BEFORE THE STATE TAX COMMISSION OF UTAH
v. : INFORMAL DECISION
AUDITING DIVISION OF THE : Appeal No. 87-0979
UTAH STATE TAX COMMISSION, : Account No. XXXXX
STATEMENT OF CASE
This matter came before the Utah State Tax Commission XXXXX. An informal hearing was held in response to Petitioner's Petition for Redetermination made after receiving a statutory Notice of Deficiency and Amended Audit Report issued by the Commission for the sales tax audit period XXXXX. James E. Harward, Hearing Officer, heard the matter for and in behalf of the Commission. XXXXX represented Petitioner. XXXXX represented Respondent. Petitioner was unable to produce tax exempt certificates for many sales transactions which took place during the three year audit period. However, Petitioner did produce evidence data gathered from one of three stores involved and treated as representative of all stores suggesting that 98% of the sales in question were tax exempt. Petitioner also presented evidence that it has closed its business doors and has no assets, no employees, and no way of producing the tax exempt certificates. Respondent directed attention to Utah Administrative Rule 865-23S-1(A) and (E) which stipulate the following:
A. Taxpayers selling tangible personal property. . . to exempt customers are required to keep records verifying the non-taxable status of the sales. . . .
E. The burden of proving that a sale is. . . exempt is upon the person who makes the sales. If any agent of the Tax Commission requests. . . a valid exemption certificate or other similar acceptable evidence to support the vendor's claim that a sale is. . . exempt, and the vendor is unable to comply, the sale will be considered taxable.
The Commission has determined that exemption numbers alone are not sufficient evidence to support an exempt claim. In addition, representative samples of sales transactions cannot be substituted for actual transactions when determining the percentage of compliance or the amount of tax due. The plain language of the rule requires that vendors provide exemption certificates or similar acceptable evidence to verify exempt sales. Utah Admin. R. 861-1OA-1(D) stipulates that it is presumed that parties dealing with the Commission are familiar with all rules of the Commission and all revenue laws of the state of Utah. Petitioners inability to meet its burden of proof or to provide tax exempt certificates for the sales in question opens it to liability for sales tax assessments and any penalty and interest charges which have accrued.
DECISION AND ORDER
Based on the foregoing, it is the decision of the Utah State Tax Commission that Petitioner's Petition for Redetermination be denied and that the audit assessment, as determined by the Respondent, stand.
DATED this 7 day of October, 1988.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger O. Tew
Joe B. Pacheco G. Blaine Davis