On October 17, 2018, the Department issued the Taxpayer an assessment for $2,516.42 in gross receipts taxes, penalty, and interest. The Taxpayer protested the assessment in a letter received by the Department on January 14, 2019. The Taxpayer is a rancher who raises and trains livestock. He argued that his receipts were exempt because they were earned from selling livestock and an exemption for the sale of livestock is provided in statute. The Department argued that the Taxpayer had not supported the exemption with evidence. For the exemption to be valid, a document like a receipt or a bill created at the time of the transaction was needed as support. Though the Taxpayer stated that he would provide a bill of sale to livestock customers who asked for it, he did not keep copies and would complete a deal with a handshake. Under the law an assessment issued by the Department is presumed to be correct. It is the taxpayer’s burden to overcome the assessment by presenting some countervailing evidence to show it should be abated. The Taxpayer, however, could only support his claim to the exemption with his testimony and the record of one sale. The Taxpayer contended that his memory, along with calendars and confirmations of old customers, should be sufficient evidence. The Hearing Officer noted that the personal income tax instructions advise taxpayers to keep copies of books, records, statements, and other supporting documents for a least ten years. The Tax Administration Act also states the taxpayers shall maintain books or records that will permit the accurate computation of state taxes. Though the Hearing Officer found the Taxpayer was very creditable and cordial, his testimony alone without other physical evidence was not enough to overcome presumption of correctness. The record the Taxpayer was able to produce, a receipt for a bull sold at auction, allowed for only that portion of the assessment to be abated. And so, the Hearing Officer ordered the protest granted in part and denied in part.
Dusty J Stone