Can a New York vendor keep computer-readable tapes instead of paper cash-register tapes to satisfy its sales tax recordkeeping duties?

Plain-English summary

Morton L. Coren, P.C. asked whether a vendor may keep computer-readable tapes instead of the paper copies of cash-register tapes to meet the sales tax recordkeeping requirement of Tax Law § 1135. The petition explained that modern point-of-sale electronic registers are essentially small computer terminals that digitally record every sale, and that a program can save all of that information in a format exactly the same as the paper tape — in fact, a printout of the digital record is an identical reproduction of the register tape. Storing paper tapes is costly, wastes space, and exposes the records to fire, flood, and animal damage in basement storage.

The Department held that keeping the computer-readable tapes is acceptable:

• § 1135(a)(1) requires every person who must collect tax to keep records of every sale and of the tax due, "in such form as the commissioner… may by regulation require," including a true copy of each sales slip, invoice, receipt, statement, or memorandum on which tax must be separately stated.
• § 533.2(f)(1) requires records originated at the time of sale to be dated, legible, and preserved so as to disclose, in readily accessible and verifiable detail, the basis for and accuracy of the return. The regulation adds that records may be reproduced by photograph, photostat, microfilm, and similar processes that actually reproduce the original record — but notes that computer output microfilm does not actually reproduce the original record and is not acceptable for reproducing hard-copy documents without written permission of the District Office Audit Bureau.
• The Department distinguished this situation: the computer-readable tapes are the original transactions recorded at the time of sale, and they print out in the same format as the cash-register paper tapes. On those facts, "maintaining computer readable tapes of the original transactions recorded at the time of sale, which print out in the same format of information as cash register paper tapes, is an acceptable method of record keeping."

What this means for you

You can go paperless on register tapes — if the digital record is the original and prints identically

New York's recordkeeping rules are about substance, not paper. If your point-of-sale system captures each sale at the time it happens and can reproduce that data in the same format as the register tape, you can keep the electronic version and skip warehousing boxes of thermal paper. The record still has to be dated, legible, and readily accessible in verifiable detail on audit.

Know the line the regulation draws: original digital record vs. a re-imaged paper document

The opinion turns on a distinction worth remembering. Capturing the original transaction digitally is fine. But the regulation separately says computer output microfilm — a photographic re-imaging of hard-copy documents — does not reproduce the original record and needs written permission from the District Office Audit Bureau. If your process is re-imaging paper rather than keeping the born-digital record, you're in the microfilm lane and should get that permission.

This is a 1991 opinion — verify current e-record rules

Recordkeeping technology and the Department's guidance have moved on since 1991. Treat this as confirmation of the underlying principle, and confirm the current requirements (retention periods, formats, and audit access) before relying on it for a modern system.

Common questions

Q: Do I have to keep the paper cash-register tapes, or can I keep the electronic version?
A: You can keep computer-readable tapes if they capture the original transactions recorded at the time of sale and print out in the same format as the paper register tapes.

Q: Why was this allowed when the regulation says computer output microfilm is not acceptable?
A: Because these tapes are the original digital record of the sale, not a photographic re-imaging of a paper document. The microfilm restriction applies to reproducing hard-copy documents.

Q: What must the electronic records still do?
A: Be dated, legible, and preserved so they disclose, in readily accessible and verifiable detail, the basis for and accuracy of the amounts reported on the sales and use tax return (§ 533.2(f)(1)).

Citations and references

Statutes and regulations:

• Tax Law § 1135(a)(1) — recordkeeping requirement for persons required to collect tax, including a true copy of each sales slip/invoice/receipt on which tax must be separately stated
• 20 NYCRR § 533.2(f)(1) — form, legibility, and reproduction of required records; computer output microfilm not acceptable to reproduce hard-copy documents without District Office Audit Bureau permission

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_50s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (50)S
Sales Tax
July 22, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910507B

On May 7, 1991, a Petition for Advisory Opinion was received from Morton L. Coren, P.C.,
638 Meadow Court, Westbury, NY 11590.
The issue raised by Petitioner, Morton L. Coren, P.C., is whether it is permissible to maintain
computer readable tapes as an alternative to the paper copies of the register tapes for purposes of
maintaining sales tax records pursuant to Section 1135 of the Tax Law.
The first cash registers were mechanical devices, which stamped information directly on the
paper tape. The development of point of sale electronic registers has changed the nature of the
register from a mechanical device to a small computer terminal with a computerized memory and
digitalized recording of sales transactions on computer readable tapes.
A computer program has been developed which will save all of the information input into
the register at the time of sale. The format of the information is exactly the same as the paper tape.
In fact, the printout of the computerized information is an identical reproduction of the register tape.
The high cost of storage and tremendous amount of wasted space has forced large companies
to look for other alternatives to storing thousands of boxes of the paper register tapes. The storing
of paper tapes are subject to many problems such as being a fire hazard or being destroyed by
flooding or animals in basement storage areas.
Section 1135(a)(1) of the Tax Law provides that:
Every person required to collect tax shall keep records of every sale or
amusement charge or occupancy and of all amounts paid, charged or due thereon and
of the tax payable thereon, in such form as the commissioner of taxation and finance
may by regulation require. Such records shall include a true copy of each sales slip,
invoice, receipt, statement or memorandum upon which subdivision (a) of section
eleven hundred thirty-two requires that the tax be stated separately.
Section 533.2(f)(1) of the Sales and Use Tax Regulations provides that:
(i) All records, including sales memoranda, purchase memoranda and
records originated at the time of sale, and any other documents, books
or records pertaining to tax liability and tax collections, must be
dated, legible, and maintained and preserved in such manner as to
disclose in readily accessible and verifiable detail the basis for and
accuracy of the entries reported on the sales and use tax return.

-2­
TSB-A-91 (50)S
Sales Tax
July 22, 1991

(ii) All records originated at the time of sale may be
reproduced on any photograph, photostat, microfilm, micro-card,
miniature photograph or other process which actually reproduces the
original record. Computer output microfilm does not actually
reproduce the original record within the meaning of this subdivision
and, therefore, is not an acceptable means of reproducing hard-copy
documents originating at the time of sale without the specific written
permission of the District Office Audit Bureau.
Accordingly, pursuant to Section 1135(a)(1) of the Tax Law and Section 533.2(f)(1) of the
Sales and Use Tax Regulations maintaining computer readable tapes of the original transactions
recorded at the time of sale, which print out in the same format of information as cash register paper
tapes, is an acceptable method of record keeping.

DATED: July 22, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.