280-20-70 R.I. Code R. § 12.8

Current through June 20, 2024

Section 280-RICR-20-70-12.8 - Inadequate Records and/or Lack of Internal Controls

A. In a detailed audit, the Tax Administrator and/or his or her agents must be able to ensure the accuracy and completeness of the transaction records recorded in the taxpayer's record keeping system including magnetic or electronic POS systems.

B. A taxpayer's records will be considered inadequate if:

1. They do not verify sales receipts;

2. They do not verify whether those receipts are subject to sales tax;

3. They do not verify the taxable status of purchases;

4. They do not show that a taxpayer's business purchases correlate to business sales;

5. It is not possible to conduct a detailed audit using the taxpayer's records for whatever reason;

6. The taxpayer fails to make records available to the Tax Administrator and/or his or her authorized agent(s);

7. The records are not in a form that is both legible and readable that can be audited by the Tax Division, and/or

8. An evaluation of the taxpayer's accounting of POS system discloses that the system does not provide adequate internal control procedures which assure the accuracy and completeness of the transactions recorded in the books and records (e.g. the lack of sequentially numbered invoices or guest checks, or the lack of dates on receipts).

C. If a taxpayer's records are considered inadequate or a taxpayer's POS system lacks internal controls, the taxpayer may be subject to an estimated methodology, based on best available information, to determine any additional tax due, be subject to penalties and interest if additional tax is found to be due, be subject to criminal penalties, and have his or her sales tax permit suspended or revoked.

280 R.I. Code R. § 280-RICR-20-70-12.8