Current through Register Vol. XLI, No. 38, September 20, 2024
14b.1. Taxpayer records may be audited by
authorized representatives of the Tax Commissioner at any time during regular
business hours of the taxpayer at the discretion of the Tax Commissioner or his
authorized agent or representative. Any person who maintains such records
outside this State shall make such records available for audit where the
general records of the taxpayer are kept.
14b.2. The Tax Commissioner may use a
detailed auditing procedure or a sample and projection auditing method to
determine tax liability.
14b.3. A
sample and projection auditing method is appropriate if:
14b.3.1. the taxpayer's records are so
detailed, complex, or voluminous that an audit of all detailed records would be
impractical or unreasonable;
14b.3.2. the taxpayer's records are
inadequate or insufficient, so that a competent audit for the period in
question is not otherwise possible; or
14b.3.3. the cost of an audit of all detailed
records to the taxpayer or the State will be unreasonable in relation to the
benefits derived, and sampling procedures will produce a reasonable
result.
14b.4. If
records are inadequate to accurately reflect the business operations of the
taxpayer, the auditor will determine the best information available and will
base the audit report on that information.
14b.5. Exemption certificates and material
purchase certificates.
14b.5.1. Exemption
certificates and material purchase certificates should be available at the time
of the audit. Certificates acquired by the taxpayer after the audit begins are
subject to independent verification of issuance by the purchaser before the
deductions will be allowed in an audit.
14b.5.2. If the taxpayer is not in possession
of the certificates within sixty (60) days from the date written notice is
given by the Tax Commissioner that certificates pertaining to periods or
transactions specified in the notice are required, any deductions claimed which
require exemption or material purchase certificates will be disallowed.
Exemptions claimed by those certificates acquired during this sixty (60) day
period will be subject to independent verification of issuance by the purchaser
before the deductions will be allowed. Certificates presented after the sixty
(60) day period will not be accepted.
14b.6. Both vendors and vendees are subject
to audit and to assessment.
14b.6.1. Vendors
will be assessed for any consumers sales or use taxes which that they should
have collected but failed to collect from the vendee. A vendor is relieved from
this liability only if the vendor has in good faith taken the vendee's direct
pay permit number, an exemption certificate or a material purchase certificate
number or has notified the Tax Commissioner of a refusal to pay tax or provide
indicia of tax exemption in accordance with Section 6.1.1.2 of these
regulations.
14b.6.2. Vendees will
be assessed consumers sales or use taxes which they should have paid to their
vendors or remitted directly to the Tax Commissioner. A vendee is relieved from
this liability only if he paid the consumers sales or use tax due on the
transaction to the vendor or directly to the Tax Commissioner. If exemption
from tax was claimed, the vendee must be able to verify that the tangible
personal property or service purchased without paying tax to the vendor or
directly to the Tax Commissioner was in fact used for an exempt purpose or used
in an exempt manner.
14b.7. The Tax Commissioner may proceed
against either the vendor or the vendee, or against both for delinquent tax
until the amount of the tax, additions to tax, penalties and interest have been
paid.
