Current through Register Vol. 42, No. 11, August 30, 2024
(1) In
General. In addition to all other recordkeeping requirements otherwise set out
in Title 40, Code of Ala. 1975, or any regulations
thereunder issued from time to time, every multistate retailer, seller, vendor,
or person doing business in Alabama or storing, using, or otherwise consuming
in Alabama tangible personal property purchased from a retailer and every
multistate lessor of tangible personal property for use in Alabama shall keep
complete and adequate records as may be necessary for the Department of Revenue
or its authorized representatives to determine the amount of sales, use, or
rental tax for the payment or collection of which that retailer, seller,
vendor, person, and lessor is liable under Title 40, Chapters 2A, 12, or 23,
Code of Ala. 1975. Unless the Department of Revenue
authorizes an alternative method of recordkeeping in writing, these records
shall show:
(a) Gross receipts. Gross
receipts from sales, or rental payments from leases, of tangible personal
property (including any services that are a part of the sale or lease) made in
Alabama, irrespective of whether the retailer, seller, vendor, person, or
lessor regards the receipts to be taxable or nontaxable.
(b) Deductions. All deductions allowed by law
and claimed in filing the return.
(c) Purchase price. Total purchase price of
all tangible personal property purchased for sale or consumption or lease in
Alabama.
These records must include the normal books of account
ordinarily maintained by the average prudent businessman engaged in such
business, together with all bills, receipts, invoices, cash register tapes, or
other documents of original entry supporting the entries in the books of
account together with all schedules or working papers used in connection with
the preparation of tax returns.
(2) Microfilm and Microfiche Records.
Records, including general books of account, such as cash books, journals,
voucher registers, ledgers, and like documents may be microfilmed or
microfiched, as long as such microfilmed and microfiched records are authentic,
assessable, and readable and the following requirements are satisfied:
(a) Appropriate facilities are to be provided
for preservation of the films or fiche for the periods required and open to
examination and the taxpayers must agree to provide transcriptions of any
information on microfilm or microfiche which may be required for verification
of tax liability.
(b) All
microfilmed and microfiched data must be indexed, cross-referenced, and labeled
to show beginning and ending numbers and to show beginning and ending
alphabetical listing of documents included, and must be systematically filed to
permit ready access.
(c) Taxpayer
must make available upon request of the Department of Revenue a reader/printer
in good working order at the examination site for reading, locating, and
reproducing any record concerning sales, use, or rental tax liability
maintained on microfilm or microfiche.
(d) Taxpayer must set forth in writing the
procedures governing the establishment of its microfilm or microfiche system
and the individuals who are responsible for maintaining and operating the
system with appropriate authorization from the Board of Directors, general
partner(s), or owner, whichever is applicable.
(e) The microfilm or microfiche system must
be complete and must be used consistently in the regularly conducted activity
of the business.
(f) Taxpayer must
establish procedures with appropriate documentation so that the original
document can be followed through the microfilm or microfiche system.
(g) Taxpayer must establish internal
procedures for microfilm or microfiche inspection and quality
assurance.
(h) Taxpayers are
responsible for the effective identification, processing, storage, and
preservation of microfilm or microfiche, making it readily available for as
long as the contents may become material in the administration of any state
revenue law.
(i) Taxpayer must keep
a record identifying by whom the microfilm or microfiche was
produced.
(j) When displayed on a
microfilm or microfiche reader (viewer) or reproduced on paper, the material
must exhibit a high degree of legibility and readability. For this purpose,
legibility is defined as the quality of a letter or numeral that enables the
observer to identify it positively and quickly to the exclusion of all other
letters or numerals. Readability is defined as the quality of a group of
letters or numerals being recognizable as words or complete numbers.
(k) All production of microfilm or microfiche
and processing, duplication, quality control, storage, identification, and
inspection thereof must meet industry standards as set forth by the American
National Standards Institute, National Micrographics Association, or National
Bureau of Standards.
(3)
Records Prepared By Automated Data Processing Systems (ADP). An ADP tax
accounting system may be used to provide the records required for the
verification of tax liability. Although ADP systems will vary from one taxpayer
to another, all such systems must include a method of producing legible and
readable records which will provide the necessary information for verifying
such tax liability. The following requirements apply to any taxpayer who
maintains any such records on an ADP system:
(a) Recorded or Reconstructible Data. ADP
records shall provide an opportunity to trace any transaction back to the
original source or forward to a final total. If detailed print-outs are not
made of transactions at the time they are processed, the systems must have the
ability to reconstruct these transactions.
(b) General and Subsidiary Books of Account.
A general ledger, with source references, shall be written out to coincide with
financial reports for tax reporting periods. In cases where subsidiary ledgers
are used to support the general ledger accounts, the subsidiary ledgers shall
also be written out periodically.
(c) Supporting Documents and Audit Trail. The
audit trail shall be designed so that the details underlying the summary
accounting data may be identified and made available to the Department of
Revenue upon request. The system shall be so designed that supporting
documents, such as sales invoices, purchase invoices, credit memoranda, and
like documents are readily available.
(d) Program Documentation. A description of
the ADP portion of the accounting system shall be made available. The
statements and illustrations as to the scope of operations shall be
sufficiently detailed to indicate:
1. the
application being performed;
2. the
procedures employed in each application (which, for example, might be supported
by flow charts, block diagrams, or other satisfactory descriptions of the input
or output procedures); and
3. the
controls used to ensure accurate and reliable processing. Important changes,
together with their effective dates, shall be noted in order to preserve an
accurate chronological record.
(e) Data Storage Media. Adequate record
retention facilities shall be available for storing tapes and printouts, as
well as all supporting documents as may be required by law.
(4) Records Retention. All records
pertaining to transactions involving sales, use, or rental tax liability shall
be preserved for a period of not less that six (6) years from the date the
related return was filed or longer if required under Title 40, Chapter 2A,
Code of Ala. 1975, and the related regulations
thereunder.
(5) Examination of
Records. All of the foregoing records shall be made available for examination
on request by the Department of Revenue or its authorized representatives in
accordance with Title 40, Chapter 2A, Code of Ala.
1975, and the related regulations thereunder.
(6) Failure of the Taxpayer to Maintain and
Disclose Complete and Adequate Records. Upon failure by the taxpayer, without
reasonable cause, to substantially comply with the requirements of this
regulation, the Department of Revenue in accordance with Title 40, Chapter 2A,
Code of Ala. 1975, and the related regulations
thereunder shall:
(a) Impose and not abate or
reduce in amount any penalty as may be authorized by law.
(b) Enter such other order as may be
necessary to obtain compliance with this regulation in the future by any
taxpayer found not to be in substantial compliance with the requirements of
this regulation.
Author: Peter M. Petrillo, Jr.
Statutory Authority:
Code of Ala.
1975, §§
40-2A-7(a)(5),
40-23-31,
40-23-83.
