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WAC 254 Recordkeeping.    
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
       
WAC: 458-20-254   05/16/1989 Record keeping.Updated02/06/07 effective 03/09/07.
         
       
RCW:      
  82.04.080   1961 "Gross income of the business."
  82.04.480   1975 Sales in own name--Sales as agent
  82.32.070   1999 Records to be preserved -- Examination -- Estoppel to question assessment -- Unified business identifier account number records.
         
       
ETA: 3131.2009 2/2/09 Record keeping requirements
  502.40.181 2/25/76 SUITABLE RECORDS - TIMBER HARVESTERS - ETA Cancelled 2/15/2001
       
INDUSTRY GUIDES:      
         
       
SPECIAL NOTICES:      
Subject Title Reference:      
Tax Reporting Changes & Methods   04/01/2002 Cash Basis Reporting Method
         
       
DIRECTIVE: NONE      
         
       
RPM: None      
         
       
WTD: 4 WTD 211 87-333   DUTY TO MAINTAIN RECORDS. A Washington taxpayer must maintain business records for five years past.
  4 WTD 293 87-354   DUTY TO MAINTAIN RECORDS. A Washingtontaxpayer must maintain business records for five years past.
  6 WTD 13 88-195   AUDIT -- EXAMINATION OF RECORDS -- REFUSAL TO ALLOW. A taxpayer who provides its own information to the Department and declines to allow the Department to make its own examination cannot be heard to deny the tax liabilities from such information.
  6 WTD 409 88-367   RECORDS -- DOCUMENTATION -- RETENTION -- BARRED FROM QUESTIONING ASSESSMENT. Persons liable for assessment of tax must keep suitable records. Failure to do so will bar the taxpayer from questioning the correctness of any assessment.
  7 WTD 31 88-425   RECORD KEEPING REQUIREMENTS -- MICROFILM -- DESTRUCTION OF ORIGINAL RECORDS. Original records can be destroyed if reproduced on microfilm and stored pursuant to the requirements stated herein (similar to IRS Revenue Procedure 81-46).
  7 WTD 137 89-53   TAX LIABILITY -- DUTY TO KEEP AND PRESERVE RECORDS -- FAILURE TO PRODUCE DOCUMENTATION. Persons engaged in business are required to keep adequate records or are estopped to question a Department assessment of tax during an audit or a later proceeding. Where taxpayer produces no daily sales records of operations or records of sales from street fairs in which the business participated, the auditor's assessments based on visual observations and conversations with taxpayer's landlords and fair organizers must be upheld.
  7 WTD 229 89-123   TAX LIABILITY -- DUTY TO KEEP AND PRESERVE RECORDS -- FAILURE TO PRODUCE DOCUMENTATION. Persons engaged in business are required to keep and produce adequate records for examination during an audit. Taxpayer's busy schedule during the audit does not relieve it of its duty to produce proof of taxes collected or paid. Should accurate records be supplied within the statutory period allowed for refunds or adjustments, an adjustment can be made.THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 94-057, 16 WTD 160 (1996).
  7 WTD 273 89-163   TAX LIABILITY -- DUTY TO KEEP AND PRESERVE RECORDS -- FAILURE TO PRODUCE DOCUMENTATION. Persons engaged in business are required to keep and produce adequate records for examination during an audit.Should accurate records be supplied within the statutory period allowed for refunds or adjustments, an adjustment can be made.
  7 WTD 349 89-349   RECORDS. Taxpayers are required to keep records that are necessary to determine their tax liability. Taxpayers who fail to keep and present such records to the Department of Revenue cannot question taxes assessed in the absence of such records.
  8 WTD 219 89-458   SALES/USE TAX -- RECORDS -- DOCUMENTATION. A taxpayer who fails to keep documentary evidence that it paid sales tax on the purchase of consumable and capital items may not successfully challenge an assessment which asserts deferred sales or use tax on those purchases.
  8 WTD 309 89-439   RECORDS AVAILABLE FOR EXAMINATION. A taxpayer is required to make relevant records available to the auditor. Failure to do so may limit appeal.
  10 WTD 71 90-275   RECORD -- DUTY TO RESERVE. A taxpayer objecting to the Department's measure of or factual basis for use tax carries the burden of proving its case with written evidence.
  13 WTD 166 92-252R   RECORDS -- DOCUMENTATION -- RETENTION -- BARRED FROM QUESTIONING ASSESSMENT. Taxpayers are required to keep records that are necessary to determine their tax liability. Taxpayers who fail to keep andpresent such records to the Department ofRevenue will bar the taxpayer from questioning the correctness of the assessment.
  14 WTD 174 94-007   RECORD KEEPING -- CONSEQUENCES OF FAILURE TO KEEP RECORDS. Any person who fails to comply with the requirements of RCW 82.32.070 or of WAC 458-20-254 shall be forever barred from questioning, inany court action or proceedings, the correctness of any assessment of taxes made by the department based upon any period for which such books, records, and invoices have not been so kept and preserved.
  14 WTD 210 94-047   The scope of an audit is not limited to the records initially provided by a taxpayer. Rather, the Department is given broad authority to review a taxpayer's books and records in order to verify the accuracy of a return. Except for unregistered taxpayers or upon a showing of fraud or misrepresentation, the period of an assessment is limited to four years after the close of the tax year.
  15 WTD 78 94-272   B&O TAX -- BARTER -- BROADCASTERS -- VALUATION. In determining the value of bartered advertising time for purposes of assessing B&O tax, the Department is entitled to rely on the value a broadcast station assigns to its advertising time under what it calls a "barter account".
  16 WTD 33 95-138   TEST PERIODS.RCW 82.32.070 requires the taxpayer to keep and preserve suitable records so that its tax liability may be correctly determined.Failure to comply with this requirement forever bars the taxpayer from questioning the correctness of any assessment of taxes based upon the period for which the records have not been suitably kept.
  17 WTD 326 97-141   B&O TAX -- SALES TAX -- USE TAX -- RECORD-KEEPING REQUIREMENTS.A person doing business in Washington is required to maintain records adequate to establish his or her state excise tax liability.One who fails to do so may not successfully object to an ensuing tax assessment.
  18 WTD 153 98-133   B&O TAX -- SALE -- VALUE PROCEEDING OR ACCRUING -- CONSIDERATION -- BARTER.The transfer of goods for valuable services constitutes a sale of the goods measured by the value of the services.
  18 WTD 163 97-134R   RECORD KEEPING.Failure to keep adequate records prevents taxpayer from questioning Audit estimate of taxpayer’s income where no additional evidence provided on appeal contradicts the estimate.
  19 WTD 477 99-300   B&O TAX – SALES OF GOODS VS. COMMISSION INCOME – AGENT – IMPORTER.To determine whether an importer takes title to goods it purchases and sells as the owner or acts as an agent receiving commission income, documents of sale to the U.S. customers offer the best evidence.Actual payment for the goods by the customers indicate exempt purchases from the owner, while commission payments for the services of an agent would be taxable.Letters of credit conditioned upon providing title indicate the party required to provide title has title.
  19 WTD 477 99-300   B&O TAX – SALES OF GOODS VS. COMMISSION INCOME – AGENT – IMPORTER.The commissions paid customers to an agent are taxed under the service and other activities classification.Because title to the goods did not flow to or through the agent, the income received by the agent was not for goods, but was commission income taxable under the service and other activities classification.Invoices, contracts, and payment records are evidence of the nature of the transaction.
  19 WTD 660 99-287   RECORDS TO BE PRESERVED.Every Taxpayer is required to keep adequate records to establish tax liability.Failure to provide such records renders the taxpayer unable to question the assessment.
  20 WTD 32 00-028   USE TAX – PUBLIC ROAD CONSTRUCTION vs. CUSTOM CONSTRUCTION – DUTY TO KEEP AND PRESERVE RECORDS.Whether a contractor/taxpayer who performed work on road projects was engaged in custom construction or in “public road construction” depended on whether the road projects were done on state-owned land or on land owned by a city, county, or other political subdivision of the state or the federal government.The taxpayer failed to keep and preserve records to support his claim that the road projects were custom construction.
  20 WTD 39 00-043   WHOLESALING B&O TAX – ACCOMMODATION SALE: AUTOMOBILE DEALER.Failure of an initiating automobile dealer of an accommodation sale to meet the requirement of keeping in its records a bona fide existing order of a customer prevents the dealer/taxpayer from deducting wholesaling B&O tax for that sale from its gross income.
  20 WTD 343 99-341   SALES TAX -- AUDITS – TEST PERIODS – REASONABLE RESULTS.The use of test periods is an appropriate audit procedure if proper consideration is given to factors which could lead to other than reasonable results.Test period found acceptable where taxpayer purchases were used to project taxable sales and where an adjustment was made for the fact that taxable items sold more slowly than exempt items at a grocery store.
  20 WTD 410 01-005   EXCISE TAXES – CREDITING OR COMPENSATING TAXPAYER FOR COSTS INCURRED.The Department cannot grant a credit, or otherwise compensate, a taxpayer for out-of-pocket expenses the taxpayer incurs in connection with a Department examination of the taxpayer’s books and records, or in connection with appeals within the Department.
  21 WTD 264 01-193   RCW 82.04.470, RCW 82.08.020, RCW 82.08.050, RCW 82.32.070:RETAIL SALES TAX – SELLER’S LIABILITY FOR – FAILURE TO TAKE RESALE CERTIFICATES – RECORDKEEPING REQUIREMENTS.A seller is liable for retail sales tax with respect to sales for which no resale certificate has been provided.The burden of maintaining proper records rests with the taxpayer.
  23 WTD 21 02-0115   RETAIL SALES TAX – RETAILING B&O TAX – RECORDKEEPING – FAILURE TO KEEP RECORDS.A contractor that fails to keep or provide records cannot challenge an assessment that was estimated from the few invoices and contract proposals that were acquired by the Department, even if one or more of the contract proposals may not have resulted in income to the taxpayer.
  23 WTD 340 04-0102   RETAIL SALES TAX – NONRESIDENT EXEMPTION – RECORDS.Taxpayers must maintain records required under RCW 82.08.0273 for each nontaxable sale to nonresidents to qualify for that statutory exemption.
  24 WTD 254 04-0132   TAX PAID AT SOURCE – RECORDS – FAILURE TO MAINTAIN.A person who did not maintain invoices separately stating retail sales tax was not entitled to a presumption that retail sales tax was paid on taxable purchases, even though the person did maintain credit card receipts showing the total amounts paid, which ended in uneven cents suggesting the that total price included retail sales tax.
  24 WTD 275 04-0287   B&O TAX – TEMPORARY LABOR—TAX CLASSIFICATION – LACK OF RECORDS – PRESUMPTION. A residential housing contractor was correctly assessed deferred retail sales tax on all the charges it paid to TSCs for the use of laborers when no records documented the nature of work they performed because the Department is entitled to a presumption, under RCW 82.32.070, that temporary labor performed for a contractor was related to the contractor’s main business activity – the building of homes.
  32 WTD 60 11-0346 04/04/2013 RULE 244, RULE 254; RCW 82.32.070:; RETAIL SALES TAX – RETAILING B&O TAX – RECORDKEEPING – FAILURE TO KEEP RECORDS. All sales of food and food ingredients at an establishment will be treated as taxable unless the seller separately accounts for sales of exempt and nonexempt food and food ingredients. Rule 244(6). The Department is authorized to estimate a grocery store owner’s retail sales tax liability where the taxpayer failed to keep or provide reliable and complete records detailing taxable and nontaxable sales.
  32 WTD 128 12-0134 06/27/2013 RULE 254; RCW 82.32.070: RETAIL SALES TAX – DOCUMENTATION SHOWING PAYMENT OF RETAIL SALES TAX. A purchaser of retail construction services is not subject to retail sales tax when it can show through invoices and other documentation that the contractor collected retail sales tax that it remitted to the Department of Revenue.
  32 WTD 151 12-0201 07/30/2013 RULE 254; RCW 82.32.070: RECORDS – SUBSTANTIATION – CASH SALES.  Rule 254(3) requires taxpayers to prepare and preserve original source documents or such other records as may be necessary to substantiate gross receipts and sales.  Where Taxpayer provided only handwritten daily sales journals to support its claimed amount of cash sales, an examination of sales invoices revealed Taxpayer paid cash for various items for the business, and Taxpayer’s infrequent cash deposits could not be reconciled with the claimed cash sales listed in the handwritten daily sales journals, Audit properly used an industry average for cash sales to estimate and assess retailing business and occupation tax and retail sales tax.
  32 WTD 194 12-0277 09/09/2013 RULE 254; RCW 82.32.070, RCW 82.32.100:  RECORDS – GROSS INCOME
– BANK DEPOSITS.    Where the taxpayer failed to produce records to explain the discrepancy between the deposits in the bank account and the amounts reported on the excise tax returns, Audit was justified in using the bank deposits to estimate gross income.
  32 WTD 213 13-0001 10/04/2013 RCW 82.32.070; RCW 82.32.100: RECORDKEEPING – FAILURE TO KEEP
RECORDS – ESTIMATE OF TAX LIABILITY.  If a taxpayer fails to maintain and provide adequate records to determine the taxpayer’s excise tax liability, the Department is authorized to use the records available to arrive at its best estimate of the taxpayer’s tax liability.
  33 WTD 45 12-0349 03/31/2014 RULE 254; RCW 82.32.070, RCW 82.32.100: RECORDS – MEASURE OF SALES – BANK DEPOSITS. Where the seller failed to provide original source documents or records showing that the measure of sales as determined by bank deposits was incorrect, Audit was justified in using bank deposits to determine the measure of taxes.
  33 WTD 45 12-0349 03/31/2014 RULE 254; RCW 82.08.0273, RCW 82.32.070: RETAIL SALES TAX – NONRESIDENT EXEMPTION – RECORDS. Taxpayers must maintain records required under RCW 82.08.0273 for each nontaxable sale to nonresidents to qualify for that statutory exemption.
  33 WTD 70 13-0272 04/30/2014 RULE 254; RCW 82.32.070; RCW 82.32.100: RECORDS TO BE PRESERVED – EXAMINATION. The Department is directed to estimate the assessment in such a manner it deems best when taxpayers do not keep and preserve suitable records.
  33 WTD 89 13-0342 04/30/2014 RULE 254; RCW 82.32.070: RECORDS – RETAIL SALES TAX - RECORDKEEPING. Taxpayer must maintain and provide adequate records to demonstrate that he is entitled to an adjustment of a tax assessment.
  33 WTD 130 13-0217 05/31/2014 RULE 254(5); RCW 82.32.070(1): TAXPAYER’S RECORDS OPEN FOR EXAMINATION BY THE DEPARTMENT – THE DEPARTMENT IS REQUIRED TO ASSESS DELINQUENT TAXES FOLLOWING A REVIEW OF TAXPAYER’S BOOKS AND RECORDS. The alleged administrative burden placed upon Taxpayer in showing the Department its books and records during the course of an audit is not grounds for canceling the resulting assessment. Taxpayer’s books and records are open for examination by the Department any time. The Department is required to assess Taxpayer for any delinquent taxes for the previous four years following a review of its books and records.
  33 WTD 380 13-0380 07/31/2014 RULE 254; RCW 82.32.070: RECORDS – RETAIL SALES TAX – RECORDKEEPING. A taxpayer must maintain and provide adequate records to demonstrate that it is entitled to an adjustment of a tax assessment.
  33 WTD 402 14-0106 07/31/2014 RULE 254; RCW 82.32.070, RCW 82.32.100: BUSINESS AND OCCUPATION TAX – RECORDS RETENTION – ESTIMATE OF TAX – BANK DEPOSITS. Taxpayer did not provide the Department with records sufficient to determine whether some deposits into Taxpayer’s business bank account originated from nontaxable sources. Without adequate records for review, the Department concluded the deposits represented taxable income.
         
OTHER: