DocketNumber: No. CV-90-377054 S
Citation Numbers: 1994 Conn. Super. Ct. 2678
Judges: ARONSON, J.
Filed Date: 3/11/1994
Status: Non-Precedential
Modified Date: 4/17/2021
The plaintiff is a gun dealer, which was doing business during the period March 1, 1986 through February 28, 1989 at 2600 Berlin Turnpike, Newington, Connecticut. The commissioner audited the plaintiff business for that time period and assessed the plaintiff additional sales and use tax that is the subject of this appeal.
The plaintiff made sales during the audit period, which included sales at retail and sales for resale. During the audit period, the plaintiff kept a book for each year, known as the day book, in which daily entries were made. It was the plaintiff's intent that the day book record for each day all retail sales including sales of guns and clothing and sales of firearms for resale. At the end of each day, plaintiff would record in the day book the total sales for that day. The day book did not itemize each retail sale subject to tax, but simply stated a total amount for all sales. For example, on February 9, 1989, the day book (Plaintiff's Exhibit C) contained information that can be summarized as follows:
Four guns repurchased for a total price of $585.00 Clothes $198.75 Three sales for resale were listed: 1. G. Ku $449.95 2. Frankl gun Repair $369.95 3. A. Pechulis $289.95
The bottom of the page for February 9, 1989, contained the following notation: "Total $12,741.38." Plaintiff's Exhibit H, introduced at trial, is a folder containing invoices of individual sales for February 9, 1989. When the gross receipts from the invoices shown in Plaintiff's Exhibit H for the sale date of CT Page 2680 February 9, 1989, are totaled, they produce a sum of $10,464.04. The data contained in the plaintiff's Exhibit H is inconsistent with the data contained in the day book for February 9, 1989. Also, not shown on the day book for February 9, 1989, was a resale to Rance Carli for $199.95. See Plaintiff's Exhibit H.
Wayne Huck, plaintiff's accountant, testified that at the end of each month, he would record the gross receipts from the day book. He would deduct from the gross receipts the sales for resale for that month. Huck would then apply the sales and use tax percentage to that net amount to determine the sales tax.
Scott Soule, the tax examiner for the commissioner who conducted the audit of the plaintiff's business for the period in question, was assisted in the course of the audit by Marvin Hoffman and his son Scott Hoffman, owner of Hoffman's Gun Center, Inc. Soule was provided with the day books but no cash register tapes or sales invoices to document the sales listed in the day books. Since Soule had only the day books to inspect, he could not verify sales listed in those books as sales for resale.
Soule permitted the plaintiff to obtain resale certificates for those sales listed as sales for resale during this audit period. Soule accepted some resale certificates as evidence of valid resales and disallowed forty-six sales listed for resale due to lack of valid documentation. For example, six specific resale certificates submitted to Soule were rejected. One certificate rejected was from a gun collector. The other five were rejected as invalid because one dealer's state sales permit had expired and the other dealer had applied for and received a federal firearm license after the date of sale. Soule, however, did make some adjustments in the amount of the assessment based on those resale certificates he accepted as valid.
The plaintiff's basic position is that the auditor should have accepted the taxpayer's accounting method, that is, the use of the day book, with the accountant totalling [totaling] the gross receipts at the end of the month, backing out the sales for resale, and determining the sales and use tax on the resulting net gross receipts.
Section
Each seller and retailer as defined in Chapter 219 of the General Statutes (Sales and Use Tax) shall keep CT Page 2681 adequate and complete records of his business in this State showing:
(1) The gross receipts from the sale or lease or (sic) tangible personal property or from sale of services, including both taxable and non-taxable items . . . .
Such records shall include the normal books of account ordinarily maintained by the average prudent businessman engaged in the activity in question, together with all bills, receipts, invoices, cash register tapes or other documents of original entry supporting the entries in the books of account as well as all schedules or working papers used in connection with the preparation of tax returns.
Failure to maintain such records will be considered evidence of negligence or intent to evade the tax and will result in the imposition of appropriate penalties. (Emphasis added.)
The commissioner has no quarrel with the plaintiff on how to compute the sales and use tax. Both agree that under the circumstances in this case, it was appropriate to determine the gross receipts for the period, subtract the resale items, and apply the sales and use tax rate to the net amount.
The dispute that developed between the commissioner and the plaintiff was on the documentation necessary to determine the sales made during the audit period. As we previously noted, variances existed between what was reported in the day book and what was ascertained from a review of invoices. Because a valid agency regulation has the force of a statute; Savage v. Aronson,
The plaintiff argues in its brief that its sales records meet the burden imposed on it by General Statutes
The plaintiff has failed to prove that its record keeping was adequate to form a basis to determine its tax liability. We find therefore that the bookkeeping records of the plaintiff did not comply with the statutory requirements placed upon the plaintiff as a seller or retailer, and the commissioner was not required to use only these records in conducting an audit.
Turning to the second issue raised in this case, the commissioner argues that the plaintiff failed to provide valid resale certificates, pursuant to General Statutes
The plaintiff argues that certificates of resale are unnecessary where the plaintiff's firearms purchasers are firearms dealers licensed by the Federal Bureau of Alcohol, Tobacco and Firearms (BATF). Plaintiff reasons that because a firearms seller must possess a federal license, a sale of a firearm to one possessing such a license is automatically a sale for resale, obviating the need for a state resale certificate.
When dealing with the necessity of proving a sale for resale, we start with the basic presumption that all gross receipts are subject to the sales tax. General Statutes
The plaintiff's proof, in the absence of a resale certificate, consists solely of the fact that the purchaser is a federally licensed firearms dealer. Our question then is whether the federal firearms license held by a dealer is sufficient proof to meet the burden assigned the plaintiff in
The statutory scheme dealing with the sale of firearms begins with the federal licensing laws. The Gun Control Act of 1968 (
The purpose of the federal licensing of all gun dealers was fully discussed in Kreshesky v. Codd,
Congress enacted the Gun Control Act of 1968 in response to the assassinations of prominent public figures and the civil disorders which took place throughout the nation during the late 1960's (U.S. Code Cong. Admin. News, 90th Cong., 2d Sess., 1968, p. 4413). The principal purpose of the Act was "to curb crime by keeping `firearms out of the hands of those not legally entitled to possess them because of age, criminal background, or incompetency'" [Huddleston v. United States,
415 U.S. 814 ,824 ,94 S.Ct. 1262 ,1268 ,39 L.Ed.2d 782 (1974)]. It was expressly found by Congress "that there is a causal relationship between the easy availability of firearms other than a rifle or shotgun and juvenile and youthful criminal behavior, and that such firearms have been widely sold by federally licensed CT Page 2684 importers and dealers to emotionally immature, or thrill-bent juveniles and minors prone to criminal behavior" [Pub.L.90-351 , 901(a)(6)]. To remedy this situation, Congress provided for a more effective licensing system made applicable to those who commercially deal in firearms to restrict their availability.
The Gun Control Act was enacted by Congress to cure social ills, not to provide exemptions from state requirements4.
On the state level, General Statutes
The plaintiff's day books contained no information relating to these state statutory requirements that would have identified a sale of a gun as a sale to a licensed dealer for resale.
As we have previously stated, pursuant to
Having possession of a federal dealer's license, alone, does not guarantee that every firearm purchased by a dealer will be for resale. As the legislature noted in General Statutes
In the present action, the plaintiff made the choice not to obtain a certificate of resale from the purchaser of a firearm, CT Page 2685 relying instead upon the federal license of the purchaser as an alternative to obtaining a resale certificate. This reliance was misplaced. There was no evidence, in the absence of a resale certificate, to show that the sales alleged by the plaintiff to be for resale, were in fact sales for resale. By not obtaining the resale certificate, plaintiff had the burden at this hearing to show that each particular sale came within the exemption and was not a sale at retail. General Statutes
Accordingly, plaintiff's appeal is dismissed.
Aronson, J.