Okla. Admin. Code § 710:20-5-8

Current through Vol. 42, No. 7, December 16, 2024

Section 710:20-5-8 - Liability and audit of mixed beverage tax permit holder for gross receipts tax upon sale, preparation or service of all alcoholic beverages purchased or received

(a)Liability in general. Every mixed beverage tax permit holder or any other person transacting business subject to the gross receipts tax shall be liable for the tax upon the gross receipts from such beverages (on the basis of the number of drinks available for sale, preparation, or service from the total alcoholic beverages received). Each permit holder or other person shall be liable for the gross receipts tax upon any and all disposition by his or her agents or employees or any other persons on the premises of the mixed beverage tax permit holders or other person, except upon seizure or other disposition of the alcoholic beverage by employees of the ABLE Commission, Tax Commission, or other law enforcement agencies in the execution of their official duties. [See: 37A O.S. § 5-105]

(b)Audit procedures.

(1) Upon audit of the books and records of a mixed beverage establishment for gross receipts tax, it shall be assumed that spirits have been dispensed at the average rate of one and one-half fluid ounce, except for drinks with recipes calling for more than one type of spirit or for double portions of spirits, or upon reasonable evidence of a different rate of use.

(2) Wines will be presumed to have been dispensed at the average rate of six ounces (6 oz.) per serving. The Tax Commission may use an average rate greater or less than those set out in this rule upon reasonable evidence of a different rate of use.

(3) An audit may be conducted to determine if the correct amount of tax payable has been collected. The taxpayer will be deemed in compliance if the audit reveals that the amount of tax collected is:

(A) For spirits, within eighty-four percent (84%) to one hundred sixteen percent (116%) of the amount of tax payable.

(B) For wine, within ninety percent (90%) to one hundred ten percent (110%) of the amount of tax payable.

(C) For beer sold at draft and not in original packages, within eighty-six percent (86%) to one hundred fourteen percent (114%) of the amount of tax payable.

(D) For beer in original packages, within ninety-five percent (95%) to one hundred five percent (105%) of the amount of tax payable. [See : 37A O.S. § 5-135]

(4) Under circumstances where a taxpayer is deemed to be in compliance as described in (b)(3) of this Section, the taxpayer is still responsible for paying one hundred percent (100%) of the total gross receipts tax levied in 37A O.S. § 5-105(A) which was collected and/or reported but not remitted to the Tax Commission.

(5) In addition, a deduction not to exceed ten percent (10%) except as provided in this paragraph may be allowed from the gross receipts tax liability determined by an audit or other investigation of the books and records of a mixed beverage tax permit holder, for alcoholic beverages that are:

(A) consumed in food as verified by the audit;

(B) destroyed due to breakage for which the permit holder has retained the container; or that portion thereof that has the unbroken seal; or for partial bottles destroyed by breakage for which the permit holder has completed a breakage affidavit listing the date of the occurrence, the brand and type of liquor, the size bottle, the approximate amount left in the bottle by 1/10ths, and the cause of the breakage. The affidavit shall be signed by the permit holder and two witnesses;

(C) stolen or destroyed by a disaster such as a fire or flood, provided that reasonable evidence is provided to support a claim. Reasonable evidence might include a copy of a police or sheriff's crime report; or an insurance claim detailing the inventory destroyed by brand, size, and type of liquor;

(D) not consumed, and exist or existed, at the close of a taxable period in question, provided that the amount and nature of the unconsumed inventory has been verified by agents of the Tax Commission, ABLE Commission, or verified by invoice to a mixed beverage permittee or wholesaler approved to purchase the inventory by the ABLE Commission. Partially filled bottles which are not included in a transferred inventory should be verified by a Tax Commission or ABLE Commission agent or agents.

(6) Deductions in excess of ten percent (10%) may be allowed for properly documented product losses or other occurrences outlined in subparagraphs (A) through (D) of paragraph (3).

(7) If an establishment was selling alcoholic beverages prior to the starting date of the audit period being used by the Commission in its audit, the establishment shall be required to furnish the Commission with a beginning inventory of all liquor, wine, and beer on hand if an ending inventory is offered for audit purposes. When the permittee is unable or unwilling to furnish such an inventory, then no beginning or ending inventories shall be considered for the audit period used and the audit will be conducted solely on the taxpayer's purchases made during the audit period.

Okla. Admin. Code § 710:20-5-8

Amended at 10 Ok Reg 3831, eff 7-12-93; Amended at 15 Ok Reg 2800, eff 6-25-98; Amended at 19 Ok Reg 1507, eff 5-25-02

Amended by Oklahoma Register, Volume 34, Issue 24, September 1, 2017, eff. 9/11/2017

Amended by Oklahoma Register, Volume 35, Issue 24, September 4, 2018, eff. 10/1/2018

Amended by Oklahoma Register, Volume 40, Issue 22, August 1, 2023, eff. 8/11/2023

Amended by Oklahoma Register, Volume 41, Issue 22, August 1, 2024, eff. 8/11/2024