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The Connecticut Supreme Court has
clarified the recordkeeping require-
ments of the regulation. As a result, it is
critical that practitioners advise clients
in retail businesses that they must
maintain the actual cash register tapes
showing the individual transactions, as
the DRS will not accept Z tapes or
other forms of summary documents
from taxpayers.
Failure to maintain the register tapes
showing the individual sales will leave
the taxpayer susceptible to the DRS
determination that the taxpayer failed
to provide adequate records, allowing
the DRS to re-determine the taxpayer's
receipts using its own method and
ignore the taxpayer's actual documen-
tation. Hopefully, the DRS will not
expand this ruling beyond this point.
In addition, practitioners still must be
alert to the issuance of a jeopardy
assessment and its 10-day deadline to
appeal and be prepared to document
facts challenging the use of the jeop-
ardy assessment against the client.
Representatives should ensure that
the DRS presents sufficient evidence
to support a conclusion that the tax-
payer intends to leave the jurisdiction
or shift assets out of the jurisdiction.
As a result of this decision, the cost to
business taxpayers who do not main-
tain complete records of their individual
sales will be enormous. Business advi-
sors should alert their clients to redou-
ble their efforts to ensure compliance
with the recordkeeping regulation.
Attorney Robert J.
Percy, a partner at
Convicer, Percy &
Glastonbury, special-
izes in civil and crimi-
nal tax litigation before
the United States Tax Court, United
States District Court, Connecticut
Superior Court, Connecticut Appellate
Court, and Connecticut Supreme
Court. Percy has extensive experience
counseling both private and public
sector clients with respect to retire-
ment and pension issues and has
developed numerous retirement and
section 125 cafeteria plans. A member
of the Connecticut Bar Association,
where he is on the Tax Section
American Bar Association, Percy is
named in The Best Lawyers in
America. He received his B.M.E. from
Rensselaer Polytechnic Institute and
his law degree from the University of
Connecticut. He can be reached at
Eric L. Green is also a
partner at Convicer,
Percy & Green, LLP
where he specializes
in representing indi-
viduals and business-
es in criminal and civil
tax proceedings before the Internal
Revenue Service and the Connecticut
Department of Revenue Services, busi-
ness tax planning, and estate planning.
He has served as adjunct faculty at the
University of Connecticut School of
Law, and serves as chair of the Closely
Held Business Tax Committee of the
American Bar Association. Green is an
honors graduate of the New England
School of Law and received his Master
of Laws degree in Taxation from Boston
University School of Law. He can be
reached at
The authors acknowledge and appre-
ciate the comments provided by
Attorney Richard Convicer.
Connecticut Supreme Court Upholds
Business Recordkeeping Requirements
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