Illinois Administrative Code › Title 86 - REVENUE › Part 130 - RETAILERS' OCCUPATION TAX › Subpart H - BOOKS AND RECORDS › Section 130.801 - Books and Records - General Requirements

Current through Register Vol. 48, No. 28, July 12, 2024
a)
Every person engaged in the
				business of selling tangible personal property at retail in this State shall
				keep records and books of all sales
and purchases
of tangible
				personal property
, including all sales and purchase invoices, purchase
				orders, merchandise records and requisitions, inventory records
prepared as of December 31 of each year or otherwise annually, as has
				been the custom in the specific trade
[35 ILCS
				120/7]
,
credit memos, debit memos,
				bills of lading, shipping records, and all other records pertaining to any and
				all purchases and sales of goods whether or not the retailer believes them to
				be taxable under the Act; and the retailer shall also keep summaries,
				recapitulations, totals, journal entries, ledger accounts, accounts receivable
				records, accounts payable records, statements, tax returns with all schedules
				or pertinent working papers used in connection with the preparation of such
				returns, and other documents listing, summarizing or pertaining to such sales,
				purchases, inventory changes, shipments or other transactions. For a
				description of what records constitute the minimum required, including the use
				of machine-sensible records and electronic data interchange, see Section
				130.805 of this Part.
b) Retailers must maintain complete books and
				records covering receipts from all sales and distinguishing taxable from
				nontaxable receipts.
c) The books
				and records must clearly indicate and explain all the information (deductions
				as well as gross receipts) required for tax returns.
d) If a taxpayer retains records required to
				be retained under this Section in both machine-sensible and hard-copy formats,
				the taxpayer shall, upon request, make the records available to the Department
				in machine-sensible format in accordance with Section
				130.805(b)(5).
e) The
books and records and other
				papers and documents which are required by the Act to be kept shall be kept in
				the English language and shall, at all times during business hours of the day,
				be subject to inspection by the Department or its duly authorized agents and
				employees.
[35 ILCS 120/7]
f) The books and records must be kept within
				Illinois except in instances where a business has several branches, with the
				head office being located outside Illinois, and where all books and records
				have been regularly kept outside the State at such head office. Under such
				circumstances, upon written permission from the Department, books and records
				may be kept outside Illinois, but the taxpayer must, within a reasonable time
				after notification by the Department, make all pertinent books, records, papers
				and documents available at some point within Illinois for the purpose of the
				inspection and audit as the Department may deem necessary.
g) Request for Books and Records and
				Documentation During an Audit
1) At the
				initiation of an audit, the Department will notify the taxpayer of the books
				and records that the taxpayer will be required to produce for the Department to
				enable the Department to conduct the audit. During the course of the audit, the
				Department will provide the taxpayer with information document requests
				("Information Document Request") for books and records the Department is
				requesting the taxpayer to produce for review. The taxpayer will be provided 30
				days, or the number of days agreed to by the taxpayer and the Department, to
				respond to an Information Document Request. If the taxpayer and the Department
				cannot agree on a date to respond to a request, the taxpayer shall have 30 days
				to respond. If the taxpayer does not provide the Department with the books and
				records requested in the Information Document Request, the Department will
				issue a second Information Document Request for the books and records. If the
				taxpayer again fails to provide the Department with the books and records
				requested, the Department is authorized to issue a written document request for
				the records pursuant to subsection (i)(3).
2)
It shall be presumed that all
				sales of tangible personal property are subject to tax under
the Act
until the contrary is established. The burden of proving that a
				transaction is not taxable shall be upon the person who would be required to
				remit the tax to the Department if the transaction is taxable. In the course of
				any audit or investigation or hearing by the Department with reference to a
				given taxpayer, if the Department finds that the taxpayer lacks documentary
				evidence needed to support the taxpayer's claim to exemption from tax, the
				Department is authorized to notify the taxpayer in writing to produce such
				evidence
("Notice of Demand for Documentary Evidence")
, and
				the taxpayer shall have 60 days subject to the right in the Department to
				extend this period either on request for good cause shown or on its own motion
				from the date when such notice is sent to the taxpayer by certified or
				registered mail (or delivered to the taxpayer if the notice is served
				personally) in which to obtain and produce such evidence for the Department's
				inspection and audit, failing which the matter shall be closed, and the
				transaction shall be conclusively presumed to be taxable.
[35 ILCS
				120/7] In the course of any audit or investigation by
				the Department with reference to a given taxpayer, if the taxpayer fails to
				produce the documentary evidence needed to support the taxpayer's claim to
				exemption from tax within the 60 days or the time allotted, the taxpayer is
				subject to the penalty in subsection (i).
EXAMPLE: The auditor requests all the resale certificates and
				  exemption certificates for all tax-exempt sales. The auditor has issued an
				  Information Document Request pursuant to subsection (g)(1). The retailer has
				  failed to provide the documentary evidence required to support the exemptions.
				  The Department issued a written request ("Notice of Demand for Documentary
				  Evidence") pursuant to subsection (g)(2) and provided the taxpayer 60 days to
				  produce the documentation. If the retailer has not provided all of the
				  certificates after the 60 days has elapsed, the matter will be closed, the
				  transactions will be conclusively presumed to be taxable, and the retailer is
				  subject to the penalty in subsection (i).