Minnesota Supreme Court Upholds Tax Court’s Ruling on Liquor Store’s Audit Failures

The Minnesota Supreme Court affirmed the Minnesota Tax Court’s grant of summary judgment in favor of the Commissioner of Revenue in a sales tax audit dispute involving a retail liquor store. The Commissioner employed indirect audit methods after determining that the taxpayer failed to maintain adequate sales records during the audit period. The court held that the Commissioner was justified in using alternative methods to reconstruct taxable sales due to deficient recordkeeping. The court further concluded that the extended statute of limitations applied because the taxpayer’s underreporting exceeded 25 percent, and it upheld the imposition of negligence penalties, finding that ...