| (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 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 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 accurate records. If a person who is required
to keep records under subsection (a) of this section fails to keep accurate
records of gross receipts, gross purchases, deductions, and exclusions, 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 against a person who intentionally
and knowingly alters or fails to keep records. For further information, see §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, 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 or the comptroller's authorized representative
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.
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