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  3. McDannald Enterprises d/b/a/ Cow Palace

McDannald Enterprises d/b/a/ Cow Palace



A claim for refund was filed by a successor to a business which operated under a liquor license. The Department had issued a provisional assessment, estimating the gross receipts tax liability of the business for periods for which returns had not been filed. The successor had paid the assessment in order to obtain a clearance allowing him to purchase the liquor license. The successor then filed a claim for refund on the basis that the Department’s estimate of the liability for unfiled periods was too high. There were no business records from which actual receipts could be established. Held that the successor had overcome the presumption of correctness of the Department’s assessment by showing that the Department’s methodology for estimating the business’ gross receipts was not in accordance with generally accepted accounting methodologies for projecting business receipts. Also held that the Taxpayer had presented evidence of a more reasonable method of estimating receipts by projecting the business’ average receipts for the previous twelve months for which returns were filed to the periods for which receipts needed to be estimated. Protest granted in part and partial refund ordered.