Sales and Use tax law requires you to keep adequate financial records. You must be able to show:
Gross receipts, Taxable & Non-Taxable items, Deductions Claimed and the Purchase price of each item and vehicle purchased for purposes of resale.
You must have Records which include:
Normal accounting books & ledgers, with documents to support these books, such as bills, invoices, receipts, repair orders & sales contracts.
Tax returns, with schedules and working papers used in their preparation.
You should be aware that failure to maintain these records is evidence of negligence, and negligence is considered as intent to evade taxes which may result is substantial penalties.
A representative of the State Board of Equalization may examine all documents for verification of tax paid or to determine tax when no return is filed.