Court Opinion

ID: 9374897
Source: CourtListenerOpinion
Date Created: 2023-02-24 16:01:54.961947+00
Date Added: 2024-06-11T17:16:53.898643
License: Public Domain

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.
CL-2022-0962

                  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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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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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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     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, cash-

register 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

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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

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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

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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

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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

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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

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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.

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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

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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.

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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

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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

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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

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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.

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