96-025

Response February 2, 1996

Request

January 22, 1996

Subject: Sales tax exemption certificates

XXXXX currently maintains on file the sales tax exemption certificates required by your agency and submitted by its customers. The current filing system retains these documents as received by the customer in their original form.

XXXXX would prefer to retain these records in a more economical and efficient manner using optical Scanning and electronic filing. This system provides for an image of the certificate to be stored on a disk. That image can then be viewed or printed at a later date. The original documents would no longer be retained, and thus, not available for audit.

Prior to implementing this method of record retention for sales tax exemption certificates, XXXXX requests a reply from your agency as noted below. A return addressed, postage paid envelope is enclosed.

Sincerely,

XXXXX

February 2, 1996

XXXXX

RE: Advisory Opinion - Storing exemption certificates in electronic form.

Dear XXXXX,

We have received your request for information regarding sales tax exemption certificates that are stored electronically. We find as follows:

A person making a tax-exempt purchase must sign an exemption certificate. We have published two exemption certificate forms: TC-721G for use by government entities, and form TC-721 for use by all others claiming an exemption. The vendor may also design an exemption certificate to reside in a database in an electronic format so long as it contains essentially the same information as the Tax Commission forms, including the purchaser' s signature.

After you have scanned the form for electronic filing, you need not keep the original hard copy on file. However, you must be able to reproduce the electronic copy in readable form in the event of an audit.

For the Commission,

Alice Shearer

Commissioner