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(Neb)-Whiteclay Beer Stores Fighting State Claim They Owe $600-K In Taxes

By: John Axtell Posted at: 12/28/2017 10:40 PM
LINCOLN, Neb. (AP) - The Nebraska Department of Revenue says an audit shows the owners of the four now-closed beer stores in Whiteclay owe more than $600,000 in back taxes after under-reporting nearly $1.7 million in sales over a 3-year period, but the store owners are challenging the claim.

     The owners of the Arrowhead Inn, State Line Liquor, D&S Pioneer Service and Jumping Eagle Inn say the findings by Tax Commissioner Tony Fulton were based on flawed estimates, and they've asked the district court in Lincoln to review the numbers.

     The owners filed 9 petitions for review of the Revenue Department's notice of deficiency determination that they owed income tax, sales and use taxes, and a litter fee for gross sales of $100,000 or more. The petitions say the state conclusions are contrary to the law and not supported by evidence, calling them "arbitrary, capricious and/or unreasonable."

     The period in question is August 2013 to August 2016. After the initial state audit showed they owed taxes, the owners asked for and got on-site re-audits in September 2016 but their cash register records weren't available because they had been taken by the Nebraska Liquor Control Commision.

       The auditors then subpoenaed the records of the distributors serving the stores to reconstruct total sales, but the stores say the auditors based their calculations on the assumption that the stores had sold a large percentage of cases by the individual can.

      The stores argued that the auditors didn't consider wholesale price increases and that the single-can sales calculations badly overestimated revenue. They said the Revenue Department should have gotten the cash register receipts for the liquor commission for the calculations, but the state disagreed.

    Tax Commissioner Fulton said it was the owners' responsibility to provide the documentation and that because they hadn't kept the records required by state law, the auditors had to look for other ways to calculate total sales.

      According to the Revenue Department, the Arrowhead Inn owes over $244,000...State Line Liquor $143,000...D&S Pioneer Services $122,000...and Jumping Eagle Inn more than $93,400 with all also owing penalties, fees and interest.

      For more than a century, except during prohibition, stores in Whiteclay sold large amounts of alcohol, nearly all to residents of the adjacent Pine Ridge Reservation where alcohol is banned. Sales last year were
the equivalent of about 3.6-million cans of beer.

    The Nebraska Liquor Control Commission in April unanimously denied license renewals for the 4 beer stores, citing inadequate law enforcement. The owners appealed and a Lancaster County District judge sided with them, blasting the liquor commission, but the state Supreme Court overturned the lower court decision because of a technical flaw in the appeal.


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