentage of "exempt food item" sales in the 2010 and 2011 tax years is denied.
B. Convenient Store Food Items: Additional Purchase Records.
Since original sales transaction documentation was not available, the auditor reviewed the purchase documentation that Taxpayer had available at the time of the audit. The Department used the November 2011 purchase documentation as this was determined to be the only complete month's information available. Based upon an analysis of Taxpayer's purchase documentation compared to its reported sales transactions, the Department determined that Taxpayer had underreported its sales transactions. The Department determined that Taxpayer had only reported approximately forty-four percent of its sales in the 2011 tax year. The Department used this number to make adjustments to Taxpayer's reported sales for the 2009, 2010, and 2011 tax years.
During the hearing, Taxpayer presented additional purchase documentation for the 2009, 2010, and 2011 tax years. Taxpayer maintains that analysis of the complete purchase documentation results in a much lower assessment. Based upon the documentation presented, it appears that the adjustments made to Taxpayer's reported sales taxable sales should be re-evaluated. Therefore, the audit division is requested to review the audit report, to review the accompanying documentation, and to make whatever adjustments it deems warranted.
Accordingly, Taxpayer's protest of the Department's adjustments to its reported taxable sales is sustained subject to the findings of a supplemental audit. Therefore, Taxpayer's protest will be sustained to the extent that the supplemental audit of the additional documentation results in the audit division making an adjustment. However, Taxpayer's protest is denied to the extent that the supplemental audit of the additional documentation does not result in the audit division making an adjustment.
C. Diesel: Additional Purchase Records.
Since original sales transaction documentation was not available, the auditor reviewed the purchase documentation that Taxpayer had available at the time of the audit. When purchase documentation was not available for certain months, the Department made an estimate for those months. Based upon an analysis of Taxpayer's purchase documentation compared to its reported sales transactions, the Department determined that Taxpayer had underreported its diesel sales transactions.
During the hearing, Taxpayer presented additional purchase documentation for its diesel sales. Taxpayer maintains that analysis of the complete purchase documentation results in a much lower assessment because the Department analysis uses more gallons than were actually purchased. Based upon the documentation presented, it appears that the adjustments made to Taxpayer's reported diesel sales should be re-evaluated. Therefore, the audit division is requested to review the audit report, to review the accompanying documentation, and to make whatever adjustments it deems warranted.
Accordingly, Taxpayer's protest of the Department's adjustments to its reported diesel sales is sustained subject to the findings of a supplemental audit. Therefore, Taxpayer's protest will be sustained to the extent that the supplemental audit of the additional documentation results in the audit division making an adjustment. However, Taxpayer's protest is denied to the extent that the supplemental audit of the additional documentation does not result in the audit division making an adjustment.
D. Gasoline: Additional Purchase Records.
Since original sales transaction documentation was not available, the auditor reviewed the purchase documentation that Taxpayer had available at the time of the audit. When purchase documentation was not available for certain months, the Department made an estimate for those months. Based upon an analysis of Taxpayer's purchase documentation compared to its reported sales transactions, the Department determined that Taxpayer had underreported its gasoline sales transactions.
During the hearing, Taxpayer presented additional purchase documentation for its gasoline sales. Taxpayer maintains that analysis of the complete purchase documentation results in a much lower assessment because the Department analysis uses more gallons than were actually purchased. Based upon the documentation presented, it appears that the adjustments made to Taxpayer's reported gasoline sales should be re-evaluated. Therefore, the audit division is requested to review the audit report, to review the accompanying documentation, and to make whatever adjustments it deems warranted.
Accordingly, Taxpayer's protest of the Department's adjustments to its reported gasoline sales is sustained subject to the findings of a supplemental audit. Therefore, Taxpayer's protest will be sustained to the extent that the supplemental audit of the additional documentation results in the audit division making an adjustment. However, Taxpayer's protest is denied to the extent that the supplemental audit of the additional documentation does not result in the audit division making an adjustment.
E. Gasoline: Profit Margin.
The Department also reviewed Taxpayer's reported monthly average gasoline "selling price." The Department compared Taxpayer's reported "selling price" per gallon to the "historical selling price" per gallon for a gas station in the Midwest as found at EIA.gov for each of the months in question. The Department found that Taxpayer's average monthly "selling price" ranged from one percent to nine percent below the "historical selling price" in 2009; ranged from three to ten percent below the "historical selling price" in 2010; and ranged from zero to seven percent below the "historical selling price" in 2011. Therefore, the Department determined that Taxpayer's reported monthly average gasoline "selling price" was not accurate and was underreported by Taxpayer. The Department made an assessment of additional sales tax that would be due from Taxpayer's underreporting of its gasoline "selling price."
Taxpayer protests that the "historical selling price" used by the Department reflects too high of a profit margin for Taxpayer's gasoline station. When reviewing sales tax compliance, the Department naturally looks to a retail merchant's sales documents. In this case, Taxpayer was unable to supply sales documents at both the audit and protest level. Instead, Taxpayer makes arguments of equity and presented two internet news articles to arrive at the conclusion that it should be entitled to a reduction of the Department's sales calculations. After review of the materials submitted by Taxpayer, the Department finds that these materials are not sufficient to establish Taxpayer's position.
However, Taxpayer has neither provided sales documentation to support the reduction nor cited to any statutes, regulations, or case law that would allow the Department to make such an adjustment. Therefore, Taxpayer has not established that the proposed assessments are wrong, and has not met the burden imposed under IC § 6-8.1-5-1(c). Based upon the information available, the Department finds no reason to disagree with the audit's conclusion that the amounts originally reported for the gasoline sales should be adjusted due to the underreporting of Taxpayer's "selling price."
Accordingly, Taxpayer's protest of the imposition of sales tax from including too high of a profit margin on its gasoline sales is denied.
