| (a) The following words and terms, when used in this section,
shall have the following meanings, unless the context clearly indicates otherwise.
(1) Certified Public Accountant (CPA) Audit Program--A program
that the comptroller creates under Tax Code, §151.0232, in which a taxpayer
may hire a certified public accountant who is not employed by the comptroller
to perform a sales and use tax audit to determine a taxpayer's liability under
Tax Code, Chapter 151.
(2) Managed audit--A taxpayer self-review and analysis of invoices,
checks, accounting records, or other documents or information to determine
a taxpayer's liability for tax under Tax Code, Chapter 151, as allowed under
a written agreement with the comptroller authorizing a managed audit as described
in subsection (f) of this section.
(3) Percentage-based reporting method--A method by which a
direct payment permit holder may be authorized to categorize purchase transactions
according to standards specified in a letter of authorization issued under
the provisions set out in subsection (h) of this section, reviews an agreed-on
sample of invoices in those categories to determine the percentage of taxable
transactions, and uses that percentage to calculate the amount of tax to be
reported.
(b) The comptroller or an authorized representative of the
comptroller may audit a taxpayer's accounts and records at any time during
regular business hours at the discretion of the comptroller or the comptroller's
authorized agent or representative.
(c) The comptroller may use a detailed auditing procedure or
a sample and projection auditing method to determine tax liability. Sampling
procedure may include manual sampling techniques and computer-assisted audit
techniques, whichever produce the most accurate results in the most efficient
manner.
(d) A sample and projection auditing method is appropriate
if:
(1) the taxpayer's records are so detailed, complex, or voluminous
that an audit of all detailed records would be unreasonable or impractical;
(2) the taxpayer's records are inadequate or insufficient,
so that a competent audit for the period in question is not otherwise possible;
or
(3) the cost of an audit of all detailed records to the taxpayer
or to the state will be unreasonable in relation to the benefits derived,
and sampling procedures will produce a reasonable result.
(e) Before using a sample technique to establish a tax liability,
the comptroller must notify the taxpayer in writing of the sampling procedure
to be used.
(f) The comptroller may authorize taxpayers that meet certain
requirements to perform managed audits.
(1) A taxpayer who wishes to participate in a managed audit
must request authorization from the comptroller's office to conduct a managed
audit under this section. Authorization will only be granted as part of a
written agreement between the taxpayer and the comptroller's office. The agreement
must:
(A) be signed by an authorized representative of the comptroller
and the taxpayer; and
(B) specify the period to be audited and the procedure to be
followed.
(2) In determining whether to authorize a managed audit, the
comptroller may consider, in addition to other factors the comptroller considers
relevant:
(A) the taxpayer's history of tax compliance, including taxpayer:
(i) timely filing of all reports;
(ii) timely payment of all taxes and fees due the state;
(iii) prior audit history;
(iv) delinquency in other taxes;
(v) correction of problems identified;
(vi) collection of tax that was not remitted; and
(vii) whether a penalty waiver had been denied on prior occasions
and the reason for denial.
(B) the amount of time and resources the taxpayer has available
to dedicate to the audit;
(C) the extent, availability, and completeness of the taxpayer's
records for the period to be covered by the managed audit;
(D) the taxpayer's ability to pay any expected liability; and
(E) the size and sophistication of the taxpayer.
(3) The decision to authorize or not authorize a managed audit
rests solely with the comptroller.
(4) A managed audit may be limited to certain categories of
liability under Tax Code, Chapter 151, including tax on:
(A) sales of one or more types of taxable items;
(B) purchases of assets;
(C) purchases of expense items;
(D) purchases under a direct payment permit; or
(E) any other category specified in an agreement authorized
by this section.
(5) Before the audit is finalized, the comptroller may examine
records that the comptroller determines are necessary to verify the results.
(6) Unless the audit or information reviewed by the comptroller
under this subsection discloses fraud or willful evasion of the tax, the comptroller
may not assess a penalty and may waive all or part of the interest that would
otherwise accrue on any amount identified to be due in a managed audit. This
subsection does not apply to any amount collected by the taxpayer that was
a tax or represented to be a tax but was not remitted to this state.
(7) Except as provided by applicable law, the taxpayer is entitled
to a refund of any tax overpayment disclosed by a managed audit.
(g) The comptroller may authorize taxpayers who meet certain
requirements to participate in the CPA Audit Program. For more information,
see §3.368 of this title (relating to Certified Public Accountant (CPA)
Audit Program).
(h) The comptroller may authorize direct payment permit holders
that meet certain requirements to report tax on purchases using a percentage-based
reporting method.
(1) A holder of a direct payment permit may request authorization
from the comptroller to use a percentage-based reporting method. The authorized
percentage must be used for a three-year period specified by the comptroller,
unless the authorization is revoked by the comptroller.
(2) The authorization to report under this subsection may be
revoked if the comptroller determines that the percentage being used is no
longer representative because of a change in the taxpayer's business operations
or in law, including a change in the interpretation of a law or rule. For
example, two decisions from the Court of Appeals changed the list of items
that may be purchased tax free by manufacturers. Subsequently the legislature
passed two bills that significantly changed the tax responsibilities of manufacturers.
Each of these changes affected a manufacturer's percentage used to report
taxable purchases.
(3) The decision of the comptroller to deny or revoke authorization
under this section is not subject to appeal.
(4) When authorizing reporting under this section, the comptroller
may categorize transactions by dollar amount, by type of taxable item purchased,
by the purpose for which the taxable item will be used, or by other standards
appropriate to the taxpayer's operations.
(i) A taxpayer who holds a permit issued under Tax Code, Chapter
151, who has paid Texas tax in error on purchases of taxable items, whether
sales tax was remitted directly to this state or to a retailer holding a permit
under Tax Code, Chapter 151, may compute the amount of overpayment by use
of a projection based on a sampling of transactions.
(1) The sampling method must be one that has been approved
by the comptroller.
(2) The taxpayer must record the method by which the projection
and computation were performed and must make available, on request by the
comptroller, information explaining the method employed and the records on
which the projection and computation were based.
(j) A taxpayer who holds a permit issued under Tax Code, Chapter
151, may obtain reimbursement for amounts determined to have been overpaid
by taking a credit on one or more sales tax returns or by filing a claim for
refund with the comptroller within the limitation period specified by Tax
Code, Chapter 111. See §3.325 of this title, (relating to Refunds, Interest,
and Payments Under Protest).
(1) A taxpayer may take a credit by amending the sales tax
return for the period in which the tax was originally paid.
(2) If a taxpayer chooses to take the credit by claiming a
refund, the claim must identify the period in which the tax was originally
paid.
(3) A taxpayer who claims a credit or submits a refund request
for local taxes must identify the period in which the local tax was paid and
the local taxing jurisdiction to which the local tax was reported.
(4) Interest will be paid on tax amounts found to be erroneously
paid for reports due on or after January 1, 2000, whether claimed on a request
for refund or claimed in an audit. See also §3.325 of this title (relating
to Refunds, Interest, and Payments Under Protest) and Tax Code, §111.064.
(k) If records are inadequate to accurately reflect the business
operations of the taxpayer, the auditor will determine the best information
available and base the audit report on that information. See §3.281 of
this title (relating to Records Required; Information Required) for information
on proper records.
(l) Resale and exemption certificates.
(1) Resale and exemption certificates should be available at
the time of the audit. All certificates obtained on or after the date the
comptroller's auditor actually begins work on the audit at the seller's place
of business or on the seller's records after the entrance conference are subject
to verification. All incomplete certificates will be disallowed regardless
of when they were obtained.
(2) The seller has 60 days from the date written notice is
received by the seller from the comptroller in which to deliver the certificates
to the comptroller. Written notice shall be given by the comptroller upon
the filing of a petition for redetermination or claim for refund. For the
purposes of this section, written notice given by mail is presumed to have
been received by the seller within three business days from the date of deposit
in the custody of the United States Postal Service. The seller may overcome
the presumption by submitting proof from the United States Postal Service
or by other competent evidence showing a later delivery date. If the seller
is not in possession of the certificates within 60 days from the date written
notice is given by the comptroller that certificates pertaining to periods
or transactions specified in the notice are required, any deductions claimed
which require resale or exemption certificates will be disallowed. Exemptions
claimed by those certificates acquired during this 60-day period will be subject
to independent verification by the comptroller before the deductions will
be allowed. Certificates delivered after the 60-day period will not be accepted.
See §3.285 of this title (relating to Sales for Resale; Resale Certificate); §3.287
of this title (relating to Exemption Certificates); and §3.288 of this
title (relating to Direct Payment Procedures and Qualifications).
(3) When a 60-day letter has been received, a resale or exemption
certificate is the only acceptable proof that a taxable item was purchased
for resale or qualifies for exemption.
(m) Both sellers and purchasers are subject to audit and assessment
of tax on any transactions on which tax was due but has not been paid.
(n) The comptroller may proceed against either the seller or
purchaser, or against both, until the tax, penalty, and interest have been
paid.
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| Source Note: The provisions of this §3.282 adopted to be effective January 1, 1976; amended to be effective December 21, 1983, 8 TexReg 5037; amended to be effective December 31, 1984, 9 TexReg 6333; amended to be effective August 5, 1985, 10 TexReg 2321; amended to be effective September 16, 1991, 16 TexReg 4844; amended to be effective September 19, 2000, 25 TexReg 9219; amended to be effective June 6, 2002, 27 TexReg 4727 |
