§ 12.50.230. Tax avoidance, civil fraud.

A.

If the department has reasonable cause to believe that a retailer or a responsible party for the retailer has structured a retail sale transaction to avoid collecting or remitting the retail marijuana sales tax levied under this chapter, or has wrongfully deceived consumers or the department, the department may take one or both of the following actions:

1.

Declare there is a rebuttable presumption that the substance of a specific retail sale is a taxable transaction under this chapter and proceed to establish, levy and collect the tax together with costs, penalties and interest as provided for in this chapter; or

2.

Prepare and file an involuntary return(s) on behalf of the retailer, as provided in section 12.50.170.

B.

Civil fraud. If the department finds a tax deficiency or part of a tax deficiency is due to fraud, then a penalty shall be assessed against the person committing the fraud. A civil fraud penalty may be assessed against a person in addition to a penalty for failure to file or failure to pay.

1.

Fraud is the intentional misrepresentation of a material fact with the intent to evade payment of tax which the person believed to be owing. The person must have had knowledge of its falsity and intended that it be acted upon or accepted as the truth. The department must prove fraud by a preponderance of the evidence.

2.

An intent to evade tax may be demonstrated by any relevant evidence, including but not limited to the following:

a.

The person provided false explanations regarding understated or omitted acquisitions of marijuana or marijuana products;

b.

The person provided falsified or incomplete source documents;

c.

The person has not justified an omission or understatement of a significant amount of acquisitions of marijuana or marijuana products;

d.

The person substantially overstated a deduction and has failed to justify the overstatement; or

e.

The person knowingly provided false statements, falsified documents, or falsified evidence to acquire a significant amount of marijuana or marijuana products in a manner that results in the evasion of payment for taxes due under this chapter.

f.

The person, without possessing valid State and Municipal retail marijuana store licenses, exchanged or bartered, in any manner or by any means whatsoever, for consideration, marijuana or marijuana products to a consumer.

( AO No. 2016-49(S), § 1, 5-10-16 )