Sampling in Sales and Use Tax and Gross Receipts Tax Audits

Annotated Bibliography of State-Specific References


Will Yancey, PhD, CPA
Email: wyancey@aclrsbs.com
Office phone 734.744.4400

Revised October 1, 2010.

Dr. Yancey is the author of Statistical Sampling in Sales and Use Tax Audits, (CCH, 2002). Available in print and in the online CCH Tax Research Network.

Maintained by ACLR. Please e-mail your suggestions for additions and changes to wyancey@aclrsbs.com.


Alabama Alaska Arizona Arkansas
California Chicago Colorado Connecticut
District of Columbia Florida Georgia Hawaii
Idaho Illinois Indiana Iowa
Kansas Kentucky Louisiana Maine
Maryland Massachusetts Michigan Minnesota
Mississippi Missouri Nebraska Nevada
New Jersey New Mexico New York North Carolina
North Dakota Ohio Oklahoma Pennsylvania
Rhode Island South Carolina South Dakota Tennessee
Texas Utah Vermont Virginia
Washington West Virginia Wisconsin Wyoming

Related Web pages:


This bibliography lists review articles, statutes, court decisions, and government agency documents on the application of sampling in sales and use tax audits. A few references are provided for applications other than sales and use tax.  Some of the references deal with the production of records needed to apply sampling.  This bibliography will be updated frequently. 

Disclaimer: Inclusion in this list does not imply the reference is or was a reliable authority or relevant to any particular set of facts.  Omission from this list does not imply the item was not reliable.

Acknowledgments:  Suggestions of numerous tax professionals are greatly appreciated.  Particularly appreciated are citations provided by Lee Zoeller, Mark Sommer, Neil Pomerantz, Ted Bernert, and Bill Backstrom.  All errors are my own responsibility.


Review Articles


Alabama

Statutes

Rules

Administrative Law Judge Decisions

Court Cases


Alaska


Arizona

Statutes

City Tax Codes

Department of Revenue Publications

Cases


Arkansas

Statutes

Regulations

Cases


California

Some California Board of Equalization statutes, regulations, opinions, and publications are online at the California Business Taxes Law Guide.

California Revenue and Taxation Code

    Online Tax Statues

State Board of Equalization Regulations

    Online Sales and Use Tax Regulations

State Board of Equalization Sales and Use Tax Audit Manual 

    Online Sales and Use Tax Manuals

State Board of Equalization Publications

    Online Publications

Cases - Sales, Use, and Excise Tax

Cases - Property Tax

These cases involve the use of sampling for determining property assessment-to-value ratios.  The California State Board of Equalization hears cases on transaction taxes, income taxes, and property ad valorem taxes.

Cases - Income Tax



Chicago

City Ordinances

Online

Colorado

Statutes

Rulings

Publications and Releases


Connecticut

Review Articles

Public Acts and Statutes

Department of Revenue Publications and Statements

Cases


District of Columbia

Office of Tax and Revenue publications


Florida

Online Research

Statutes

Online

Administrative Code

Online in the Florida Tax Law Library

Department of Revenue - Guides

Online Research
Audit information

Guides formally adopted by Rule FAC 12-3.0017. Adoption of Materials That Contain Departmental Procedures.

Other Guides

Department of Revenue - Forms and Instructions

Forms online

Administrative Hearings

Court Cases


Georgia

Statute

Administrative

  • Georgia Department of Revenue, Compliance Division, Georgia's Computer Assisted Audit System.
  • Case


    Hawaii

    Statutes

    Department of Taxation Administrative Rules

    Department of Taxation publications


    Idaho

    Statute


    Illinois

    Statute

    Regulations

    Department of Revenue Publications

    Department Letters

    Hearings

  • Illinois Department of Revenue Administrative Hearing, ST 96-31, CCH-IL-ADMIN-RUL, (1996).  The administrative law judge held for the Department on a case of incomplete records.  The taxpayer executed an audit test check/statistical sampling agreement in which he agreed to abide by the projection of a sample review of his purchases, said sample being a "5% random selection of checks in the period 7/92 through 11/93, projected over total material purchases in audit period".
  • Illinois Department of Revenue Administrative Hearing, TC 97-1, CCH-IL-ADMIN-RUL, (1997).  At issue is the amount telecommunications excise tax liability for All Call Travel Card Service that the taxpayer owes to the state. After the hearing held in this matter, the parties stipulated to certain facts. Included in the stipulations is the fact that a large credit was improperly included in the dollar sample used to create the 2.29% error rate established in the sample used by the auditor. The sample was then projected to form the basis of the non-All Call portion of two of the assessments. If the credit is properly accounted for, the error rate is decreased to 1.91%. The taxpayer agrees to the test sample if the error rate is decreased to 1.91%.
  • Illinois Department of Revenue Administrative Hearing, ST 97-5 (1997). Whether the taxpayer met its burden of proving that the Department of Revenue's calculation of the tax liability based on unreported and underreported gross receipts was incorrect depends, initially, on whether the Department met a minimum standard of reasonableness in making its determination of additional tax due for the period.  When a taxpayer fails to supply the Department with records to substantiate its gross receipts, the Department is justified in using the markup method to estimate gross receipts.  The Department is required only to meet a minimum standard of reasonableness in conducting the markup.
  • Illinois Department of Revenue Administrative Hearing, ST 97-25, CCH-ADMN-RUL, (1997).  The taxpayer’s mere assertion that sampling techniques are not representative of the population is insufficient to rebut the prima facie correctness of the Department of Revenue's proposed adjustments.  Questioning the Department's determination or denying its accuracy does not shift the burden back to the Department.  The Department's determinations are rebutted only after a taxpayer introduces evidence which is consistent, probable and identified with the taxpayer’s books and records, showing that the Department's determination is incorrect.
  • Illinois Department of Revenue Administrative Hearing, ST 02-14, (April 5, 2002).  Taxpayers questioned the reasonableness and fairness of the sampling techniques used by auditor. They claim that projections based on the group of items randomly selected for investigation distorted the taxpayers' mark up. However, the courts have held that the type of discretion exercised by the auditor in arriving at a method to assess tax in this case is authorized under the broad powers granted the Department to administer the state's tax laws. Moreover, the taxpayers failed to present any evidence other than oral testimony showing that the auditor's sampling techniques produced an incorrect result and therefore have not shown that the auditor's methods were unreasonable. 
  • Cases


    Indiana

    Review Articles

    Statutes

    Administrative Rulings

    Court Decisions


    Iowa

    Statute

    Regulations

    Cases


    Kansas

    Statutes

    See Kansas Department of Revenue Policy Information Library

    Regulations

    See Kansas Department of Revenue Policy Information Library

    Department of Revenue pronouncements

    Kansas Tax Cases


    Kentucky

    Reviews

    Statutes

    Online

    Regulations

    Online

    Administrative Guidance

    Cases


    Louisiana

    Statutes

    Online

    Administrative

    Cases


    Maine

    Statutes

    Online

    Cases



    Maryland

    Statutes

    Statutes online or at LexisNexis Michie - Legal Resources - Maryland menu

    Code of Maryland Regulations (COMAR)

    Regulations online

    Publications

    Cases


    Massachusetts

    Statutes

    Administrative Documents

    Cases


    Michigan

    Statutes

    Department of Treasury Rules

    Online

    Department of Treasury Publications

    Cases


    Minnesota

    Statutes

    Minnesota Department of Revenue documents

    Cases


    Mississippi

    Statutes


    Missouri

    Reviews

    Statutes

    Regulations

    Cases


    Nebraska

    Statutes

    Department of Revenue publications



    Nevada

    Statute

    Nevada Statutes

    Department of Taxation Publications

    Cases


    New Jersey

    Division of Taxation publications

    Cases


    New Mexico

    Statute

    New Mexico Statutes and Administrative Code

    Department of Taxation & Revenue

    Online

    Department of Taxation & Revenue Public Decisions and Orders

    Cases


    New York
     

    Review articles

    Statute

    New York Statutes

    New York State Department of Taxation & Finance documents

    Cases disallowing auditor's sampling method

    New York State Division of Tax Appeals decisions and some New York State Tax Commission decisions are available online.

    Cases upholding auditor's sampling, projection, or mark-up methods

    New York State Division of Tax Appeals decisions and some New York State Tax Commission decisions are available online.

    North Carolina

    Statutes

    Department of Revenue Publications

    Cases



    North Dakota

    Statutes



    Ohio

    Statutes

        Ohio Statutes, Title LVII Taxation

    Regulations

    Ohio Administrative Code. Regulations for the Department of Taxation are in Ohio Administrative Code section 5703.

    Administrative Guidance

    Board of Tax Appeals Decisions

    Court Cases

    Reviews



    Oklahoma

    Statutes

    Regulations


    Pennsylvania

    Reviews

    Statutes

    Regulation

    Administrative

    Cases


    Rhode Island

    Statutes

    Cases

  • Administrative Hearing Decision No. 97-38 (October 23, 1997).  The Division of Taxation and auditor’s methodology in assessing sales and use taxes against a restaurant and bar owner was appropriate because, in the absence of appropriate taxpayer documentation, the auditor was authorized to recompute the tax using any information available to assure that the appropriate tax was paid.  Although the owner, who operated on a cash basis, filed sales and use tax returns, he took excessive and inappropriate deductions and grossly underrepresented sales.  More than half of the auditor’s assessment was based on the improper deductions, with the remainder based on markup percentages used by the auditor to recompute food and beer sales.  Those markup percentages were based on conservative industry standards and the owner's advice regarding past practice and were appropriate under the circumstances.
  • Administrative Hearing Decision No. 98-26 (December 28, 1998).  When the taxpayer and the Division of Taxation agree on a test period for sampling purposes, the taxpayer cannot successfully challenge that test period after the assessment.

  • South Carolina

    Statutes

    Regulations

    Department of Revenue publications


    South Dakota

    Statutes

    Online

    Regulations

    Cases


    Tennessee

    Statutes

    Department of Revenue

    Cases



    Texas

    Vernon's Texas Statutes Annotated

    Texas Statutes

    Administrative Rules

    Administrative rules are available on the Texas Comptroller's State Tax Automated Research System (STARS)

    Comptroller of Public Accounts - Audit Manuals

    Main menu for audit manuals.

    Comptroller of Public Accounts - Audit Memos, Procedures, and Letters

    Some of these documents are available at the Texas Comptroller's State Tax Automated Research System (STARS).

    Comptroller Administrative Law Judge (ALJ) Hearings

    Many of these hearing decisions can be found in redacted form at the Comptroller's State Tax Automated Research System (STARS).

    Court Cases

    Summaries of Texas Comptroller cases that are being handled by the Texas Office of Attorney General, Taxation Division.

    Utah

    Statutes

    Rules



    Vermont

    Statutes



    Virginia

    Statutes

    Online

    Regulations

    Guides

    Administrative Decisions

        Online in the Virginia Tax Policy Library

    Cases


    Washington

    Statutes

    Revised Code of Washington (RCW) online.
    RCW Title 82, Excise Taxes online.

    Regulations

    Washington Adminstrative Code (WAC) is online.

    Department of Revenue Tax Determinations

    Department of Revenue Publications


    West Virginia

    Regulations

    Administrative Decisions


    Wisconsin

    Statutes

    Online

    Administrative

    Cases


    Wyoming

    Statutes

    Cases