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RULE §3.281Records Required; Information Required

(a) Persons who must keep records.

  (1) Sellers of taxable items and purchasers who store, use, or consume taxable items in this state shall keep books, papers, and records in the form that the comptroller requires.

  (2) Examples of persons who are required to keep records include the following:

    (A) a person who sells, leases, or rents tangible personal property;

    (B) a person who performs taxable labor, such as fabricating, processing, and producing tangible personal property;

    (C) a person who performs taxable services that are listed in Tax Code, §151.0101; or

    (D) a person who purchases taxable items.

(b) Records required.

  (1) Records must reflect the total gross receipts from all sales, rentals, leases, taxable services, and taxable labor. Examples include, but are not limited to, receipts, shipping manifests, invoices, and other pertinent papers from each rental, lease, taxable service, and each taxable labor transaction that occurs during each reporting period.

  (2) Records must reflect total purchases of taxable items. Examples include, but are not limited to, receipts, shipping manifests, invoices, and other pertinent papers of all purchases of taxable items from every source that are made during each reporting period.

  (3) Additional records must be kept to substantiate any claimed deductions or exclusions authorized by law. Examples include, but are not limited to, receipts, shipping manifests, invoices, exemption certificates, resale certificates, and other pertinent papers that substantiate each claimed deduction or exclusion.

  (4) Records must reflect all sales and use tax, and any money represented to be sales and use tax, received or collected on each sale, rental, lease, or service transaction. Examples include, but are not limited to, sales receipts, invoices, or other equivalent records, including electronically stored images of such documents, showing all sales and use tax received or collected during each reporting period.

  (5) Records may be written, kept on microfilm, stored on data processing equipment, or may be in any form that the comptroller may readily examine.

(c) Failure to keep or to provide accurate records. If a person who is required to keep records under subsection (a) of this section fails to keep accurate contemporaneous records of gross receipts, gross purchases, deductions, exclusions, and taxes received or collected, or if a person fails to produce such records when requested by the comptroller during an audit or investigation, the comptroller may take actions that include, but are not limited to, the following:

  (1) estimate the person's tax liability based on any available information that includes, but is not limited to, records of suppliers;

  (2) use a sample and projection auditing method to calculate the person's tax liability. For further information, see §3.282 of this title (relating to Auditing Taxpayer Records);

  (3) suspend the person's permit;

  (4) file criminal charges as provided in §3.305 of this title (relating to Criminal Offenses and Penalties); and

  (5) take other action as authorized by law to enforce compliance with the Tax Code.

(d) Information required.

  (1) The comptroller may require any person subject to the Limited Sales and Use Tax Act to furnish information necessary to:

    (A) identify any person applying for a permit or any person required to file a return;

    (B) determine the amount of bond required to commence or continue business;

    (C) determine possible successor liability; and

    (D) determine the amount of tax the person is required to remit.

  (2) The information required may include, but is not limited to, the following:

    (A) name of the actual owner of the business;

    (B) name of each partner in a partnership;

    (C) names of officers and directors of corporations and other organizations;

    (D) all trade names under which the owner operates;

    (E) mailing address and actual locations of all business outlets;

    (F) license numbers, title numbers, and other identification of business vehicles;

    (G) identification numbers assigned by other governmental agencies, including social security numbers, federal employers identification numbers, and drivers license numbers;

    (H) names of suppliers, banks, and other persons with whom the taxpayer transacts business;

    (I) names and last known addresses of former owners of the business.

(e) Retention. A person who is required to keep records under subsection (a) of this section must keep those records for a minimum of four years from the date on which the record is made, and throughout any period in which any tax, penalty, or interest may be assessed, collected, or refunded by the comptroller or in which an administrative hearing or judicial proceeding is pending, unless the comptroller authorizes in writing a shorter retention period. A person must keep exemption and resale certificates for a minimum of four years following the completion of the last sale that is covered by the certificate.

(f) The comptroller, the attorney general, or the authorized representative of either of them may examine, copy, and photograph any records of any person who is required to keep records under subsection (a) of this section, to verify the accuracy of any return or to determine any tax liability. However, during an audit, an auditor for the comptroller should obtain permission from a taxpayer to copy or photograph records that are proprietary in nature, unless the comptroller reasonably believes that the taxpayer may have committed fraud or taken action to evade taxes. If the taxpayer does not grant the auditor permission to copy or photograph records, and the comptroller believes that the records are necessary to determine the tax liability of the taxpayer, then the comptroller may obtain records through other means under authority granted by Tax Code, §111.0043.

Source Note: The provisions of this §3.281 adopted to be effective January 1, 1976; amended to be effective October 30, 1984, 9 TexReg 5387; amended to be effective June 6, 2002, 27 TexReg 4727; amended to be effective December 31, 2013, 38 TexReg 9601

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