Simon Lever Learning Community Presents: The Importance of Keeping Daily Sales Records

Background:

One of the many requirements of a business is to maintain adequate records; such as those for federal, state and local tax purposes. Failure to keep and maintain these records can result in unfavorable outcomes for taxpayers. This article explicitly deals with the requirement of maintaining adequate records for Pennsylvania sales tax purposes.

Issue: Sales Tax

The Department of Revenue is requesting daily sales records during sales tax examinations and specific sales tax appeals filed with the Pennsylvania Board of Appeals. It is a request based on Section 34.2(a)(2)(i) of the Pennsylvania Regulations which states:

“With respect to sales, records shall be maintained for each store or other outlet showing the total amount of taxable and nontaxable sales, that is, gross sales, made on each day and during each reporting period. Total sales should also be divided as to cash sales and credit sales” .

This requirement includes daily sales invoices or sales receipts (such as Z-tapes from the cash registers to tie in to the daily transaction sales report).

Failure to produce these records are resulting in assessments at the examination level in some situations. In addition, failing to produce these same records during the appeals process (at the Board of Appeals and at the Board of Finance and Revenue) can result in these assessments being upheld with no relief granted. The Boards position is that they are unable to determine the accuracy of the sales reports without the daily detailed sales records.

Industries Impacted:

The above requirement affects all businesses. Recently there have been numerous unfavorable outcomes to companies which receive a lot of cash for payment, such as market stands and restaurants. These businesses lost their sales tax appeal because they could not produce their daily cash register tapes.

What Does this Mean?:

The critical takeaway is to keep cash daily register tapes and other regular sales invoices supporting daily sales for all periods that are still able to be audited. These records are crucial for minimizing assessments at the examination level and for winning appeals.