S.D. Admin. R. 64:06:01:35.05

Current through Register Vol. 50, page 159, June 17, 2024

Section 64:06:01:35.05 - Use of other records to verify audits

For auditing purposes, the auditor may refer to other records to determine the tax liability of the taxpayer, as follows:

(1) When the gross sales records are inadequate, the auditor may refer to the following records:

(a) Federal income tax returns;

(b) Bank statements, including checks, deposit slips, and bank records of loans;

(c) Purchase invoices or journals;

(d) Gross profit tests based on expenses and withdrawals; and

(e) Cash transactions;

(2) When the gross taxable sales records are inadequate, the auditor may use the following methods of verifying the taxable sales:

(a) Using purchase invoices or journals plus an acceptable industry markup;

(b) Computing the ratio of gross taxable sales to gross sales from a like business and applying this ratio to gross sales;

(c) Using a percentage markup based on like businesses; and

(d) Using other indirect methods generally accepted under accounting principles; and

(3) Records the auditor may use to verify the deductions taken by the taxpayer include the following:

(a) Invoices for sale for resale;

(b) Invoices for exempt sales;

(c) Invoices for out-of-state sales;

(d) Freight bills showing out-of-state deliveries;

(e) Invoices for returns and allowances; and

(f) Worksheets for bad debts; and

(4) Records the auditor may use to verify the use tax purchases include the following;

(a) Purchase invoices;

(b) Disbursements journals or check registers; and

(c) Depreciation schedules.

S.D. Admin. R. 64:06:01:35.05

15 SDR 58, effective 10/19/1988; 21 SDR 219, effective 7/1/1995; 27 SDR 9, effective 8/7/2000; 28 SDR 178, effective 7/1/2002; 32 SDR 225, effective 7/3/2006.

General Authority: SDCL 10-45-47.1(5), 10-45D-13(5), 10-46-35.1(5), 10-46E-11(4), 10-52-4, 10-52A-7(5), 49-31-51.1(4).

Law Implemented: SDCL 10-45-45, 10-45D-12, 10-46-43, 10-46E-8, 10-52-4, 10-52A-6, 49-31-51.1(4).

Accounting principles, § 20:37:11:08.