Monday, September 16, 2013

Revenue Finds Taxpayer's Failure to Keep Records Fatal to its Sales Tax Appeal

Taxpayer is an Indiana business and retail merchant. As the result of an audit, the Indiana Department of Revenue ("Department") determined that Taxpayer had not collected and remitted the proper amount of sales tax for the years 2009 and 2010. The Department therefore issued proposed assessments for sales tax, penalty, and interest.

Taxpayer protests a portion of the Department's proposed assessments of sales tax for the tax years 2009 and 2010. Taxpayer agrees that some sales tax was not collected and remitted; however, Taxpayer protests the Department's calculation of sales tax due for those years because Taxpayer claims to have an operating margin smaller than that applied during the audit. Taxpayer, however, has provided no documentation to support the claim.
Taxpayer was unable to produce documents to support its claim that it had a smaller operating margin than the one applied during the audit, so the Department made its assessment based on the best information available, as provided by IC § 6-8.1-5-1(b).
In conclusion, Taxpayer did not keep adequate records available for the Department to review and determine the appropriate sales tax. The burden is on Taxpayer to prove the proposed assessment was wrong, as provided by IC § 6-8.1-5-1(c). Taxpayer is a retail merchant making retail sales as defined by IC § 6-2.5-4-1. Taxpayer has not met this burden.