R865. Tax Commission, Auditing.
R865-19S. Sales and Use Tax.
R865-19S-22. Sales and Use Tax Records Pursuant to Utah
Code Ann. Section 59-12-111.
A.
Every retailer, lessor, lessee, and person doing business in this state
or storing, using, or otherwise consuming in this state tangible personal
property purchased from a retailer, shall keep and preserve complete and
adequate records as may be necessary to determine the amount of sales and use
tax for which such person or entity is liable.
Unless the Tax Commission authorizes in writing an alternative method of
record keeping, these records shall:
1.
show gross receipts from sales, or rental payments from leases, of
tangible personal property or services performed in connection with tangible
personal property made in this state, irrespective of whether the retailer
regards the receipts to be taxable or nontaxable;
2.
show all deductions allowed by law and claimed in filing returns;
3.
show bills, invoices or similar evidence of all tangible personal
property purchased for sale, consumption, or lease in this state; and
4.
include the normal books of account maintained by an ordinarily prudent
business person engaged in such business, together with supporting documents of
original entry such as: bills,
receipts, invoices, and cash register tapes.
All schedules or working papers used in connection with the preparation
of tax returns must also be maintained.
B.
Records may be microfilmed or microfiched. However, microfilm reproductions of general books of
account--such as cash books, journals, voucher registers, ledgers, and like
documents--are not acceptable as original records. Where microfilm or microfiche reproductions of supporting records
are maintained--such as sales invoices, purchase invoices, credit memoranda and
like documents--the following conditions must be met:
1.
appropriate facilities must be provided for preservation of the films or
fiche for the periods required and open to examination,
2.
microfilm rolls and microfiche must be systematically filed, indexed,
cross referenced, and labeled to show beginning and ending numbers and to show
beginning and ending alphabetical listing of documents included,
3.
upon request of the Tax Commission, the taxpayer shall provide transcriptions
of any information contained on microfilm or microfiche which may be required
for verification of tax liability,
4.
proper facilities must be provided for the ready inspection and location
of the particular records, including machines for viewing and copying the
records,
5.
a posting reference must appear on each invoice. Credit memoranda must carry a reference to
the document evidencing the original transaction. Documents necessary to support exemptions from tax liability,
such as bills of lading and purchase orders, must be maintained in such order
so as to relate to exempt transactions claimed.
C.
Any automated data processing (ADP) tax accounting system must be
capable of producing visible and legible records for verification of taxpayer's
tax liability.
1.
ADP records shall provide an opportunity to trace any transaction back
to the original source or forward to a final total. If detailed printouts are not made of transactions at the time
they are processed, the systems must have the ability to reconstruct these
transactions.
2.
A general ledger with source references should be prepared 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 should also be prepared periodically.
3.
The audit trail should be designed so that the details underlying the
summary accounting data may be identified and made available to the Tax
Commission upon request. The system
should be so designed that supporting documents--such as sales invoices,
purchase invoices, credit memoranda, and like documents--are readily available.
4.
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:
(a)
the application being performed;
(b)
the procedures employed in each application (which, for example, might
be supported by flow charts, block diagrams or other satisfactory description
of the input or output procedures); and
(c)
the controls used to insure accurate and reliable processing and
important changes, together with their effective dates, in order to preserve an
accurate chronological record.
D.
All records pertaining to transactions involving sales or use tax
liability shall be preserved for a period of not less than three years.
E.
All of the foregoing records shall be made available for examination on
request by the Tax Commission or its authorized representatives.
F.
Upon failure of the taxpayer, without reasonable cause, to substantially
comply with the requirements of this rule, the Tax Commission may:
1.
Prohibit the taxpayer from introducing in any protest or refund claim
proceeding those microfilm, microfiche, ADP, or any records which have not been
prepared and maintained in substantial compliance with the requirements of this
rule.
2.
Dismiss any protest or refund claim proceeding in which the taxpayer
bases its claim upon any microfilm, microfiche, ADP, or any records which have
not been prepared and maintained in substantial compliance with the
requirements of this rule.
3.
Enter such other order necessary to obtain compliance with this rule in
the future.
4.
Revoke taxpayer's license upon evidence of continued failure to comply
with the requirements of this rule.
Effective: 1/1/87