Introduction 

If you have a Certificate of Authority to collect sales tax for the state, you are required to keep accurate records of all sales and purchases that you make. Keeping good records of your business operation will help you prepare accurate and complete sales tax returns. It will also serve as documentation of the accuracy of your returns if you are audited. This bulletin explains:

• what kinds of records you must keep,
• how to maintain these records, and
• how long you must keep these records.

While this bulletin does not provide an exhaustive list of the records you must keep, it does give an overview of those records and references to more resources on record-keeping requirements.

Record-keeping rules

When you file a sales tax return, it must show:

• total sales;
• taxable sales;
• purchases by the business subject to tax on which no tax was paid to the seller;
• credits (if any);
• sales and use taxes due for each locality; and
• any other special taxes due.

All of your records must be dated and kept in good order. You must be able, through your records, to connect an exempt sale to a particular purchaser to the exemption certificate you have on file for that sale or purchaser. If you issue an exemption certificate when you make a purchase, you must maintain a record of the purchase and be able to prove the exempt use.

What records to keep

You must keep records of every sale, the amount of the sale, and the sales tax on the sale. If you give a receipt to the purchaser, you must keep a copy of the receipt or other evidence. Otherwise, you must keep a daily record of all cash and credit sales in a daybook or similar journal. Ask your accountant for help if you aren’t sure how to do this.

If you sell both taxable and nontaxable goods or services, you must identify which of the items you sell are subject to sales tax and which are not on the invoice or receipt. For example, a cash register tape must list each item sold with enough detail to determine whether that item is subject to sales tax. You must always separately state the amount of sales tax due on the invoice or receipt that you give your customer. For more information, see Tax Bulletin Taxable Receipt (TB-ST-860).

If you deliver the product or service to a place other than your place of business, you must maintain records that prove where delivery took place. A special rule applies to motor vehicles, trailers, and certain boats. For more information, see Publication 750, A Guide to Sales Tax in New York State.

You must keep detailed records of your business purchases. You must be able to determine from these records any sales tax you owe as a result of these purchases.

For detailed information on record-keeping requirements, see TSB-M-81(9)S, Records Required to be Kept by Sales Tax Vendors, and Publication 900, Important Information for Business Owners.

Maintaining records electronically

If you maintain records in an electronic format, all the requirements for paper records also apply to records created and stored electronically. Records that are originally created in an electronic format must be made available to the Tax Department in an electronically readable form. See Publication 132, Computer-Assisted Audits – Guidelines and Procedures for Sales Tax Audits.

How long must I keep these records?

You must keep all of your records for a minimum of three years from the due date of the return to which those records relate, or the date the return is filed, if later. You must make the records available to the Tax Department upon request. The Tax Department may require you to keep records for a longer period of time, such as when the records are the subject of an audit, court case, or other proceeding.

When your records are considered inadequate 

Your records may be considered inadequate if:

• they don’t verify sales receipts;
• they don’t verify whether those receipts are subject to sales tax;
• it’s not possible to conduct a complete audit using those records;
• you fail to make your records available to the auditor;
• your records are not in a form that can be audited by the Tax Department; or
• you keep your records electronically and you fail to make those records available in an electronic format even if you also keep hard copies of those records.

Consequences of inadequate records

If your records are considered inadequate, you may:

• owe additional sales and use taxes;
• be subject to penalties and interest;
• be subject to criminal penalties; and
• have your Certificate of Authority suspended or revoked.

See Publication 131, Your Rights and Obligations Under the Tax Law, and Tax Bulletin Sales and Use Tax Penalties (TB-ST-805).