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|MAINE REVENUE SERVICES||
24 STATE HOUSE STATION
AUGUSTA, MAINE 04333
OF ADMINISTRATIVE AND FINANCIAL SERVICES
Rule No. 103 (18-125 CMR 103)
RECORDKEEPING AND RETENTION
SUMMARY: The purpose of this rule is to define the requirements for the maintenance and retention of books, records, and other sources of information necessary for the determination of a person's correct tax liability. The rule applies to all taxes, including sales tax, use tax, service provider tax, and corporate income tax. It is also the purpose of the rule to address these requirements where all or a part of a taxpayer's records are received, created, maintained or generated through various computer, electronic and imaging processes and systems.
Outline of Contents:
SECTION 1. Definitions
1. “Assessor” means the State Tax Assessor or any designated agent.
2. “ Database management system" means a software system that controls, relates, retrieves, and provides access to data stored in a database.
3. "Electronic data interchange" or "EDI" means the computer to computer exchange of business transactions in a standardized structured electronic format.
4. "Hard-copy record" means any document, record, report or data compilation printed on paper.
5. "Machine-sensible record" means a collection of related information in an electronic format. Machine-sensible records do not include hard-copy records that are created or recorded on paper or stored in or by an imaging system such as a microfilm, microfiche, or storage-only imaging system.
6. "Storage-only imaging system" means a system of computer hardware and software that provides for the storage, retention and retrieval of documents originally created on paper. It does not include any system, or part of a system, that manipulates or processes information or data contained on a document in any manner other than to reproduce the document in hard copy or as an optical image.
SECTION 2. Recordkeeping requirements generally; for registered retailers.
1. Every taxpayer, including every retailer required to be registered under Title 36 Chapter 211 and every service provider required to be registered under Title 35 Chapter 358, must maintain all records that are necessary to determine the correct tax liability. All required records must be made available on request by the State Tax Assessor or the assessor's authorized representatives as required by Title 36 Section 112(4).
2. A taxpayer that captures the required records in machine-sensible format must maintain those records for as long as is required by Title 36 section 135(1) and Section 9 of this rule. In the case of sales tax, this means at least 6 years. These records must upon request be made available to the assessor in machine-sensible format as described in Section 5, including permitting the transfer of the records onto a laptop or other computer in the possession and control of an agent of the assessor.
3. A taxpayer may demonstrate tax compliance with traditional hard-copy documents or reproductions thereof, in whole or in part, whether or not the taxpayer also has retained or has the capability to retain records on electronic or other storage media in accordance with this rule. However, this subsection does not relieve the taxpayer of the obligation to comply with subsection 2.
4. Records kept by a taxpayer doing business in this State must include all bills, receipts, cash register tapes, sales invoices, purchase invoices and any other documentation supporting the entries made in the normal books of account and ledgers maintained by the average prudent business person, as well as all related reports produced from these records. The records must also include all documents, schedules or work papers used in connection with the preparation of tax returns filed by the retailer.
The minimum information required of a taxpayer includes:
SECTION 3. Recordkeeping requirements — machine-sensible records
1. General requirements.
2. Electronic data interchange requirements.
2. Electronic data processing system requirements. The requirements for an electronic data processing accounting system are similar to those for a manual accounting system, in that an adequately designed accounting system incorporates methods and records that will satisfy the requirements of this rule.
3. Business process information.
SECTION 4. Records maintenance requirements
1. The taxpayer's computer hardware or software must accommodate the extraction and conversion of retained machine-sensible records.
2. Maine Revenue Services recommends that taxpayers refer to the standards established by the federal National Archives and Record Administration (NARA) for guidance on the maintenance and storage of electronic records, such as the labeling of records, the location and security of the storage environment, the creation of back-up copies, and the use of periodic testing to confirm the continued integrity of the records. The NARA standards may be found at 36 Code of Federal Regulations, Part 1234.
SECTION 5. Access to machine-sensible records
Unless the taxpayer and the State Tax Assessor agree on other means of providing access to machine-sensible records, upon the assessor's request the taxpayer must provide the assessor, either directly or through a third party, with all pertinent records in bulk and in a media form acceptable to the assessor or standard record format specified by the assessor, and with the transaction-level detail deemed necessary by the assessor to determine the correct tax liability.
SECTION 6. Taxpayer responsibility and discretionary authority
1. In conjunction with meeting the requirements of section 3, a taxpayer may create files solely for the use of the State Tax Assessor. For example, if a data-base management system is used, it is consistent with this rule for the taxpayer to create and retain a file that contains the transaction-level detail from the database management system and that meets the requirements of section 3. The taxpayer must document the process that created the separate file to show the relationship between that file and the original records.
2. A taxpayer may contract with a third party to provide custodial or management services of the records. Such a contract does not relieve the taxpayer of its responsibilities under this rule.
SECTION 7. Alternative storage media
1. For purposes of storage and retention, a taxpayer may convert hard-copy documents received or produced in the normal course of business and required to be retained under this rule to microfilm, microfiche or other storage-only imaging systems and may discard the original hard-copy documents, provided the conditions of this section are met. Documents that may be stored on these media include, but are not limited to, general books of account, journals, voucher registers, general and subsidiary ledgers, and supporting records of details, such as sales invoices, purchase invoices, exemption certificates, credit memoranda, bills of lading and delivery tickets.
2. Microfilm, microfiche, and other storage-only imaging systems must meet the following requirements:
Section 8. Effect on hard-copy recordkeeping
1. Except as otherwise provided in this section, the provisions of this rule do not relieve taxpayers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as required by existing law and rules.
2. If hard-copy records are not produced or received in the ordinary course of transacting business (e.g., when the taxpayer uses electronic data interchange technology), such hard-copy records need not be created.
3. Hard-copy records generated at the time of a transaction using a credit or debit card or electronic funds transfer must be retained unless all the details necessary to determine correct tax liability relating to the transaction are subsequently received and retained by the taxpayer in accordance with this rule. Such details include those listed in section .03 3 .
4. This rule does not preclude the assessor from requiring hard-copy printouts in lieu of retained machine-sensible records at the time of an audit.
Section 9. Records retention - time period
Records required to be retained pursuant to the terms of this Rule must be retained for the same time period as all other records are required to be kept for the applicable tax. Title 36 MRSA §135 requires that records pertaining to the Maine Income Tax (36 MRSA Part 8), the Maine Estate Tax (36 MRSA Chapter 575) and the Maine Mining Excise Tax (36 MRSA Chapter 371) must be retained as long as is required by applicable federal law and regulation. Records pertaining to the Special Fuel Tax user reports filed pursuant to section 36 MRSA §3209, subsection 2 and the International Fuel Tax Agreement must be retained for at least 4 years. Records pertaining to all other taxes imposed by this Title 36 must be retained for a period of at least 6 years. All records must be kept in such a manner as to ensure their security and accessibility for inspection by the State Tax Assessor or any designated agent.
AUTHORITY: 36 MRSA §§112, 135
EFFECTIVE DATE: January 12, 2006
AMENDED: March 30, 2008