California – Updates to the BOE’s Audit Manual

2/06/2013

SALT Report 2125 – The California State Board of Equalization announced that they will revise the Sales and Use Tax Department’s audit manual to clarify an existing law.  The BOE will add AM section 0101.22, Standard of Proof, to clarify that for sales and use tax cases where there is conflicting evidence the BOE will apply the preponderance of evidence standard of proof.  The language of the revision reads as follows:

“The “preponderance of evidence” standard relates to the probability of truth, and can be defined as, “such evidence as, when weighed with that opposed to it, has more convincing force and the greater probability of truth” or, more succinctly, “more likely to be true than not true.

Pursuant to RTC sections 7053 and 7054, it is the responsibility of the taxpayer to maintain and make available for examination all records and other pertinent documents necessary to determine the correct tax liability.  In performing an audit or other examination, staff should communicate with the taxpayer and/or its authorized representative to the fullest extent possible in an effort to establish facts that are relevant for sales and use tax audit purposes.   When applying the preponderance of evidence standard, it is important that staff view all evidence in an objective manner, focusing on the quality of the evidence (i.e., original source documentation) and its probable truth or accuracy, and not only on the quantity of evidence produced.”

Any comments or suggestions regarding the proposed revision must be received by the BOE no later than March 27, 2013.

For Further Information

California State Board of Equalization – Audit Manual Pending Addition