Bill Text: MI HB4292 | 2013-2014 | 97th Legislature | Introduced
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-Introduced.html
HOUSE BILL No. 4292
February 20, 2013, Introduced by Reps. MacGregor, Genetski, Foster and Nesbitt and referred to the Committee on Tax Policy.
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
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 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.
(5) If a taxpayer has filed all the required returns and has
maintained and preserved adequate 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. An indirect audit of a taxpayer under
this subsection shall not be conducted in an arbitrary fashion 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) A tax deficiency determination or an assessment of tax
deficiency shall not be based on a projection from a sample without
the written approval of the taxpayer.
(c) Both the credibility of the evidence and the
reasonableness of the conclusion shall be evaluated before any
determination of tax liability is made.
(d) 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.
(e) The department shall investigate all reasonable evidence
presented by the taxpayer refuting the computation.
(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) "Circumstantial evidence" is evidence from which more than
1 logical conclusion can be reached.
(b) "Indirect audit procedure" is an audit method that
involves the use of circumstantial evidence to determine a
liability for the tax under this act based on omitted income,
overstated deductions or expenses, or both.
