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Texas: Accurate Records Count


It pays to keep accurate records in Texas. This fact is underscored in a 2010 ruling by the Texas Comptroller regarding a convenience store, a sales and use tax assessment, and the best information available.

During a 2008-09 audit of the convenience store, the Comptroller's Business Activity Research Team (BART) examined reports on alcohol and tobacco products from the vendor, wholesalers, and distributors. BART compared the vendor's purchases of tobacco and alcohol products with taxable sales of the vendor's alcohol and tobacco products. The examiner "calculated that the purchases … exceeded the reportable taxable sales." BART concluded that "there were underreported taxable sales" of alcohol and tobacco products.

If the Texas Comptroller determines that a business has underpaid its sales and use taxes, and if the taxpayer's records are inadequate, the "Comptroller is authorized by statute to estimate a taxpayer's tax liability. … The Comptroller is required to determine the best information available and base the assessment on that information."

Audit Division Policy Memo 92 (AP92) recommends a markup of 25% for alcohol and 17.65% for tobacco products "to determine the estimated taxable sales of alcohol and tobacco."

Estimated Taxable Sales of Alcohol and Tobacco
- Taxable Sales of Alcohol and Tobacco                                        
------------------------------------------------------------                                                    
Tax Deficiency

The Petitioner in this case argued against the ruling, but had no evidence to support claims that the amount of additional sales of alcohol and tobacco products derived from the vendor data was wrong, or that the markup percentages were too high. Without any such evidence, the findings of the audit were upheld.

The moral of this story? In Texas, as elsewhere, it pays to keep accurate records of business transactions.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.