Texas Tobacco Tax Sales Tax Audit Rule 155
If the Texas Criminal Investigations Division randomly stops by your place of business for a routine audit, you may want to know your obligations. They are primarily looking for proof that you only purchased tobacco products from authorized vendors. Authorized vendors are those who are registered with the State of Texas. This is the State’s way to ensure that you have paid tobacco tax.
The rule under Texas Code 155 is that books and records for a tobacco retailer must be kept at their place of business if they have only one place of business. If they have two or more places of business, they can be kept at the main location or at each location respectively.
As a retailer, Texas Code 155 states that simply not keeping adequate books and records of tobacco taxes paid by a retailer results in a 4th degree felony. You may be able to get around this if you at least provide the name of the retailer and they State can get the records from that seller.
If you purchased tobacco products and they were taken using the laws of forfeiture, then, you will have to appeal the forfeiture in a board of appeals administrative hearing. When the retailer does not pay tobacco tax and/or have their records, then, they will not be successful on an appeal.
At this point, the CID will wait for the records. If they do not receive them, then, more than likely they will seek a warrant for your arrest. There is no civil monetary penalty that can be applied in lieu of criminal charges and an arrest.
Facing a sales tax audit in Texas? Contact our attorney for a consultation.
