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Yes, the State Board of Equalization has the authority to essentially ignore the taxpayer’s business records and establish its own conclusions as to the proper sales tax liability by using the mark-up method. The authority for this is found in Rev. & Tax Code 6481, which provides, in pertinent part, that “if the board is not satisfied with the return or returns of the tax or the amount of tax, or other amount, required to be paid . . . it may compute and determine the amount required to be paid upon the basis of the facts contained in the return or returns or upon the basis of any information within its possession or that may come into its possession.”
