830 CMR, § 62C.25.1

Current through Register 1536, December 6, 2024
Section 62C.25.1 - Record Retention
(1)Statement of Purpose; Outline of Topics.
(a)Statement of Purpose. Every person subject to taxation under M.G.L. chs. 60A, 62 through 65C; 121A, 138, or 175M, or liable for the collection of any such tax, or required by provisions of those chapters or of M.G.L. c. 62C to file information with respect to any such tax, must preserve and maintain permanent books of account or records, sufficiently accurate and complete to establish the amount of gross income, deductions, credits or other matters required to be shown by such person in any return of such tax or information. The Commissioner may require any person to keep such specific records as he deems necessary to determine the amount of such person's tax liability under the aforementioned Chapters as well as those pertaining to any other tax or fee administered by the Department of Revenue.

Every person required by statute, regulation, letter ruling, technical information release or by instructions applicable to a tax form, to keep a copy of a return, schedule, statement or other document, must keep such copy as part of his records.

Every person filing a claim for credit, refund, or abatement must retain records of sufficient detail to substantiate such claim.

Every person retaining records required to be retained under 830 CMR 62C.25.1 shall make the records available to the Commissioner in machine-sensible format upon request of the Commissioner.

(b)Outline of Topics. 830 CMR 62C.25.1 is organized as follows:
1. Statement of Purpose; Outline of Topics
2. Definitions
3. Form of Records
4. Failure to Maintain Adequate Records
5. Electronic Data Interchange Requirements
6. Electronic Data Processing System Requirements
7. Alternative Storage Media
8. Period of Retention
9. Verification of Returns
10. Personal Income Tax
11. Income Tax Withholding
12. Paid Family and Medical Leave Contributions
13. Corporate Excises
14. Business Excises
15. Estate Tax
(2)Definitions. For purposes of 830 CMR 62C.25.1, the following terms shall have the following meanings unless the context requires otherwise:

Automated Sales Suppression Devices, Software Programs. carried on a memory stick or removable compact disc or accessed through an internet link or through any other means, that falsify the electronic records of electronic cash registers or other point-of-sale systems including, but not limited to, transaction data and transaction reports. See M.G.L. c. 62C, § 35F. These devices are commonly referred to as zappers.

Commissioner. The Commissioner of Revenue or the Commissioner's duly authorized representative.

Database Management System. A software system that controls, relates, retrieves, and provides accessibility to data stored in a database.

Electronic Data Interchange or EDI Technology. The computer-to-computer exchange of business transactions in a standardized structured electronic format.

Hard-copy. Any documents, records, reports or other data printed on paper.

Machine-sensible Record. 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 microfilm, microfiche, or storage-only imaging systems.

Phantom-ware. Any hidden programming option that is embedded in the operating system of an electronic cash register or hardwired into the electronic cash register and may be used to create a virtual second till, such as a virtual second cash register, or to eliminate or manipulate transaction records to represent the true or manipulated record of transactions in the electronic cash register. See M.G.L. c. 62C, § 35F.

Point of Sale or POS System. Hardware and software used at the point a retail sale is completed to record and track sales to a business's customers that may be integrated with accounting modules, including general ledgers, accounts receivable, accounts payable, purchasing, and inventory control systems. A POS System may include Database Management Systems, Electronic Data Interchange or EDI Technology, Machine-sensible Records and similar systems.

Storage-only Imaging System. 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 any information or data contained on the document in any manner other than to reproduce the document in hard copy or as an optical image.

(3)Form of Records. The records required by 830 CMR 62C.25.1 must be easily locatable, organized and in such form as to enable the Commissioner to ascertain whether liability for tax is incurred, and if so, the amount of liability. In the event a taxpayer's records are dispersed, disorganized or otherwise kept in such manner as to make it impossible for the Commissioner to ascertain the proper amount of tax due without inordinate audit time, the Commissioner may require the taxpayer to organize and present the pertinent records in such form as to enable a determination of the amount of any such liability. If the taxpayer is unwilling or unable to do so, the Commissioner may use any reasonable alternative method of determining the amount due, including obtaining records from third parties, to verify any entries, deductions, statements, and credits on the taxpayer's return.
(a)Machine-sensible Records. Machine-sensible records used to establish tax compliance must contain sufficient transaction-level detail information including the state of origination and destination of transactions so that the details underlying the machine-sensible records can be identified and made available to the Commissioner upon request. A taxpayer may discard duplicated records and redundant information provided its responsibilities under 830 CMR 62C.25.1 are otherwise met.
(b) At the time of examination, the retained records must be capable of being retrieved and converted to a standard format.
(c) A taxpayer is not required to construct machine-sensible records other than those created in the ordinary course of business or those required to establish tax compliance as set out in 830 CMR 62C.25.1(3)(a). 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 such a record for purposes of 830 CMR 62C.25.1 provided that:
1. a taxpayer who maintains machine-sensible records in archive form or off-site in a data warehouse may be required to retrieve and produce such records, and;
2. a taxpayer who maintains machine-sensible records in the form of an electronic database may be required to generate reports from existing data fields maintained in such database, whether or not such reports are otherwise generated by the taxpayer in the ordinary course of business.
(4)Failure to Maintain Adequate Records. The taxpayer bears the burden of proof with respect to any entry, statement, deduction, or credit claimed on a tax return. A taxpayer meets that burden by maintaining adequate records of all such entries, statements, deductions or credits. Records will be considered adequate if they are complete, accurate, and accessible such that the Commissioner can quickly confirm the proper amount of tax due.

Where a taxpayer fails to maintain adequate records, the Commissioner may determine the amount of tax due by using any information available and may verify the taxpayer's amount of tax due using third party sources. The Commissioner may issue administrative summonses pursuant to M.G.L. c. 62C, § 70 to compel the production of any books, papers, records, and other data from the taxpayer or other sources.

A taxpayer's failure to maintain complete, accurate, and accessible records may result in the imposition of penalties under M.G.L. c. 62C, including double deficiency assessment penalties under M.G.L. c. 62C, § 28, and other appropriate action provided by law, including the disallowance of any deduction, credit, and exemption and the addition of any tax to which the requested records relate.

(5)Electronic Data Interchange Requirements. Where a taxpayer uses electronic data interchange processes and technology, the level of record detail, in combination with other records related to the transactions, must be equivalent to that contained in an acceptable paper record. For example, the retained records should contain such information as vendor/purchaser name, invoice date, product description, quantity purchased, price, amount of tax, indication of tax status, shipping details, etc. Codes may be used to identify some or all of the data elements, provided that the taxpayer provides a method which allows the Commissioner to interpret the coded information.

A taxpayer may capture the information necessary to satisfy the requirements of 830 CMR 62C.25.1(5) at any level within the accounting system provided the audit trail, authenticity, and integrity of the retained records can be established. For example, a taxpayer using electronic data interchange technology receives electronic invoices from its suppliers. The taxpayer decides to retain the invoice data from completed and verified EDI transactions in its accounts payable system rather than to retain the EDI transactions themselves. Since neither the EDI transaction nor the accounts payable system captures information from the invoice pertaining to product description and vendor name (i.e., they contain only codes for that information), the taxpayer must also retain other records such as its vendor master file and product code description lists and makes them available to the Commissioner in electronic format.

(a)Requirements for POS Systems. POS systems used by taxpayers must provide enough detail to independently determine the taxability of each sale and the amount of tax due and collected. Each POS transaction record must provide detailed information including, but not limited to:
1. individual item(s) sold;
2. selling price;
3. tax due;
4. invoice number;
5. date of sale;
6. method of payment; and
7. POS terminal number and POS transaction number.

POS system records must permit the direct reconciliation of the receipts, invoices, and other source documents with entries in the books and records and on the returns of a taxpayer.

Users of POS systems must maintain auditable internal controls to ensure the accuracy and completeness of the transactions recorded in the POS system including a separate and accessible platform that continually backs up the POS system's data. The records must provide audit trail details including, but not limited to;

a. internal sequential transaction numbers;
b. records of all POS terminal activity; and
c. procedures to account for voids, cancellations, or other discrepancies in sequential numbering.

The POS audit trail or logging functionality must be activated and operational at all times, and it must record any and all activity related to other operating modes available in the system, such as a training mode; and any and all changes in the setup of the system. If a POS system lacks storage capacity or the taxpayer makes a change to a POS system, the taxpayer must transfer, maintain, and have available in a machine-sensible and auditable form any data removed from the POS system. In the event that a POS system fails, crashes, or otherwise loses data or becomes inaccessible, the user of the POS system must provide contemporaneous documentation from a third-party vendor describing the cause and duration of the incident, the extent of any necessary repairs, the scope of the data affected, and which data were salvageable. Where a user of a POS system fails to maintain proper POS system records as described by this paragraph, the Commissioner will consider the taxpayer not to have maintained adequate records and may impose applicable penalties as provided in 830 CMR 62C.25.1(4). If it is determined that the failure to maintain proper records constitutes a willful attempt to evade or defeat payment of the tax due, such as where the user continues to fail to maintain proper POS system records in subsequent audits, criminal penalties may be imposed pursuant to M.G.L. c. 62C, § 73.

(b)Prohibition of the Use of Automated Sales Suppression Devices and Phantom-ware. The use of automated sales suppression devices and phantom-ware is prohibited. M.G.L. c. 62C, § 35F. A person or entity that sells or offers for sale an automated sales suppression device or phantom-ware will be subject to a civil penalty of not more than $25,000 for the first offense and not more than $50,000 for each subsequent offense. Use of such systems or any other means of willfully underreporting sales, whether in connection with the use of POS systems or otherwise, is illegal and will be subject to the tax evasion penalties of M.G.L. c. 62C, § 73, including a felony conviction, a fine of not more than $100,000 or $500,000 in the case of a corporation, or by imprisonment for not more than five years, or both, and payment of the costs of prosecution.

Any person or entity that sells or offers for sale an automated sales suppression device or phantom-ware will be subject to a civil penalty of not more than $25,000 for the first offense and not more than $50,000 for each subsequent offense.

(6)Electronic Data Processing System Requirements. The requirements for an electronic data processing accounting system are similar to that of a manual accounting system, in that an adequately designed system should incorporate methods and records that will satisfy the requirements of 830 CMR 62C.25.1.
(a) Upon the request of the Commissioner, a taxpayer shall provide a description of the business process that created the retained records. Such 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. A taxpayer shall be capable of demonstrating:
1. the functions being performed as they relate to the flow of data through the system;
2. the internal controls used to ensure accurate and reliable processing; and
3. the internal controls used to prevent unauthorized addition, alteration, or deletion of retained records.
(b) The following specific documentation is required for machine-sensible records retained pursuant to 830 CMR 62C.25.1:
1. record formats or layouts;
2. field definitions (including the meaning of all codes used to represent information);
3. file descriptions (e.g., data set name);
4. detailed charts of accounts and account descriptions;
5. evidence that the retained records reconcile to the accounting records and to the tax returns.
(c) A taxpayer's computer hardware or software shall accommodate the extraction and conversion of retained machine-sensible records.
(7)Alternative Storage Media. 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 830 CMR 62C.25.1 to electronic format or other storage-only imaging systems and may discard the original hard-copy documents, provided the conditions of 830 CMR 62C.25.1 are otherwise met. Documents which 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 detail such as sales invoices, purchase invoices, exemption certificates, and credit memoranda. Upon request of the Commissioner, a taxpayer must provide facilities and equipment for locating, reading and reproducing any documents maintained on storage-only imaging media and all data shall be maintained and arranged in a manner that readily permits the location of any particular record.
(8)Period of Retention. The records required by 830 CMR 62C.25.1, must be kept so long as their contents are material in the administration of Massachusetts tax laws. At a minimum, unless the Commissioner consents in writing to an earlier destruction, the records must be preserved until the statute of limitations for making additional assessments for the period for which the return was due has expired; generally, this is three years after the due date of the return or the date the return is actually filed, whichever occurs later.

There are a number of situations including, but not limited to the following, where the three-year limitation on assessments does not apply:

(a) in case of fraud or failure to file a required return the Commissioner may assess a tax and examine all records related to such return at any time;
(b) if an executor, as defined in M.G.L. c. 65C, omits from the gross estate, as reported in the estate tax return, items which should have been included in the return, and the sum of such items exceeds 25% of the gross estate reported in the return, the Commissioner may assess the estate tax and examine all records related to such tax at any time within six years after the return was filed;
(c) where the taxpayer and the Commissioner have agreed to extend the time for assessing the tax, records are to be kept for such additional period;
(d) records related to a taxable event which will occur in the future, such as records of property for which a basis must be determined to compute gain or loss upon disposition, must be retained for three years after the return for the year in which the disposition occurred was due or was actually filed, whichever occurs later; and
(e) any person claiming a refund, credit or abatement shall keep all records relating to the taxable period involved until final resolution of the claim.
(9)Verification of Returns. For purposes of verification of returns, all records required by M.G.L. c. 62C or 830 CMR 62C.25.1, must be kept, by the person required to keep them, at one or more convenient locations accessible to the Commissioner and must be made available in a timely manner for inspection by the Commissioner at any reasonable time. No taxpayer shall be subject to unnecessary inspections, examinations, or investigations of his records, and only one inspection of a taxpayer's general books of account for a particular tax shall be made for any taxable period, unless the taxpayer requests otherwise or unless the Commissioner notifies the taxpayer in writing that an additional inspection is necessary.
(10)Personal Income Tax. Every person required to file a personal income tax return under M.G.L. c. 62C, § 6, and the regulations thereunder, must keep such records as will enable the Commissioner to determine the correct amount of tax due. The records of taxpayers required to complete Schedule C (Prolit or Loss from Business or Profession) must include such permanent books of account, or records, including inventories, as are sufficient to establish the amount of gross income, deductions, or other items required to be shown on Schedule C of the personal income tax return. Such records must be in sufficient detail and clarity to delineate and support each line item deducted on such Schedule C.

Massachusetts nonresident employees that work for a Massachusetts employer and who source their income to Massachusetts based on their proportion of time spent in Massachusetts and time spent elsewhere must maintain source records adequate to substantiate their amount of time spent outside of Massachusetts. Examples of source records include, but are not limited to, detailed work calendars created contemporaneously, employee badge swipe reports, expense reports, approved timesheets, taxpayer-specific letters from the taxpayer's employer on the taxpayer's employer's letterhead with an authorized signature stating the number of days the taxpayer worked in Massachusetts and elsewhere, and signed telework agreements. The records must be sufficient to enable the Commissioner to determine how much time the nonresident employee worked outside of Massachusetts during the year.

Taxpayers receiving a Form 1099-K or Form M- 1099-K must maintain records sufficient to enable the Commissioner to determine the correct amount of tax due with respect to the income reported. Such records must sufficiently establish the amount of gross income, deductions, or other items required to be shown on the Massachusetts personal income tax return. For each line item deducted on such return, the records must sufficiently detail and delineate the deduction.

(11)Income Tax Withholding. Every employer required by M.G.L. c. 62B to withhold Massachusetts income taxes from the wages of his employees must keep the following records:
(a)General.
1. the name, address, occupation and social security number of each employee;
2. the amount and date of all payments of wages and the period of services covered by such payments, and the amounts of tax withheld thereon;
3. employees' statements of tips received
4. employees' requests to be withheld on the basis of cumulative wages;
5. employees' withholding allowance certificates (Forms M-4 and W-4);
6. employer's copies of employees' wage and tax statements (Form W-2); and
7. copies of all withholding returns.
(b)Employers with Nonresident Employees. For an employer that withholds income tax from wages paid to a non-resident employee based on the employee's workdays in and out of Massachusetts, payroll and attendance records that accurately reflect the location from which the employee works. Alternately, the employer may use any other reasonable method to determine the portion of the non-resident employee's work performed at locations in Massachusetts, including estimating that portion based on a certification provided by the non-resident employee if taken in good faith. Where an employer uses such an alternative method, the employer must retain documentation to verify the method and if it is relying on employee certification, the employer must retain a signed statement from the employee attesting to the number of days the employee worked in Massachusetts or expects to work in Massachusetts.
(12)Paid Family and Medical Leave Contributions. All employers and covered businesses, both as defined in M.G.L. c. 175M, § 1, and self-employed individuals electing coverage under M.G.L. c. 175M, must maintain records sufficient to comply with the requirements of458 CMR 2.00: Family and Medical Leave and 830 CMR 175M.8.1: Administration and Collection of Paid Family and Medical Leave Contributions. Such records must include:
(a) The name, address, occupation and social security number of each employee and covered contract worker, both as defined in M.G.L. c. 175M, § 1;
(b) The amount and date of all payments of wages and payments to covered contract workers, including the period of services covered by such payments, and the amount of Paid Family and Medical Leave contributions collected and remitted;
(c) The number of employees and covered contract workers compensated for services throughout the calendar year;
(d) Copies of employees' wage and tax statements (Form W-2) and covered contract workers' payments and tax statements (Form 1099-MISC);
(e) Copies of all spreadsheets and any other document used to prepare any employment and wage detail report; and
(f) Copies of all employment and wage detail reports and any other documents submitted online to the Commissioner through MassTaxConnect.
(13)Corporate Excises. Every corporation required to file a return under M.G.L. c. 62C, § 11 or § 12, must keep adequate and complete records, including copies of federal and state income tax returns, schedules used in connection with the preparation of returns, and records showing source, date and amount of income received or expenses claimed as deductions. The corporation must also keep information relative to tangible personal property located in the Commonwealth as to which such corporation is lessor or lessee.
(14)Business Excises.
(a)Gasoline. Every distributor, unclassified importer and unclassified exporter, as defined in M.G.L. c. 64A (and denominated for purposes of830 CMR 62C.25.1(14)(a) as a licensee), is required to maintain:
1. a complete and accurate record of all sales of fuel, including the name and address of the purchaser, the place and date of delivery, the number of gallons of each type of fuel (e.g. unleaded regular, unleaded premium, gasohol and products sold or used as fuel for aircraft, except aircraft fuel as defined in M.G.L. c. 64J, § 1), and the total price paid for each type;
2. a complete and accurate record of the number of gallons of each type imported, exported, produced, refined, manufactured, and compounded and the date of import, export, production, refining, manufacturing or compounding;
3. a complete and accurate record of the number of taxable gallons placed in the licensee's own vehicles or in registered vehicles leased to the licensee.
4. copies of statements delivered with every consignment of fuel to a purchaser within the Commonwealth containing the date of purchase, the name of the purchaser, the name of the seller, the number of gallons of each type of fuel delivered and the total price paid for each type.

Licensees must retain copies of gasoline excise returns filed.

(b)Tobacco Products. Every manufacturer, wholesaler, retailer, vending machine operator, transportation company and unclassified acquirer, as defined in M.G.L. c. 64C, is required to maintain a complete and accurate record of all tobacco products, as defined in M.G.L. c. 64C, § 1, including electronic nicotine delivery systems, as defined in M.G.L. c. 64C, § 7E, as well as cigars and smoking tobacco, as defined in M.G.L. c. 64C, § 7B, manufactured, purchased or otherwise acquired. Such record must include copies of statements delivered with sales or consignments containing: the name and address of the seller, the name, address and federal identification number of the purchaser, the date of delivery, the quantity purchased, the trade name or brand and the price paid for each brand. Every vending machine operator is required to keep a detailed record for each vending machine owned for the sale of tobacco products showing: the location of the machine, the date of placing the machine at that location, the quantity of each brand of tobacco products placed in the machine, the date when such quantity was placed in the machine and the amount of the commission paid or earned on sales through such vending machine.

Taxpayers must retain copies of all tobacco product excise returns filed.

(c)Special Fuels. Every person licensed as a user-seller or supplier, as defined in M.G.L. c. 64E, is required to keep a complete and accurate record of all purchases, sales and use of special fuels. Such record shall include:
1. an inventory of each type of special fuels on hand at the beginning and the end of the period of filing a special fuels excise return;
2. the number of gallons of each type acquired from all sources during the period including the date of each purchase or acquisition, the name and address of each supplier, and the number of gallons acquired from each supplier;
3. the number of taxable gallons of each type placed in the licensee's own vehicles or in registered motor vehicles leased to him during the period including the make and type of each vehicle, the odometer reading of each vehicle, the engine hour reading of each vehicle, the number of gallons placed in such vehicles from the licensee's own storage or supply and the number of gallons placed in such vehicles from other sources;
4. the total number of taxable gallons of each type sold to other users for use in registered motor vehicles during the period including the name and address of each purchaser and the number of gallons sold;
5. a written statement for each sale to user-sellers during the period including the date of sale, the name of the purchaser, date of delivery, the delivery address, gross sales price and the number of gallons of each type sold;
6. the total number of non-taxable gallons of each type sold during the period, including the date of sale, name and address of each purchaser date of delivery, gross sales price and the number of gallons sold to each purchaser;
7. the total number of each type of non-taxable gallons used by the licensee during the period including the nature of the use, the type of machine using the special fuel and the number of gallons used;
8. a complete and accurate record of the number of gallons imported, produced, refined, manufactured or compounded during the period and the date of importation, production, refining, manufacturing or compounding; and
9. the gross cost paid as consideration for liquefied gases (including propane) used by licensed suppliers in their own motor vehicles and not resold during the period.

Licensees must retain copies of special fuels excise returns filed.

If any supplier or user-seller not properly licensed pursuant to M.G.L. c. 64E, becomes liable for the excise under M.G.L. c. 64E, such person must retain those records which a licensee is required to retain under 830 CMR 62C.25.1.

(d)Fuels Acquired Outside the Commonwealth. Every motor carrier, as defined in M.G.L. c. 64F, is required to keep complete and accurate records of all miles travelled and fuel used in operations. Such records must specify:
1. the number of miles travelled everywhere, the number of miles travelled in Massachusetts, the number of miles travelled on the Massachusetts Turnpike substantiated by toll receipts or daily listing invoices issued by the Massachusetts Turnpike Authority, the number of gallons of fuel used everywhere, the number of gallons of fuel used in Massachusetts; and
2. the sources of fuel purchased in Massachusetts, including the date of supply, the name and address of the supplier, the number of gallons of gasoline supplied and the number of gallons of special fuel supplied.

Motor carriers must retain copies of gasoline and special fuels excise returns filed.

(e)Room Occupancy. Every operator and intermediary, both as defined in M.G.L. c. 64G, § 1, must maintain records sufficient to comply with the requirements of 830 CMR 64G.1.1: Massachusetts Room Occupancy Excise. Operators and intermediaries must retain complete and accurate records of charges and receipts for all transfers of occupancy sufficient to determine whether the proper amount of tax and any applicable fees have been paid. If an occupant claims entitlement to an exemption from the room occupancy excise, the operator or intermediary must maintain records to support the exemption.

All operators and intermediaries must retain copies of all room occupancy excise returns filed.

(f)Sales and Use. For purposes of 830 CMR 62C.25.1(14)(f), "vendor" means vendor as defined in M.G.L. c. 64H, § 1, "purchaser" means any purchaser as defined in M.G.L. c. 64H, § 1 or M.G.L. c. 64I, § 1 as the context requires, "retailer" means any retailer as defined in M.G.L. c. 64H, § 1, "promoter" means promoter as defined in M.G.L. c. 62C, § 1 and "contractor" means any person engaged in the construction, reconstruction, alteration, remodeling, or repair of real property.

Every promoter must maintain the following records:

1. a copy of the notice filed with the Commissioner indicating the date and place of each flea market, craft show, antique show, coin show, stamp show, comic book show, fair and any similar show held within the Commonwealth with respect to which he was a promoter;
2. a copy of the promoter registration certificate issued by the Commissioner; and
3. name, address, and vendor registration number, by show, of every person whom he permitted to display for sale or to sell tangible personal property subject to tax under M.G.L. c. 64H at such show.

Every vendor, purchaser, retailer and contractor required by M.G.L. c. 64H or c. 64I to file sales or use tax returns shall maintain a complete and accurate record of the gross receipts/expenditures from all purchases and sales, whether or not taxable. Such persons shall retain copies of tax returns filed together with supporting data to indicate how the figures in such returns were calculated.

Every vendor, purchaser, retailer and contractor must maintain the following records:

a. a journal or its equivalent, which records daily all non-cash transactions affecting accounts payable;
b. a cash journal or its equivalent, which records daily all cash receipts and cash disbursements, including any check transactions;
c. a sales slip, invoice, cash register tape, or other document evidencing the original transaction, which substantiates each entry in the journal or cash journal;
d. memorandum accounts, records or lists concerning inventories, fixed assets or prepaid items, except in cases where the accounting system clearly records such information; and
e. a ledger to which totals from the journal, cash journal and other records have been periodically posted. The ledger must clearly classify the individual accounts receivable and payable and the capital account.

Vendors, purchasers, retailers and contractors who maintain double-entry or cost accounting systems, or whose total sales volume for the month for which a return has most recently been filed is in excess of $100,000, or who maintain machine-sensible records for accounting purposes, must maintain the following records, or other records which will readily furnish the equivalent information:

i. evidence of original transactions: all customer orders, sales invoices, purchase invoices, credit memoranda, shipping documents, and cancelled checks;
ii. journals: a cash journal or journals, specifying cash receipts and disbursements (including all check transactions), a sales journal recording all charge sales, a purchase journal recording all charge purchases of merchandise for resale or of materials to be incorporated into a finished product, a voucher register recording all purchases by check of materials or services, a general journal recording any non-recurrent transactions, a journal voucher and standard journal recording recurrent transactions not otherwise accounted for;
iii. ledger and balance sheet records: a general ledger accounting for every balance sheet and profit and loss item, to which periodic postings are made, and reflecting totals from the journals; a subsidiary ledger classifying and detailing all accounts payable or receivable, expense accounts and any other accounts so recorded; a private ledger; records concerning fixed assets; depreciation schedules; records of inventories and transfers; a detailed chart of accounts; and
iv. general records: sales contracts, lease agreements, contractor bonds and annual auditor's reports.

Every holder of a certificate of exemption from the sales or use tax must retain a record of each purchase made under the certificate including the certificate itself, a description of each item purchased, the name and address of the vendor, the cost of the item and the date of the purchase.

Every vendor making a sale to the holder of an exempt purchaser certificate must retain a copy of the certificate, a record of each sale made under the certificate including a description of each item sold, the price charged for each item, the date of sale, the name and address of the purchaser, and the certificate number of the purchaser.

Every vendor making a sale to the holder of a contractor's exempt purchase certificate must retain a copy of the certificate, a record of each sale made under the certificate including a description of each item sold, the price charged for each item, the date of sale, the name and address of the purchaser, and the contract number or other identifying designation of an unnumbered contract. The contract number or other identifying designation must appear on all purchase orders and invoices.

Every vendor making a sale to the holder of an exempt use certificate must retain a copy of the certificate, a record of each sale made under the certificate including a description of each item sold, the price charged for each item, the date of sale, the name and address of the purchaser and purchase orders which clearly indicate that they represent exempt use purchases.

Every vendor making a sale to the holder of a resale certificate must retain a copy of the certificate, a record of each sale made under the certificate including a description of each item sold, the price charged for each item, the date of the sale, the name and address of the purchaser-vendor, the registration number of the purchaser-vendor, and the business of the purchaser-vendor.

Every motor vehicle dealer must retain copies of his reports of sales of motor vehicles and trailers (Form MV-DL) and accompanying documents.

In addition to other records of vendors required by this regulation to be retained, every vendor of aircraft, boats and recreation or snow vehicles must keep copies of Form ST-6, (Certificate of Payment of Sales or Use Tax).

(g)Marketplace Facilitators. Each marketplace facilitator, as defined in M.G.L. c. 64H, § 1 and 830 CMR 64H.1.9: Remote Retailers and Marketplace Facilitators, must maintain records sufficient to comply with the requirements of 830 CMR 64H.1.9. Such records must be sufficient to determine whether the proper amount of tax has been paid. Marketplace facilitators must also maintain any other records required under 830 CMR 62C.25.1(14)(f) where applicable.
(h)Sales and Use-meals. Every vendor of meals, as defined in M.G.L. c. 64H, § 6(h), is required to maintain complete and accurate records of all sales of meals and alcoholic beverages, and all sales of non-taxable food and beverages. The records must include cash register tapes, alcoholic beverages bar checks, dining room meals checks, and a daily receipts book or record. Vendors must retain copies of sales tax on meals returns filed.

Every vendor of meals making a sale to the holder of an exempt purchaser certificate must retain a copy of the certificate, a record of each sale made under the certificate including a description of each item sold, the price charged for each item, the date of sale, the name and address of the purchaser, and the certificate number of the purchaser.

Every vendor of meals making a sale to the holder of a resale certificate must retain a copy of the certificate, a record of each sale made under the certificate including a description of each item sold, the price charged for each item, the date of the sale, the name and address of the purchaser-vendor, the registration number of the purchaser-vendor, and the business of the purchaser-vendor.

(i)Alcoholic Beverages. Every licensee subject to the excise on alcoholic beverages under M.G.L. c. 138, § 21 must keep and preserve a complete and accurate record of all alcoholic beverages, alcohol and malt beverages manufactured, distilled, bottled, imported, purchased or sold within the Commonwealth or exported from the Commonwealth. Such records must include: the total number of gallons, by brand, the price or prices paid for each brand, the name and address of the purchaser to whom sold or vendor from whom purchased and the date of the purchase or sale. Licensees must retain copies of alcoholic beverages excise returns filed.
(j)Deeds. Every person liable for payment of the excise on deeds, instruments or writings under M.G.L. c. 64D, must keep such adequate and complete records as to allow the Commissioner to ascertain that the proper amount of the excise has been paid. Such records shall include books, papers or memoranda bearing upon the amount of excise owed the Commissioner. These records need be preserved for only two years from the date of conveyance.
(k)Aircraft Fuel. Every person licensed as a user-seller or supplier, as defined in M.G.L. c. 64J, § 1, is required to keep a complete and accurate record of all purchases, sales and use of aircraft fuel. Such records shall include:
1. a complete and accurate record of all purchases, sales and use of aircraft fuel, including the name and address of the person accepting delivery of said aircraft fuel to be used in an aircraft in the commonwealth, its place and date of delivery, and the gross sales price or cost;
2. a complete and accurate record of the number of gallons imported, produced, refined, manufactured or compounded and the date of the importation, production, refining, manufacturing or compounding; and
3. a written statement for each sale containing the date of the sale, the name of the person making delivery and the name of the person receiving the same; and
4. a completed certificate of exemption (Form JFT-8) for all exempt sales. Licensees must retain copies of all aircraft fuel excise returns filed.
(l)Abandoned Deposit Amounts. Every bottler or distributor maintaining or required to maintain, a Deposit Transaction Fund, as required by M.G.L. c. 94 is required to keep a complete and accurate record of all transactions affecting the Deposit Transaction Fund. Such records shall include the number of non-reusable beverage containers for which refund values have been received or for which refund values have been paid, interest income earned on amounts held in the Deposit Transaction Fund, and beginning and end of month fund balances.

Bottlers and distributors required to maintain Deposit Transaction Funds must retain copies of Abandoned Deposit Amounts returns.

(m)Convention Center Financing Surcharge. Operators of sightseeing tours, operators of parking facilities in a convention center facility in Boston, Springfield, or Worcester, and vendors with customers that sign vehicle rental contracts subject to the surcharge imposed under St. 1997, c. 152, the Convention Center Act, are required to keep complete and accurate record of all sales subject to the surcharge. Such records shall include the following:
1. a complete and accurate record for all sales of tickets, parking, and all vehicle rental contracts subject to St. 1997, c. 152, the Convention Center Act; and
2. supporting data that indicates how the amounts of the surcharge reported in the returns were calculated.

Taxpayers must retain copies of Convention Center Forms filed.

(n)Ferry Embarkation Fee. Every ferry operator subject to the provisions of St. 2003, c. 55 is required to maintain compete and accurate records regarding passenger embarkation from each port town voting to impose the embarkation fee. Such records shall include:
1. the total number of fee passengers departing from each port town;
2. the number of such passengers using tickets purchased as commuter fares;
3. the number of such passengers using tickets purchased at school-related rates; and
4. the total embarkation fees collected.

Taxpayers must retain copies of ferry embarkation fee returns.

(o)Uniform Oil Spill Fee. Every marine terminal operator registered under M.G.L. c. 21M, must keep a complete and accurate record of the receipt of all petroleum products or crude oil at the marine terminal. Such records must include the name and address of the owner of the petroleum product or crude oil, the date and the number of barrels of petroleum products received at the marine terminal and the point of origin shipment. Licensees must retain copies of the Uniform Oil Response and Prevention Fee form.
(p)Vehicular Rental Surcharges. Vendors entering into a vehicular rental transaction contract in the Commonwealth that is subject to the police training surcharge imposed pursuant to M.G.L. c. 90, § 327/8 or the surcharge imposed on such vehicular rental contracts in Revere pursuant to St. 2005, c. 92, are required to keep complete and accurate record of all sales subject to such surcharges. Records must be sufficient to establish the amount of vehicular rental surcharge due and indicate how the amount of the surcharge reported was calculated. Vendors must retain copies of all Vehicle Rental Surcharge returns filed.
(q)Direct Broadcast Satellite Service Excise. Each direct broadcast satellite service provider required to collect and remit the excise imposed under M.G.L. c. 64M, § 2, must maintain business records sufficient to determine whether the proper amount of tax has been paid. The records must include a breakdown of any amounts excluded from gross revenues pursuant to M.G.L. c. 64M, § 1. Direct broadcast satellite service providers are required to retain copies of all Monthly Satellite Service returns filed.
(r)Marijuana Excise. Every marijuana retailer, as defined in M.G.L. c. 94G, § 1, must maintain complete and accurate records as required by 830 CMR 64N.1.1: Marijuana Retail Taxes, as well as any other records required under 830 CMR 62C.25.1(14)(f) where applicable. Marijuana retailers must retain copies of all Marijuana Retail Tax returns filed.
(15)Estate Tax. An executor as defined in M.G.L. c. 65C, must keep such complete and detailed records of the affairs of the estate for which he acts as will enable the Commissioner to determine the amount of the estate tax liability. The executor must furnish pertinent records upon request, including:
(a) copies of any documents relating to the estate which are on file in any court having jurisdiction over the estate;
(b) appraisal lists of any items included in the gross estate;
(c) copies of insurance policies on the decedent's life;
(d) copies of instruments which transferred the decedent's property within three years preceding his death;
(e) copies of trust instruments in which decedent had an interest, including powers of appointment;
(f) copies of federal estate and gift tax returns and any documents required to be submitted to the Internal Revenue Service in connection with them;
(g) copies of balance sheets, profit and loss statements and other pertinent financial records relating to the value of closely-held businesses owned by the decedent;
(h) copies of documents which verify deductions taken on the estate tax return; and
(i) available copies of the decedent's federal and state income tax returns.

830 CMR, § 62C.25.1

Amended by Mass Register Issue 1274, eff. 11/21/2014.
Amended by Mass Register Issue 1307, eff. 11/30/2015.
Amended by Mass Register Issue 1485, eff. 12/23/2022.