Alabama Tax Tribunal Upholds Fraud Penalties in Recordkeeping Case

• The Alabama Tax Tribunal upheld fraud penalties in a recordkeeping case.
• The case involved a small convenience store and gas station.
• The Department of Revenue assessed additional tax due and a fraud penalty based on underreporting of sales and inconsistent records.
• The taxpayer provided bank records and purchase records, but the department was unable to use them to determine accurate sales tax reporting.
• The Department used a standardized 35% markup on purchases for resale to estimate sales in excess of tax reported.
• The taxpayer provided cash register records, but the auditor determined them to be inaccurate.
• The Tax Tribunal agreed with the Department’s assessment and fraud penalty based on the inconsistency of the records.
• Alabama requires taxpayers to maintain adequate records for examination upon request for audit purposes.
• Maintaining clear records that tie to other business records can eliminate the threat of unexpected assessments under audit.

Source: salestaxinstitute.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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