New York Affirms Test Method Accuracy

A New York corporation petitioned the state over the methods used in the audit of their business. The Division of Taxation requested a number of documents for an audit and the corporation did not produce all of the documents requested, including cash register tapes and sales invoices. The Division advised the taxpayer that the provided documents were not detailed enough to be conclusive and advised the corporation that an observation test would be conducted. The corporation protested the audit method after the determination was issued by the Division. The state found that the audit method was valid in the absence of direct evidence of activity. The state also found that the taxpayer could not demonstrate that the audit method was in any way unreasonable. (Got-A-Lot-A-Dough, Inc., New York Division of Tax Appeals Tribunal, DTA Nos. 820112 and 820113, November 16, 2006)

Posted on February 16, 2007