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131.240 Taxpayer's records in electronic format -- Requirements -- Satisfaction of requirements.

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131.240 Taxpayer's records in electronic format -- Requirements -- Satisfaction of requirements. (1) If a taxpayer's required records are maintained as both electronic records and hard copies, the taxpayer shall make the records available to the department in electronic <br>record format upon the department's request and in accordance with the following: <br>(a) Electronic records used to establish tax compliance shall contain sufficient information so that the details underlying the electronic record can be <br>identified and made available to the department upon request; (b) Taxpayers shall not be required to construct electronic records for tax purposes other than those created in the course of business; (c) If a taxpayer uses codes to identify some element in an electronic record or hard copy, the taxpayer shall provide the department with a method to <br>interpret the coded information; and (d) The taxpayer's computer hardware or software shall accommodate the extraction and conversion of retained electronic records. (2) A taxpayer may create electronic records solely for the department's use if the taxpayer documents the process that created the record and the relationship between <br>the electronic record and the original record. (3) Nothing in this section shall relieve taxpayers of the responsibility to retain hard-copy records that are created or received in the ordinary course of business as <br>required by existing law. (4) Nothing in this section shall prevent the department from requesting, in lieu of electronic records, any hard-copy printouts that the taxpayer possesses at the time of <br>examination. (5) The department's access to electronic records as required in subsection (1) of this section may be satisfied by: <br>(a) The taxpayer providing the department with the hardware, software, and personnel resources to access the electronic records; (b) The taxpayer arranging for a third party to provide the hardware, software, and personnel resources necessary to access the electronic records. Contracting <br>with a third party does not relieve the taxpayer of its responsibilities under this <br>section; or (c) The taxpayer converting the electronic records to a standard record format specified by the department, including copies of files, on a medium to which <br>the department agrees. Effective: June 20, 2005 <br>History: Created 2005 Ky. Acts ch. 184, sec. 3, effective June 20, 2005. <br>Legislative Research Commission Note (6/20/2005). 2005 Ky. Acts chs. 11, 85, 95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory references to <br>agencies and officers whose names have been changed in 2005 legislation confirming <br>the reorganization of the executive branch. Such a correction has been made in this <br>section.