REL: February 24, 2023

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. 

Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, 

Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections 

may be made before the opinion is published in Southern Reporter.

ALABAMA COURT OF CIVIL APPEALS

OCTOBER TERM, 2022-2023

_________________________

CL-2022-0962

_________________________

Opal Management, Inc.

v.

Alabama Department of Revenue

Appeal from Montgomery Circuit Court

(CV-21-901011)

MOORE, Judge.

Opal Management, Inc. ("the taxpayer"), appeals from a final 

judgment entered by the Montgomery Circuit Court ("the trial court")

granting a summary judgment in favor of the Alabama Department of 

Revenue ("the Department"). We reverse the judgment and remand the 

case with instructions.
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2

Background and Procedural History

The taxpayer owns and operates a convenience store in 

Montgomery and is in the business of selling at retail tangible personal 

property. Pursuant to Ala. Code 1975, § 40-23-2(1), the gross sales from 

the sale of tangible personal property at retail are subject to a privilege 

or license tax, known as the sales tax. The taxpayer is required to add 

the sales tax to each item of tangible personal property that it sells, 

except those items that are not subject to the sales tax, and then collect 

the sales tax from the purchaser. Ala. Code 1975, § 40-23-26(a). The 

taxpayer is required then to report and remit to the state the sales taxes 

it collects. Ala. Code 1975, § 40-23-7.

The taxpayer has collected, reported, and remitted sales taxes to 

the state over the years of operating the convenience store. In 2018, the 

Department audited the taxpayer for the period July 1, 2012, to 

December 31, 2017. Based on the audit, the Department determined that 

the taxpayer had failed to keep complete and accurate records and 

information needed to allow the Department to determine the sales taxes 

that the taxpayer owed for that period, in violation of Ala. Code 1975, § 
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3

40-2A-7(a)(1) (providing, in pertinent part, that "taxpayers shall keep 

and maintain an accurate and complete set of records, books, and other 

information sufficient to allow the [taxing authority] to determine the 

correct amount of value or correct amount of any tax"). In accordance 

with Ala. Code 1975, § 40-2A-7(b)(1)a., the Department invoked its right 

to estimate the sales-tax liability of the taxpayer based on "the most 

accurate and complete information reasonably obtainable." Upon review 

of the information it deemed most reliable, the Department determined 

that the taxpayer had consistently, intentionally, and fraudulently 

underreported and underpaid its sales taxes. On April 3, 2019, the 

Department entered a final assessment against the taxpayer asserting 

that it owed $257,497.57, which included interest and a 50% penalty for 

fraud. See § 40-2A-11(d), Ala. Code 1975 (imposing 50% penalty "[i]f any 

part of any underpayment of tax required to be shown on a return is due 

to fraud").

The taxpayer properly and timely appealed the final assessment to 

the Alabama Tax Tribunal ("the Tax Tribunal"). See Ala. Code 1975, § 

40-2A-7(b)(5). On August 18, 2021, the Tax Tribunal issued a 
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4

preliminary order in which it made certain findings of fact and 

conclusions of law, generally upholding the final assessment but ordering 

the Department to recalculate the sales-tax liability to correct a 

mathematical error. On August 21, 2021, the Tax Tribunal issued a final 

order that incorporated the preliminary order and accounted for the

mathematical error; ultimately, the Tax Tribunal modified the amount 

owed under the final assessment to $257,188.10. In the final order, the 

Tax Tribunal resolved the two main disputes between the parties. First, 

the Tax Tribunal determined that the taxpayer had failed to maintain 

accurate and complete records from which the Department could 

ascertain its sales-tax liability and that the Department had properly 

estimated the sales-tax liability. Second, the Tax Tribunal determined 

that the Department had proven that the taxpayer had committed fraud 

in underreporting and underpaying its sales-tax liability, supporting the 

decision of the Department to impose the penalty for fraud. The Tax 

Tribunal also determined that the Department had correctly applied Ala. 

Code 1975, § 40-2A-7(b)(1)b., discussed infra.
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5

On September 19, 2021, the taxpayer properly and timely appealed 

the Tax Tribunal's final order to the trial court. See Ala. Code 1975, § 

40-2B-2(m). On October 21, 2021, the Department filed a motion for a 

summary judgment. On December 13, 2021, the taxpayer filed a written 

response to the summary-judgment motion. On December 29, 2021, the 

trial court conducted a hearing on the motion for a summary judgment. 

During the hearing, the trial court requested briefs from the parties 

regarding the standard of review to be applied to the final order of the 

Tax Tribunal, which both parties submitted by January 13, 2022. On 

July 26, 2022, the trial court entered a summary judgment upholding the 

final order of the Tax Tribunal. The taxpayer properly and timely 

appealed to this court on September 2, 2022. See Ala. Code 1975, § 12-3-

10; Alabama Dep't of Revenue v. Scholastic Book Clubs, Inc., 276 So. 3d 

698, 705 (Ala. Civ. App. 2018); and Rule 4(a)(1), Ala. R. App. P. 

Issues

The dispositive issue in this case is whether the trial court erred in 

entering a summary judgment in favor of the Department and against 

the taxpayer. 
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Standard of Review

An appellate court reviews a summary judgment de novo. S.J.S. v.

B.R., 949 So. 2d 941, 944 (Ala. Civ. App. 2006). A summary judgment 

may be entered only "if the pleadings, depositions, answers to 

interrogatories, and admissions on file, together with the affidavits, if 

any, show that there is no genuine issue as to any material fact and that 

the moving party is entitled to a judgment as a matter of law." Rule 

56(c)(3), Ala. R. Civ. P. The burden is on the party moving for a summary 

judgment to make a prima facie showing that it is entitled to a summary 

judgment by presenting evidence that, if uncontroverted at trial, would 

entitle the moving party to a judgment as a matter of law. See Ex parte

General Motors Corp., 769 So. 2d 903, 909 (Ala. 1999). If the movant 

makes a prima facie showing, the burden shifts to the nonmoving party 

to rebut that showing by presenting substantial evidence creating a 

genuine issue of material fact or proving that the movant is not entitled 

to a judgment as a matter of law. Bass v. SouthTrust Bank of Baldwin

Cnty., 538 So. 2d 794, 797-98 (Ala. 1989).
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Facts

The Department filed a narrative summary of undisputed facts that 

relied exclusively on the contents of the preliminary and final orders 

entered by the Tax Tribunal, which were attached as exhibits in support 

of its motion for a summary judgment. See Rule 56(c)(1), Ala. R. Civ. P. 

In those orders, the Tax Tribunal found that, when the Department had 

notified the taxpayer of its intent to perform a sales-tax audit, the 

Department had requested that the taxpayer provide sales records, cashregister tapes, purchase invoices, bank statements, and other records so 

that it could determine the proper amount of the sales-tax liability. 

During the audit, however, the Department discovered that the taxpayer 

had not retained the "z tapes," which had recorded each sales transaction

that had been processed through its store's cash register.

Instead, Mohamed Hoque, the manager for the convenience store 

owned and operated by the taxpayer, informed the Department that he 

had used "z summaries" generated by the cash register to compute the 

sales-tax liability. Those summaries aggregated the individual sales for 

the month. According to Hoque, each month he would use the "z 
CL-2022-0962

8

summaries" to ascertain the amount of the total sales transacted through 

the cash register, subtract the nontaxable sales from that amount, and,

after accounting for theft and spoilage, determine the gross monthly 

taxable sales and the sales-tax liability on that amount. Hoque would 

make all of those calculations on a monthly worksheet and would then 

forward the monthly worksheet to the taxpayer's accountant, who, he 

said, would then file the taxpayer's monthly sales-tax return, reporting 

and remitting the amount of the sales tax as determined by Hoque. The 

taxpayer provided the Department with the monthly worksheets and 

monthly sales-tax returns, which corresponded exactly, but not the "z 

summaries" or other raw data Hoque had used in his monthly 

calculations, all of which, Hoque said, had been discarded because of a 

lack of storage space.

The Department determined, and the Tax Tribunal agreed, that the 

taxpayer had not maintained proper records of its sales. To ascertain the 

sales-tax liability, the auditor decided to perform a "mark-up audit." In 

a markup audit, the Department determines the wholesale costs to the 

taxpayer of the goods sold and applies a markup percentage to estimate 
CL-2022-0962

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the retail-sales amount of the goods sold. In this case, the auditor 

obtained information from the top eight wholesale vendors who supplied 

the taxpayer to estimate the total costs of the store's inventory during 

the audit period, which originally had been January 1, 2015, through 

December 31, 2017. After the summary-judgment hearing, the taxpayer 

submitted an affidavit from a third party and from Hoque designed to 

prove that the Department had used unreliable information from the 

wholesale vendors to ascertain the amount and value of the wholesale 

goods purchased by the taxpayer, and the Department submitted an 

affidavit from the same third party "to set the record straight"; the Tax 

Tribunal excluded those affidavits from consideration. Based on his 

review of the information obtained from the wholesale vendors, the 

auditor determined that the taxpayer had purchased inventory during 

the relevant audit period at a cost of $5.8 million. 

After determining the wholesale cost of inventory, and accounting 

for theft, waste, and "tobacco buy downs," the auditor applied a 35% 

markup to the costs of the goods sold to conclude that the amount of the 

gross retail sales during the relevant audit period was approximately 
CL-2022-0962

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$7.8 million. After subtracting nontaxable sales, the auditor calculated 

the dollar amount of the taxable sales for the initial audit period, 

concluding that the total far exceeded the $3.5 million that had been 

reported by the taxpayer. 

Because the auditor believed that, for the initial audit period, the 

taxpayer had underreported its taxable sales by more than 25%, the audit 

period was extended back to July 2, 2012. See § 40-2A-7(b)(2)b. ("A 

preliminary assessment may be entered within six years from the due 

date of the return or six years from the date the return is filed with the 

department, whichever is later, if the taxpayer omits from the taxable 

base an amount properly includable therein which is in excess of 25 

percent of the amount of the taxable base stated in the return."). 

Applying the same markup-audit methodology for the extended period, 

the Department determined, and the Tax Tribunal found, that, for each 

of the 66 months of the total audit period, the taxpayer's inventory 

purchases exceeded its reported sales, and that the taxpayer had no 

plausible explanation for the discrepancy. Ultimately, the auditor 

calculated the total sales taxes due, credited the taxpayer for the sales 
CL-2022-0962

11

taxes paid during the audit period, and assessed a deficiency of 

$155,721.24, without interest.

The Department determined that the taxpayer had fraudulently 

underreported and underpaid the sales taxes that it had collected during 

the audit period, so it assessed an additional 50% penalty for fraud on 

the amount of the total sales tax-liability. The Tax Tribunal upheld that

determination, finding that the taxpayer had not maintained proper 

records, that it had vastly underreported its taxable sales, that it had 

done so every month during the 66-month audit period, and that the 

taxpayer had not provided any plausible explanation for its 

recordkeeping and reporting practices. The Tax Tribunal essentially 

concluded that the taxpayer had engaged in this scheme for the purpose 

of evading the payment of the appropriate amount of sales tax.

Rule 56(c)(1), Ala. R. Civ. P., provides, in pertinent part: "If the 

opposing party contends that material facts are in dispute, that party 

shall file and serve a statement in opposition supported in the same 

manner as is provided herein for a summary of undisputed material 

facts." The taxpayer did not file and serve a statement of facts opposing 
CL-2022-0962

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the statement filed by the Department. However, throughout its brief in 

response to the motion for a summary judgment, the taxpayer set forth 

additional facts, which it supported with affidavits and exhibits,

substantially complying with Rule 56(c)(1). See Kennedy v. Wells Fargo

Home Mortg., 853 So. 2d 1009, 1011-12 (Ala. Civ. App. 2003). The 

taxpayer also relied on excerpts from the certified record of the testimony 

presented at the hearing before the Tax Tribunal, which had been 

submitted to the trial court pursuant to § 40-2B-2(m)(4) ("The 

administrative record and transcript shall be transmitted to the 

reviewing court as provided herein and shall be admitted into evidence 

in the trial de novo, subject to the rights of either party to object to any 

testimony or evidence in the administrative record or transcript.").

The Department's auditor testified at the hearing before the Tax 

Tribunal that the Department follows the guidelines of the federal 

Internal Revenue Service ("IRS") when performing a markup audit. The 

IRS annually calculates a standard markup percentage for various retail 

businesses based on nationwide data. The Department regularly uses a 

standard IRS markup percentage of 35% when conducting its markup 
CL-2022-0962

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audits. The auditor admitted that the Department had not promulgated 

any rule, regulation, or guideline adopting the standard IRS 35% markup 

percentage. The auditor further testified that he had used the standard 

IRS 35% markup percentage because his supervisor had instructed him 

to do so. The auditor stated that he did not perform any independent 

calculation, investigation, or analysis to ascertain whether the 35% 

markup percentage should be applied in the taxpayer's audit.

In one of the affidavits submitted by the taxpayer, J. Alan Taunton, 

a certified public accountant, stated that he was familiar with the 

Department's practice of using a "standard mark up of [35%] in its sales 

tax audits of retail businesses." Taunton opined that the Department's

practice "is not the best methodology to calculate the correct tax or value 

for sales tax purposes for convenience stores." Taunton stated that "the 

most accurate and complete information reasonably obtainable for 

purposes of a markup can be derived from what is commonly called a 

shelf audit or classified markup." Taunton explained that, 

"[i]n performing a shelf audit, the auditor actually goes to the 

convenience store and performs an actual physical 

examination of various items/products being sold at the store. 
CL-2022-0962

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Selections for examination are made after first stratifying the 

population of the items sold. This [e]nsures that the 

selections accurately represent the entire population." 

According to Taunton, "[t]he auditor [then] physically views the sales 

price that is being charged for various items in the selected sample" and 

"then examines current pertinent invoices to determine the wholesale 

purchase in proportion to the sales of the product using weighted 

averages for major categories of products being sold [which] is designed 

to determine the average cost percentage for each stratified group." 

The auditor testified that he had not performed a shelf audit and, 

in fact, that he had never visited the convenience store owned and 

operated by the taxpayer. The auditor conceded that a shelf audit could 

have produced a different markup percentage, as low as even 4%, far less 

than the standard IRS 35% markup percentage that he had been ordered 

to apply by his supervisor. Hoque testified in the hearing before the Tax 

Tribunal that he had personally determined that the taxpayer had 

marked up its inventory only by an average of 12%, and he explained how 

he determined that figure by reviewing the retail prices of various goods 

sold in the store. The taxpayer pointed out in its response to the motion 
CL-2022-0962

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for a summary judgment that applicable IRS guideline IRM 4.10.4.6.5.2

(May 27, 2011), concerning the use of the standard IRS 35% markup

percentage, requires an auditor to accept the oral testimony of the 

taxpayer regarding any plausible explanation for why a taxpayer's 

markup percentage deviates from the 35% standard. According to the 

taxpayer, the Department failed to follow the IRS guidelines by ignoring 

Hoque's explanation. However, the Department pointed out that, in the 

preliminary order, the Tax Tribunal had determined that Hoque's 

explanation of how he had determined his 12% markup figure was

incoherent. 

Finally, the taxpayer attached the affidavit of Christopher J. 

Capell, a beer-sales representative, who stated that beer distributors 

control the markup percentage for sales of their products and that he had 

personally observed that the taxpayer had complied with the distributors'

guidelines by marking up most of its beer products between 15% and 

19%, except for single cans or bottles, which, he said, were sold at a 20% 

markup.
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In the last part of its response, the taxpayer challenged the fraud 

finding made by the Tax Tribunal. The taxpayer acknowledged that it 

had not maintained the "z tapes" and that its recordkeeping practices 

were not ideal, but it noted that the Department had not promulgated 

any regulation requiring that the taxpayer retain the "z tapes." The

taxpayer also noted that the Tax Tribunal had based its finding of fraud, 

in part, on the conclusion of the markup audit that the taxpayer had 

transacted sales far exceeding its reported sales, which, the taxpayer 

said, had been derived from the use of unauthenticated vendor 

documents and the IRS standard 35% markup. The taxpayer argued that 

the finding of fraud could not be inferred from the difference in the 

estimated sales-tax liability based on what it described as the improper 

markup audit and the sales taxes that it had actually paid.

Law & Analysis

Section 40-2B-2(m)(4), Ala. Code 1975, provides, in pertinent part:

"The appeal to circuit court from a final or other appealable order issued 

by the Alabama Tax Tribunal shall be a trial de novo, except that the 

order shall be presumed prima facie correct and the burden shall be on 
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the appealing party to prove otherwise." That Code section establishes a 

rebuttable presumption that the final order entered by the Tax Tribunal 

is correct. See Rule 301, Ala. R. Evid. To rebut that presumption, the 

burden rests on the appealing party "to prove otherwise." In the context 

of an appeal of a final order of the Tax Tribunal upholding a final 

assessment, the appealing party must prove that the final assessment is 

incorrect, contrary to the determination of the Tax Tribunal.

In this case, the Department moved for a summary judgment on the 

ground that the taxpayer could not present any admissible evidence to 

prove that the Tax Tribunal had incorrectly upheld the final assessment. 

The Department attached to its motion the preliminary and final orders 

of the Tax Tribunal and argued that the Tax Tribunal had correctly 

determined the facts and the law and had properly applied the law to the 

facts. Because the final order is "presumed prima facie correct," the 

Department discharged its burden of presenting evidence that, if 

uncontroverted, would have entitled it to a judgment affirming the order. 

See Ex parte General Motors Corp., supra.
CL-2022-0962

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The taxpayer countered the Department's evidence with evidence 

contradicting the determination of the Tax Tribunal that the Department 

had correctly estimated the taxable sales transacted by the taxpayer 

during the audit period. For purposes of the motion for a summary 

judgment, the parties agree that the taxpayer did not preserve records 

and information sufficient for the Department to ascertain the taxpayer's 

sales-tax liability. The parties also do not dispute that, when a taxpayer 

does not maintain adequate records to determine the sales tax owed, Ala. 

Code 1975, § 40-2A-7(b)(1)a. applies. Section 40-2A-7(b)(1)a. provides, in 

pertinent part:

"If the department determines that the amount of any tax as 

reported on a return is incorrect, or if no return is filed, or if 

the department is required to determine value, the 

department may calculate the correct tax or value based on 

the most accurate and complete information reasonably 

obtainable by the department."

(Emphasis added.). In 84 Lumber Co. v. City of Northport, 250 So. 3d 

567, 573 (Ala. Civ. App. 2017), this court determined from the plain 

language of the statute that "[s]ection 40-2A-7(b)(1)a. requires a taxing 

authority that disputes the accuracy of a tax reported on a return to use 
CL-2022-0962

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the most accurate and complete information that it can procure without 

extraordinary effort in order to calculate the correct tax."

In the proceedings before the Tax Tribunal, the central issue was 

whether the Department had complied with § 40-2A-7(b)(1)a. by using 

the markup-audit methodology to estimate the sales tax owed by the 

taxpayer during the audit period. The Tax Tribunal determined that the 

Department had properly estimated the sales-tax liability using that 

methodology, which was explained at length during the testimony of the 

auditor. The Department asserts that, because the Tax Tribunal is an 

administrative agency that is subject to the Alabama Administrative 

Procedure Act ("the AAPA"), Ala. Code 1975, § 41-22-1, et seq., see Ala. 

Code 1975, § 40-2B-2(a), (b), and (q), the trial court was required to defer 

to those findings in accordance with the standard of review set forth in 

Ala. Code 1975, § 41-22-20(k), a part of the AAPA. Section 41-22-20(k) 

generally provides that, on judicial review of the final decision of an 

administrative agency, the reviewing court "shall not substitute its 

judgment for that of the agency as to the weight of the evidence on 

questions of fact" and that the decision shall be upheld unless it is 
CL-2022-0962

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determined to be "[c]learly erroneous" or "[u]nreasonable, arbitrary, or 

capricious ." See § 41-22-20(k)(6) & (7). During the oral argument on the 

motion for a summary judgment, the trial court alluded to that standard 

of review when questioning the parties regarding the effect of the factual 

findings of the Tax Tribunal on appeal.

However, § 41-22-20(k) expressly provides that the general 

standard of review of the decisions of an administrative agency governs 

"[e]xcept where judicial review is by trial de novo" As noted above, § 40-

2B-2(m)(4) provides for judicial review of a final order of the Tax Tribunal 

by trial de novo. Thus, the general standard of review of the decisions of 

an administrative agency does not apply in an appeal of a final order of 

the Tax Tribunal.

In Alabama Department of Revenue v. Greenetrack, Inc., [Ms.

1200841, June 30, 2022] ___ So. 3d ___ (Ala. 2022), our supreme court 

explained that "a trial de novo means a new trial 'as if no trial had ever 

been had, and just as if it had originated in the circuit court.'" (quoting 

Louisville & Nashville R.R. v. Lancaster, 121 Ala. 471, 473, 25 So. 733, 

735 (1899)). Section 40-2B-2(m)(4) further provides that, in a trial de 
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novo, "[t]he circuit court shall hear the case by its own rules and shall 

decide all questions of fact and law." By its plain language, the statute 

indicates that the circuit court shall independently decide the facts of the 

case. Although the final order of the Tax Tribunal is entitled to a 

presumption of correctness, that presumption amounts only to a 

procedural device shifting the burden of proof to the taxpayer, see

generally Rule 301, Ala. R. Evid., and is not in any sense a directive to 

the circuit court that it is bound by, or even required to give any 

substantial deference to, the findings of fact made by the Tax Tribunal, 

which would be inconsistent with the meaning of a trial de novo. 

Because the trial court was reviewing the case de novo, it had to 

determine for itself whether the final assessment was incorrect based on 

the evidence before it. In the context of the motion for a summary 

judgment, the pertinent question was whether the taxpayer had 

presented substantial evidence in its submission to the trial court to 

warrant a trial. See Bass, supra. In deciding that question, the trial 

court was guided solely by the summary-judgment standard by which 

evidence is "substantial" enough to create a genuine issue of material fact 
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to defeat a motion for a summary judgment if it is of "such weight and 

quality that fair-minded persons in the exercise of impartial judgment 

can reasonably infer the existence of the fact sought to be proved." West

v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala. 

1989). The question was not whether the factual determinations made 

by the Tax Tribunal had been adequately supported by the evidence 

before that agency so that they should be given preclusive effect on 

appeal. Moreover, because the judicial review was by trial de novo, the 

taxpayer was allowed to present new evidence not considered by the Tax 

Tribunal, which it did by submitting affidavits and exhibits not contained 

in the administrative record. See Greenetrack, supra. The trial de novo 

review required the trial court to consider that evidence when ruling on 

whether the taxpayer had sufficiently proven a genuine issue of material 

fact.1 Therefore, the factual findings of the Tax Tribunal, which were 

made without consideration of that evidence, could not be binding on the 

1Pursuant to § 40-2B-2(m)(4), the parties may consent to limit the 

judicial review to the administrative record and transcript, but the 

parties in this case did not agree to that limitation.
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trial court. To the extent that the trial court indicated otherwise, it was 

in error.

On our de novo review of the motion for a summary judgment, we 

conclude that the taxpayer presented substantial evidence creating a 

genuine issue of fact as to whether the final assessment was correct. In 

his affidavit, Taunton attested that the markup audit was not the most 

accurate and complete method of determining the taxpayer's sales-tax 

liability. Taunton stated that a shelf audit, or classified markup audit, 

pursuant to which the auditor would have inspected the taxpayer's 

convenience store to ascertain the actual retail prices of the merchandise,

would have provided the Department with the most precise markup 

percentage to be applied when making its estimate. The evidence 

submitted by the taxpayer indicates that the auditor was familiar with a 

shelf audit, that the Department could have performed a shelf audit, 

that, in its publications, the Department acknowledges that a shelf audit 

is a more defensible method of ascertaining the specific markup 

percentage for a specific taxpayer, and that the shelf audit could have 

produced a drastically lower markup percentage. However, the auditor 
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testified that he had never visited the convenience store owned and 

operated by the taxpayer to conduct a shelf audit because he had been 

instructed by his supervisor to apply the standard IRS 35% markup. 

The IRS guidelines, which the Department ordinarily follows,

indicate that a standard markup audit would not be as accurate as a shelf 

audit and that the standard 35% markup should not be used when the 

taxpayer presents a plausible argument to support a deviation. Capell 

stated in his affidavit that the taxpayer had marked up its beer products, 

which constituted a large percentage of its sales, only between 15% and 

20%. Hoque testified that, overall, the taxpayer marked up their prices 

an average of only approximately 12%. The Tax Tribunal found that 

Hoque's testimony lacked credibility, but the trial court could have found 

otherwise in a trial de novo based on its own assessment of the witness. 

"[A] court may not determine the credibility of witnesses on a motion for 

summary judgment." Phillips v. Wayne's Pest Control Co., 623 So. 2d 

1099, 1102 (Ala. 1993).

We conclude that the taxpayer presented a genuine issue of 

material fact regarding whether the Department relied on the most 
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accurate and most complete information reasonably obtainable when 

making its estimation of the taxpayer's taxable sales and whether the 

amount of the final assessment was properly estimated. Furthermore, 

as part of its basis for determining that the taxpayer had committed 

fraud, the Tax Tribunal relied heavily on the large discrepancy between 

the estimated taxable sales as determined by the Department using the 

markup-audit methodology and the taxable sales reported by the 

taxpayer on its sales tax returns. Because the taxpayer has presented a 

genuine issue of material fact as to whether the Department properly 

estimated the taxable sales, the taxpayer has likewise presented a 

genuine issue of material fact as to whether the finding of fraud made by 

the Tax Tribunal is correct.

Conclusion

Because we find that the taxpayer presented substantial evidence 

establishing a genuine issue of material fact, we pretermit discussion of 

any other arguments for reversal of the summary judgment made by the 

taxpayer in its brief. We reverse the judgment of the trial court and 

remand the cause with instructions that the trial court vacate the 
CL-2022-0962

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summary judgment and that it take such other actions that are 

consistent with this opinion to conclude this matter in accordance with 

the procedure set forth in § 40-2B-2(m)(4).

REVERSED AND REMANDED WITH INSTRUCTIONS.

Thompson, P.J., and Hanson and Fridy, JJ., concur.

Edwards, J., concurs in the result, without opinion.