Whenadministration read between the lines
Following a tax audit of a restaurant,administration rejected the business’s financial records and reconstructed its revenue based on sales of coffee, bottled beer, and draft beer.
In particular,administration estimated that the restaurant used 7 grams of coffee per cup, while the taxpayer claimed to use 9 grams.
The departmental commission, for its part, had determined that 8 grams should be the threshold, butadministration did not follow its recommendationadministration upheld the increased limits.
The Court finds, however, thatadministration, which bears the burden of proof, had met that burden by relying not only on industry standards but also on a letter from Café Richard recommending“a dosage of 7 grams per cup to prepare an espresso under optimal conditions.”
The judge also rejected the inclusion of a bailiff’s report submitted by the taxpayer, as it was prepared after the audit proceedings had concluded and covered only a single day. He also held that the statement in the letter from Café Richard indicating that“a range of 7 to 8.5/9 grams, depending on the circumstances and the desired flavor profile”is permitted does not establish that theadministration methodadministration underestimated.
The Court thus dismisses the taxpayer’s appeal and upholds the assessment against the company.
If you have a question about how a tax audit of a business works, you can consult our FAQs on tax audits of businesses or corporations.