The Department assessed the Taxpayer for gross receipts tax in periods from 2016 to 2019. The Taxpayer argued that his receipts were deductible as the receipts were from commissions that had derived from the sale of tangible property between manufacturers and retailers that were not taxable. Under statute, tangible property purchased for resale in the ordinary course of business is deductible. The Taxpayer testified that because of the nature of these transactions, the retailers would have issued nontaxable transaction certificates to the wholesalers, making the sales deductible. The Department argued that since the retailers in this case would be charging gross receipts tax to the ultimate customers of the merchandise, the sales of the property were eventually taxable. The Hearing Officer determined, however, that the receipts from the commissions were deductible if the Taxpayer could document that the sales between the wholesalers and retailers had indeed been deductible. Though the Taxpayer provided a letter from a wholesaler the Taxpayer had negotiated sales for, and which explained the sales commission compensation agreement it had with the Taxpayer, the letter did not describe whether the receipts of the wholesaler had been deductible. The Taxpayer was unable to provide any other support that the transactions that had resulted in the commissions were deductible. Since the Hearing Officer determined the Taxpayer had not provided enough evidence to support the taxpayer’s deduction, the protest was denied.
