Sec. 03.01.03.04. Record-Keeping Requirements-----Machine-Sensible Records

A. General Requirements.

(1) Machine-sensible records used to establish tax compliance shall contain sufficient transaction-level detail information so that the details underlying the machine-sensible records can be identified and made available to the Comptroller.

(2) At the time of an examination, the retained machine-sensible records shall be capable of being retrieved and converted to a standard record format.

(3) A taxpayer who does not create the electronic equivalent of a traditional paper document in the ordinary course of business is not required to construct that record for tax purposes.

B. Electronic Data Interchange Requirements.

(1) If a taxpayer uses electronic data interchange processes and technology, the level of record detail, in combination with other records related to the transactions, shall be equivalent to that contained in an acceptable paper record. For example, the retained records shall contain such information as vendor name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, and shipping detail. Codes may be used to identify some or all of the data elements, if the taxpayer provides a method which allows the Comptroller to interpret the coded information.

(2) The taxpayer may capture the information necessary to satisfy §B(1) of this regulation at any level within the accounting system and need not retain the original electronic data interchange transaction records if the audit trail, authenticity, and integrity of the retained records can be established.

C. Business Process Information.

(1) Upon the request of the Comptroller, the taxpayer shall provide a description of the business process that created the retained records. The description shall include the relationship between the records and the tax documents prepared by the taxpayer and the measures employed to ensure the integrity of the records.

(2) The taxpayer shall be capable of demonstrating the:

(a) Functions being performed as they relate to the flow of data through the system;

(b) Internal controls used to ensure accurate and reliable processing; and

(c) Internal controls used to prevent unauthorized addition, alteration, or deletion of retained records.

(3) The following specific documentation is required for machine-sensible records retained pursuant to this regulation:

(a) Record formats or layouts;

(b) Field definitions, including the meaning of all codes used to represent information;

(c) File descriptions, for example, data set name; and

(d) Detailed charts of accounts and account descriptions.