[IMGCAP(1)]State tax exam information requests are increasingly becoming more comprehensive and demanding. We’ve noticed a disturbing trend with our clients who maintain their records electronically. States, in their information document requests, are requesting that those businesses supply all transaction data for the entire period covered by the exam; i.e., data regarding every transaction, every check paid and complete general ledger detail.

During a recent sales tax exam, one of our clients received an information document request that contained a written notification that the state’s tax provision governing what constitutes adequate books and records required that a taxpayer under exam provide “complete electronic sale and purchases data in a standard record format for all transactions nationwide.” This notification indicated that such information included, but was not limited to, “accounts payable, accounts receivable and journal entries” for the entire three year period covered by the exam.

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