Idaho Admin. Code r. 35.01.02.111 - RECORDS REQUIRED AND AUDITING OF RECORDS
01.
In General. Every retailer doing business in this state and every
buyer storing, using, or otherwise consuming in this state tangible personal
property will keep complete and adequate records as may be necessary for the
Commission to determine the amount of sales and use tax for which that person
is liable under Title 63, Chapter 36, Idaho Code. (3-31-22)
a. Unless the Commission authorizes an
alternative method of record keeping in writing, these records will show gross
receipts from sales or rental payments from leases of tangible personal
property, including any services that are a part of the sale or lease, made in
this state, irrespective of whether the retailer or buyer regards the receipts
to be taxable or nontaxable; all deductions allowed by law and claimed in
filing the return; and the total purchase price of all tangible personal
property purchased for sale or consumption or lease in this state.
(3-31-22)
b. These records include
the normal books of account ordinarily maintained by the average prudent
businessman engaged in such business, together with all bills, receipts,
invoices, cash register tapes, or other documents of original entry supporting
the entries in the books of account, together with all schedules or working
papers used in connection with the preparation of tax returns.
(3-31-22)
c. For taxpayers that
maintain the required records in both a machine-sensible and a hard-copy
format, that taxpayer will make the records available to the Commission in
machine-sensible record format upon the Commission's request. Machine-sensible
records are to be maintained in the original format for the same time periods
as required of hard-copy records outlines in Subsection
111.04 of this rule.
"Machine-sensible record" is a collection of related information in an
electronic format. This does not include hard-copy records that are created or
recorded on paper or stored in or by an imaging system such as microfilm,
microfiche or storage-only imaging systems. (3-31-22)
02.
Alternative Storage Media.
Records, including general books of account, such as cash books, journals,
voucher registers, ledgers, and like documents may be microfilmed, microfiched,
or retained by a storage-only imaging system and the original hard-copy
documents may be discarded when all other conditions of this rule are met. A
storage-only imaging system involves computer hardware, software, and other
reproduction equipment that provides for the storage, retention, and retrieval
of records and documents which were originally created on paper. It does not
allow for any manipulation or processing of the documents. These records are to
be authentic, accessible, readable, and meet the following requirements:
(3-31-22)
a. Appropriate facilities are to be
provided for preservation of the storage media for the periods required and
open to examination and the taxpayers will provide transcriptions of any
information on microfilm, microfiche, or imaged data which may be required for
verification of tax liability. (3-31-22)
b. All microfilmed, microfiched, and imaged
data are to be indexed, cross-referenced, and labeled to show beginning and
ending numbers and to show beginning and ending alphabetical listing of
documents included, and systematically filed to permit ready access.
(3-31-22)
c. The taxpayer will make
available upon request of the Commission facilities and equipment in good
working order at the examination site for reading, locating, and reproducing
any record concerning sales or use tax liability maintained on microfilm,
microfiche, or other storage-only imaging system. (3-31-22)
d. The taxpayer will set forth in writing the
procedures governing the establishment of its microfilm, microfiche, or other
storage-only imaging system and the individuals who are responsible for
maintaining and operating the system with appropriate authorization from the
Board of Directors, general partners, or owner, whichever is applicable.
(3-31-22)
e. The microfilm,
microfiche, or other storage-only imaging system is to be complete and used
consistently in the regularly conducted activity of the business.
(3-31-22)
f. The taxpayer will
establish procedures with appropriate documentation so that the original
document can be followed through the conversion system. (3-31-22)
g. The taxpayer is responsible for the
effective identification, processing, storage, and preservation of microfilm,
microfiche, or other storage-only imaging system making it readily available
for as long as the contents may become material in the administration of any
state tax law. (3-31-22)
h. The
taxpayer is to keep a record identifying by whom the microfilm, microfiche, or
other storage-only image system was produced. (3-31-22)
i. When displayed or reproduced on paper, the
material is to exhibit a high degree of legibility and readability. For this
purpose, legibility is defined as the quality of a letter or numeral that
enables the observer to identify it positively and quickly to the exclusion of
all other letters or numerals. Readability is defined as the quality of a group
of letters or numerals being recognizable as words or complete numbers.
(3-31-22)
j. All production of
microfilm or microfiche and processing duplication, quality control, storage,
identification, and inspection thereof are to meet acceptable industry
standards. (3-31-22)
03.
Records Prepared by Automated Data Processing Systems, ADP. An ADP
tax accounting system may be used to provide the records required for the
verification of tax liability. Although ADP systems will vary from one taxpayer
to another, all such systems are to include a method of producing legible and
readable records which will provide the necessary information for verifying
such tax liability. The following requirements apply to any taxpayer who
maintains any such records on an ADP system: (3-31-22)
a. Recorded or reconstructible data. ADP
records will 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 when they are processed, the systems are to have
the ability to reconstruct these transactions. (3-31-22)
b. General and subsidiary books of account. A
general ledger, with source references, is to be written out 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 will
also be written out periodically. (3-31-22)
c. Supporting documents and audit trail. The
audit trail is to be designed so that the details underlying the summary
accounting data may be identified and made available to the Commission upon
request. The system is to be so designed that supporting documents, such as
sales invoices, purchase invoices, credit memoranda, and like documents are
readily available. (3-31-22)
d.
Program documentation. A description of the ADP portion of the accounting
system are to be made available. The statements and illustrations as to the
scope of operations be sufficiently detailed to indicate: The application being
performed; the procedures employed in each application, which, for example,
might be supported by flowcharts, block diagrams, or other satisfactory
descriptions of the input or output procedures; the controls used to insure
accurate and reliable processing; and important changes, together with their
effective dates, are to be noted in order to preserve an accurate chronological
record. (3-31-22)
e. Data storage
media. Adequate record retention facilities are to be available for storing
tapes and printouts, as well as all supporting documents as may be required by
law or this rule. (3-31-22)
04.
Record Retention. All
records pertaining to the transactions involving sales or use tax liability are
to be preserved for a period of not less than four (4) years. If an assessment
has been made and an appeal to the Commission or any court is pending, the
books and records relating to the period under appeal by such proposed
assessment must be preserved until final disposition of the appeal.
(3-31-22)
05.
Examination of
Records. All of the foregoing records are to be made available for
examination on request of the Commission or its authorized representatives.
(3-31-22)
06.
Failure of the
Taxpayer to Maintain or Disclose Complete and Adequate Records. Upon
failure by the taxpayer, without reasonable cause, to substantially comply with
the requirements of this rule, the Commission will: (3-31-22)
a. Impose any penalty as may be authorized by
law. (3-31-22)
b. Subpoena
attendance of the taxpayer and any other witness when the Commission deems it
necessary or expedient for examination and compel the taxpayer and witness to
produce any documents within the scope of its inquiry relating in any manner to
the sales and use tax. (3-31-22)
c.
Enter such other order as may be necessary to obtain compliance with this rule
in the future by any taxpayer found not to be in substantial compliance with
the requirements of this rule. (3-31-22)
Notes
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