Bill Text: MI HB4292 | 2013-2014 | 97th Legislature | Engrossed
Bill Title: Use tax; other; indirect audit procedures; prohibit under certain circumstances. Amends sec. 14a of 1937 PA 94 (MCL 205.104a).
Spectrum: Partisan Bill (Republican 4-0)
Status: (Passed) 2014-04-17 - Assigned Pa 109'14 With Immediate Effect [HB4292 Detail]
Download: Michigan-2013-HB4292-Engrossed.html
HB-4292, As Passed House, January 15, 2014
SUBSTITUTE FOR
HOUSE BILL NO. 4292
A bill to amend 1937 PA 94, entitled
"Use tax act,"
by amending section 14a (MCL 205.104a), as amended by 2008 PA 439.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 14a. (1) A person in the business of selling tangible
personal property and liable for any tax under this act shall keep
in a paper, electronic, or digital format an accurate and complete
beginning and annual inventory and purchase records of additions to
inventory, complete daily sales records, receipts, invoices, bills
of lading, and all pertinent documents in a form the department
requires. If an exemption from use tax is claimed by a person
because the sale is for resale at retail, a record shall be kept of
the sales tax license number if the person has a sales tax license.
These records shall be retained for a period of 4 years after the
tax imposed under this act to which the records apply is due or as
otherwise provided by law.
(2) If the department considers it necessary, the department
may require a person, by notice served upon that person, to make a
return, render under oath certain statements, or keep certain
records the department considers sufficient to show whether or not
that person is liable for the tax under this act.
(3) A person knowingly making a sale of tangible personal
property for the purpose of resale at retail to another person not
licensed under this act is liable for the tax imposed under this
act unless the transaction is exempt under the provisions of
section 4i.
(4) If a taxpayer fails to file a return or to maintain or
preserve
proper sufficient records as prescribed in this section,
or the department has reason to believe that any records maintained
or returns filed are inaccurate or incomplete and that additional
taxes are due, the department may assess the amount of the tax due
from the taxpayer based on an indirect audit procedure or any other
information that is available or that may become available to the
department. That assessment is considered prima facie correct for
the purpose of this act and the burden of proof of refuting the
assessment is upon the taxpayer. An indirect audit of a taxpayer
under this subsection shall be conducted in accordance with 1941 PA
122, MCL 205.1 to 205.31, and the standards published by the
department under section 21 of 1941 PA 122, MCL 205.21, and shall
include all of the following elements:
(a) A review of the taxpayer's books and records. The
department may use an indirect method to test the accuracy of the
taxpayer's books and records.
(b) Both the credibility of the evidence and the
reasonableness of the conclusion shall be evaluated before any
determination of tax liability is made.
(c) The department may use any method to reconstruct income,
deductions, or expenses that is reasonable under the circumstances.
The department may use third-party records in the reconstruction.
(d) The department shall investigate all reasonable evidence
presented by the taxpayer refuting the computation.
(5) If a taxpayer has filed all the required returns and has
maintained and preserved sufficient records as required under this
section, the department shall not base a tax deficiency
determination or assessment on any indirect audit procedure unless
the department has a documented reason to believe that any records
maintained or returns filed are inaccurate or incomplete and that
additional taxes are due.
(6) (5)
For purposes of this act, exemption
certificate
includes a blanket exemption certificate on a form prescribed by
the department that covers all exempt transfers between the
taxpayer and the buyer for a period of 4 years or for a period of
less than 4 years as stated on the blanket exemption certificate if
that period is agreed to by the buyer and taxpayer.
(7) As used in this section:
(a) "Indirect audit procedure" is an audit method that
involves the determination of tax liabilities through an analysis
of a taxpayer's business activities using information from a range
of sources beyond the taxpayer's declaration and formal books and
records.
(b) "Sufficient records" means records that meet the
department's need to determine the tax due under this act.
