{ "id": 2183288, "name": "PPG INDUSTRIES, INC., Plaintiff-Appellant/Cross-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellee/Cross-Appellant", "name_abbreviation": "PPG Industries, Inc. v. Department of Revenue", "decision_date": "2002-01-29", "docket_number": "No. 1\u201499\u20142487", "first_page": "16", "last_page": "36", "citations": [ { "type": "official", "cite": "328 Ill. App. 3d 16" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "242 N.E.2d 205", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1968, "opinion_index": 0 }, { "cite": "41 Ill. 2d 154", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2851304 ], "year": 1968, "pin_cites": [ { "page": "157-58" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/41/0154-01" ] }, { "cite": "376 N.E.2d 324", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "60 Ill. App. 3d 11", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3354438 ], "year": 1978, "pin_cites": [ { "page": "15" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/60/0011-01" ] }, { "cite": "527 N.E.2d 1048", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1988, "opinion_index": 0 }, { "cite": "173 Ill. 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App. 3d", "case_ids": [ 3567994 ], "weight": 2, "year": 1985, "pin_cites": [ { "page": "632" }, { "page": "630" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/139/0626-01" ] }, { "cite": "421 N.E.2d 236", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "96 Ill. App. 3d 293", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 12130486 ], "weight": 4, "year": 1981, "pin_cites": [ { "page": "296" }, { "page": "296" }, { "page": "296" }, { "page": "296-97" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/96/0293-01" ] }, { "cite": "453 N.E.2d 48", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1983, "opinion_index": 0 }, { "cite": "117 Ill. App. 3d 260", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3482811 ], "year": 1983, "pin_cites": [ { "page": "266" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/117/0260-01" ] }, { "cite": "510 N.E.2d 937", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1987, "opinion_index": 0 }, { "cite": "157 Ill. App. 3d 907", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3543102 ], "year": 1987, "pin_cites": [ { "page": "910" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/157/0907-01" ] }, { "cite": "104 N.E.2d 606", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1952, "opinion_index": 0 }, { "cite": "411 Ill. 573", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5313595 ], "weight": 2, "year": 1952, "pin_cites": [ { "page": "580" }, { "page": "578" } ], "opinion_index": 0, "case_paths": [ "/ill/411/0573-01" ] }, { "cite": "155 N.E.2d 3", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1958, "opinion_index": 0 }, { "cite": "15 Ill. 2d 327", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2766408 ], "weight": 4, "year": 1958, "pin_cites": [ { "page": "335" }, { "page": "333" }, { "page": "334" }, { "page": "366" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/15/0327-01" ] }, { "cite": "723 N.E.2d 820", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1999, "opinion_index": 0 }, { "cite": "309 Ill. App. 3d 959", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 349569 ], "weight": 2, "year": 1999, "pin_cites": [ { "page": "965" }, { "page": "965" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/309/0959-01" ] }, { "cite": "735 N.E.2d 100", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 2000, "opinion_index": 0 }, { "cite": "315 Ill. App. 3d 1060", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 980675 ], "weight": 2, "year": 2000, "pin_cites": [ { "page": "1064" }, { "page": "1064" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/315/1060-01" ] }, { "cite": "692 N.E.2d 295", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1998, "opinion_index": 0 }, { "cite": "181 Ill. 2d 191", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 821407 ], "year": 1998, "pin_cites": [ { "page": "205" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/181/0191-01" ] }, { "cite": "695 N.E.2d 481", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1998, "opinion_index": 0 }, { "cite": "182 Ill. 2d 262", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 864528 ], "weight": 3, "year": 1998, "pin_cites": [ { "page": "273" }, { "page": "269" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/182/0262-01" ] }, { "cite": "494 N.E.2d 924", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "144 Ill. App. 3d 541", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3500070 ], "weight": 4, "year": 1986, "pin_cites": [ { "page": "553-54" }, { "page": "554" }, { "page": "554" }, { "page": "554" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/144/0541-01" ] }, { "cite": "447 U.S. 207", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6182773 ], "weight": 3, "year": 1980, "pin_cites": [ { "page": "223-24" }, { "page": "81" }, { "page": "2120" } ], "opinion_index": 0, "case_paths": [ "/us/447/0207-01" ] }, { "cite": "488 N.E.2d 984", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1986, "opinion_index": 0 }, { "cite": "111 Ill. 2d 32", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3167373 ], "year": 1986, "pin_cites": [ { "page": "47-48" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/111/0032-01" ] }, { "cite": "541 N.E.2d 1385", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "186 Ill. App. 3d 208", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 2658629 ], "year": 1989, "pin_cites": [ { "page": "213" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/186/0208-01" ] }, { "cite": "704 N.E.2d 884", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1998, "opinion_index": 0 }, { "cite": "301 Ill. App. 3d 736", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 257131 ], "year": 1998, "pin_cites": [ { "page": "744" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/301/0736-01" ] }, { "cite": "425 N.E.2d 606", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "99 Ill. App. 3d 263", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3102417 ], "year": 1981, "pin_cites": [ { "page": "266" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/99/0263-01" ] }, { "cite": "606 N.E.2d 1111", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1992, "opinion_index": 0 }, { "cite": "153 Ill. 2d 76", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4738801 ], "year": 1992, "pin_cites": [ { "page": "88" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/153/0076-01" ] }, { "cite": "673 N.E.2d 710", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1996, "opinion_index": 0 }, { "cite": "284 Ill. App. 3d 473", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1260410 ], "weight": 7, "year": 1996, "pin_cites": [ { "page": "484" }, { "page": "484" }, { "page": "484" }, { "page": "480" }, { "page": "480" }, { "page": "480" }, { "page": "480" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/284/0473-01" ] } ], "analysis": { "cardinality": 1419, "char_count": 51345, "ocr_confidence": 0.775, "pagerank": { "raw": 1.0625647458390723e-07, "percentile": 0.557450067552201 }, "sha256": "5c7f3d6cd7857daad04fe406a9248766618974e865eaccf9518d6ac3ce71e282", "simhash": "1:cbe96cd66f15bec1", "word_count": 8231 }, "last_updated": "2023-07-14T17:11:21.532369+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "PPG INDUSTRIES, INC., Plaintiff-Appellant/Cross-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellee/Cross-Appellant." ], "opinions": [ { "text": "JUSTICE McBRIDE\ndelivered the opinion of the court:\nThis appeal arises from an administrative review action filed by plaintiff-appellant/cross-appellee, PPG Industries, Inc. (PPG or Taxpayer). Taxpayer is a Pennsylvania corporation with its principal place of business in Pittsburgh, Pennsylvania. Defendant-appellee/ cross-appellant is the Department of Revenue of the State of Illinois (Department). Taxpayer appeals the trial court\u2019s decision which upheld the Department\u2019s finding that Taxpayer was liable for tax penalties for the tax years 1987, 1988, 1989, and 1990. PPG timely filed a notice of appeal on July 12, 1999, seeking only a reversal of the trial court\u2019s imposition of penalties based upon the claim that it exercised ordinary business care in determining, filing, and paying its proper tax liability. On July 22, 1999, the Department cross-appealed the trial court\u2019s order which held that the Department\u2019s decision concerning throwback or reversionary sales was against the manifest weight of the evidence.\nIn order to review the propriety of penalties imposed against PPG, we must determine whether PPG exercised ordinary business care in measuring its tax liability. To make that determination, we must, in turn, examine five issues: (1) whether PPG and its subsidiary, PPG Oil and Gas, Inc. (Oil & Gas), were a unitary business group; (2) whether the gain PPG realized from the sale of Oil & Gas\u2019 assets was business income apportionable to Illinois; (3) whether royalty income PPG received from intellectual property licensing agreements to foreign entities was business income apportionable to Illinois; (4) whether the Department improperly threw back the sales of certain PPG subsidiaries to Illinois; and (5) whether penalties imposed on PPG for underpaying taxes for the 1987, 1988, 1989, and 1990 tax years under section 1005(a) of the Illinois Income Tax Act (Act) (Ill. Rev. Stat. 1991, ch. 120, par. 10 \u2014 1005) were properly calculated. We review only those facts necessary for disposing of this appeal.\nPPG is a global manufacturer and distributor of glass, fiberglass, coatings, and resins of chemicals. It is responsible for paying taxes on a calender year basis. The Department made two separate audits on PPG for the periods 1987-88 and 1989-90 respectively. Based on these audits, the Department issued notices of deficiency against PPG for tax infractions occurring between 1987 and 1990. PPG timely protested the deficiency notices. The notices of deficiency and corresponding protests were consolidated for an administrative hearing. On May 23, 1997, the Department determined that Taxpayer owed an additional tax amount of $1,406,103 plus penalties in the amount of $785,011.11.\nOil & Gas as Part of PPG\u2019s Unitary Business Income\nOne of PPG\u2019s enterprises is the production of potash, which is a potassium carbonate substance derived from the ashes of wood. While exploring for potash in Michigan, PPG discovered deposits of oil and natural gas. Based on this discovery, PPG formed Oil & Gas to maintain the exploration and extraction of oil and natural gas in Michigan. In 1981, Oil & Gas was incorporated as a wholly owned subsidiary of PPG. All of the officers of Oil & Gas were officers or employees of PPG. Thomas Neider, a PPG employee, was the manager of PPG\u2019s agricultural and performance chemical division between 1981 and 1987. Neider was paid by PPG and oversaw potash production as well as the operation of Oil & Gas.\nNeider was the supervisor of James Hafenbrack, who was hired by PPG from the Exxon Corporation to be general manager of Oil & Gas. The record discloses that Hafenbrack was a PPG employee, not an Oil & Gas employee. Regardless, he was charged with making day-to-day decisions concerning the operations of Oil & Gas such as where wells would be drilled and where lease and land rights could be acquired.\nThe record also reveals that PPG internally reported Oil & Gas financial information with the financial reports of its chemical division. Also, PPG provided all of the operating funds for Oil & Gas. In 1987, all expenses of Oil & Gas were paid by PPG and then billed to Oil & Gas through PPG\u2019s interoffice billing procedure. Many of the invoices regarding purchases made by Oil & Gas are in PPG\u2019s name.\nThe record indicates that PPG performed accounting, legal, and tax services for Oil & Gas. Further, PPG entered into all contracts to sell the products produced by Oil & Gas. Also, in 1994, the Stony Point natural gas plant was constructed by Oil & Gas in Michigan. The record indicates that PPG invested a significant amount in the financing and construction of the Stony Point refinery.\nIn 1987, all of the assets of Oil & Gas were sold to Marathon Oil Company. PPG planned, negotiated, and executed the contract to sell Oil & Gas. Throughout the years when Oil & Gas operated, PPG reported in its annual reports that oil and gas production was part of its chemical processing business.\nGain on the Sale of Oil & Gas Assets\nIn its 1987 Illinois tax return, PPG excluded Oil & Gas from its unitary business income, and thus excluded the gain on the sale of Oil & Gas\u2019 assets to Marathon Oil Company. Based on the 1987-88 audit, the Department included the gain on the sale of Oil & Gas\u2019 assets as part of PPG\u2019s unitary business income. In addition, the Department imposed penalties on PPG for not reporting the gain as Illinois business income.\nAudit of Throwback Sales\nDuring the two audit periods, James Zamboldi, PPG\u2019s supervisor of state income taxes, was the contact person with the auditors. During these audits, the record reveals that the auditors made written inquiries to PPG to provide data showing sales by origin and destination. Zamboldi informed the auditors that PPG did not generate documents which indicated sales by origin. He further said that the only way PPG could comply with the request was through original invoices, which were maintained on microfiche at PPG\u2019s headquarters in Pittsburgh, Pennsylvania, and at other sites throughout the country.\nZamboldi said that neither auditor asked him to generate the invoices from the microfiche. Also, Zamboldi did not tender any invoices to the auditors. George Getty, PPG\u2019s tax attorney, testified that PPG maintained records that would reflect sales made by destination. Getty also stated that these documents existed during the audit period and that Zamboldi could have obtained them.\nBecause the auditors could not acquire the origin and destination sales information they sought, the Department calculated PPG\u2019s throwback sales attributable to Illinois by using a formula. The formula\u2019s ratio was based on PPG\u2019s average Illinois inventory to PPG\u2019s average inventory \u201ceverywhere\u201d (or worldwide) and was applied against total sales everywhere (or worldwide).\nOn May 23, 1997, the Department affirmed the notices of deficiency against PPG. Specifically, it found, for the audit periods at issue: (1) that PPG and Oil & Gas were a unitary business group; (2) that the gain PPG realized from the sale of Oil & Gas was business income apportionable to Illinois; (3) that royalty income PPG received from intellectual property licensing agreements to foreign entities was business income apportionable to Illinois; (4) that the Department properly threw back the sales of certain PPG subsidiaries to Illinois; and (5) that PPG was liable for penalties for underpaying taxes for the 1987, 1988, 1989, and 1990 tax years.\nAs noted above, on August 12, 1997, PPG sought administrative review in the trial court. The trial court affirmed all of the Department\u2019s findings except on the question of reversionary or throwback sales. In regard to throwback sales, the trial court concluded that the auditors had ignored the sales invoices which, in fact, existed and therefore had not conducted a minimally reasonable audit. Since the method of calculation lacked accuracy, the trial court held that the Department\u2019s assessment of throwback sales was against the manifest weight of the evidence. Thus, the trial court entered a judgment against PPG in the amount of $3,379,720 which included $785,011 in penalties. As also stated above, PPG appealed on July 12, 1999, seeking only a reversal of the trial court\u2019s imposition of penalties. In response, the Department cross-appealed the trial court\u2019s order which reversed the Department\u2019s decision on the question of throwback sales.\nWe apply a manifest weight of the evidence standard of review to the first, second, and third questions on appeal. \u201cThe existence of reasonable cause justifying abatement of a [tax] penalty is a factual determination that will be decided only on a case-by-case basis. [Citation.]\u201d Kroger Co. v. Department of Revenue, 284 Ill. App. 3d 473, 484, 673 N.E.2d 710 (1996). Where the questions to be decided are factual questions, our supreme court has stated that: \u201c[0]n administrative review, it is not a court\u2019s function to reweigh the evidence or make an independent determination of the facts. Rather, the court\u2019s function is to ascertain whether the findings and decision of the agency are against the manifest weight of the evidence. [Citations.] An administrative agency decision is against the manifest weight of the evidence only if the opposite conclusion is clearly evident.\u201d Abrahamson v. Il linois Department of Professional Regulation, 153 Ill. 2d 76, 88, 606 N.E.2d 1111 (1992).\nWith the appropriate standard in place, we examine the arguments made by the parties concerning the first three questions on appeal.\nTaxpayer\u2019s argument on the first question is that, under the law at the time the audit was conducted, it had reasonable cause to exclude Oil & Gas from its unitary business group. When Taxpayer filed its tax returns for the years 1987 through 1990, section 1005(a) of the Act provided:\n\u201cIf any amount of tax required to be shown on a return prescribed by this Act is not paid on or before the date required for filing such return (determined without regard to any extension of time to file), a penalty shall be imposed at the rate of 6% per annum upon the tax underpayment unless it is shown that such failure is due to reasonable cause. This penalty shall be in addition to any other penalty determined under this Act.\u201d Ill. Rev. Stat. 1991, ch. 120, par. 10\u20141005.\nThe trial judge noted that \u201creasonable cause,\u201d stated above, was not defined in the Act at the time Taxpayer filed its returns for the audit period at issue. We determine, however, that at least one appellate decision existed at the time Taxpayer\u2019s returns were due where reasonable cause was interpreted to mean the exercise of ordinary care and business prudence. Du Mont Ventilation Co. v. Department of Revenue, 99 Ill. App. 3d 263, 266, 425 N.E.2d 606 (1981), cited in Kroger Co. v. Department of Revenue, 284 Ill. App. 3d 473, 484, 673 N.E.2d 710 (1996).\nSection 1005(a) was amended, effective January 1, 1993, omitting the \u201creasonable cause\u201d language and referring to the Uniform Penalty and Interest Act (35 ILCS 735/3\u20141 et seq. (West 1994)), which currently contains such language. 35 ILCS 735/3\u20148 (West 1994). Regulation section 700.400 (c) of the Illinois Administrative Code, which was adopted under the Uniform Penalty and Interest Act and became effective January 13, 1994, provides the following:\n\u201cA taxpayer will be considered to have made good faith effort to determine and file and pay his proper tax liability if he exercised ordinary business care and prudence in doing so. A determination of whether a taxpayer exercised ordinary business care and prudence is dependent upon the clarity of the law or its interpretation and the taxpayer\u2019s experience, knowledge and education.\u201d 86 Ill. Adm. Code \u00a7 700.400(c) (1998).\nFurther, this court has held that \u201c[rjeasonable cause generally has been interpreted to mean the exercise of ordinary business care. [Citation.]\u201d Kroger, 284 Ill. App. 3d at 484; Peoria & Pekin Union Ry. Co. v. Department of Revenue, 301 Ill. App. 3d 736, 744, 704 N.E.2d 884 (1998).\nTaxpayer maintains that it was reasonable for it to determine that Oil & Gas was not part of its unitary business group filing in Illinois. As Taxpayer correctly noted in its brief, the Act defines unitary business group as:\n\u201c[A] group of persons related through common ownership whose business activities are integrated with, dependent upon and contribute to each other. *** Unitary business activity can ordinarily be illustrated where the activities of the members are: (1) in the same general line (such as manufacturing, wholesaling, retailing of tangible personal property, insurance, transportation or finance); or (2) are steps in a vertically structured enterprise or process (such as the steps involved in the production of natural resources, which might include exploration, mining, refining, and marketing); and, in either instance, the members are functionally integrated through the exercise of strong centralized management (where, for example, authority over such matters as purchasing, finance, tax compliance, product line, personnel, marketing and capital investment is not left to each member).\u201d 35 ILCS 5/1501(a)(27) (West 1994).\nTaxpayer, in its brief, also correctly recognized that Illinois courts have defined unitary business group as follows:\n\u201cThe term \u2018unitary business group\u2019 is used to describe \u2018a group of functionally integrated corporate units which are so interrelated and interdependent that it becomes relatively impossible for one State to determine the net income generated by a particular corporation\u2019s activities within the State and therefore allocable to that State for purposes of taxation.\u2019 [Citation.] The existence of a unitary business group is strongly indicated when a single entity carries on an integrated business in several jurisdictions, with each operation contributing income to the others through centralized management, accumulated know-how and economies of scale. [Citation.]\u201d Filtertek, Inc. v. Department of Revenue, 186 Ill. App. 3d 208, 213, 541 N.E.2d 1385 (1989).\nCitizens Utilities Co. of Illinois v. Department of Revenue, 111 Ill. 2d 32, 47-48, 488 N.E.2d 984 (1986). In addition to Illinois authority, Taxpayer also cites a United States Supreme Court decision which states:\n\u201cThe \u2018linchpin of apportionability\u2019 for state income taxation of an interstate enterprise is the \u2018unitary-business principle.\u2019 [Citation.] If a company is a unitary business, then a State may apply an apportionment formula to the taxpayer\u2019s total income in order to obtain a \u2018rough approximation\u2019 of the corporate income that is \u2018reasonably related to the activities conducted within the taxing State.\u2019 [Citations.] In order to exclude certain income from the apportionment formula, the company must prove that \u2018the income was earned in the course of activities unrelated to the sale of petroleum products in that State.\u2019 [Citation.] The court looks to the \u2018underlying economic realities of a unitary business,\u2019 and the income must derive from \u2018unrelated business activity\u2019 which constitutes a \u2018discrete business enterprise.\u2019 [Citation.]\u201d Exxon Corp. v. Department of Revenue, 447 U.S. 207, 223-24, 65 L. Ed. 2d 66, 81, 100 S. Ct. 2109, 2120 (1980).\nTaxpayer further relies on examples set forth in the Illinois Administrative Code which illustrate scenarios where companies are deemed engaged or not engaged in a unitary business activity. In example D, \u201ccorporation K\u201d was involved in the manufacture and sale of canned goods. Corporation K acquired subsidiary corporations L, M, and N, where each manufactured and sold different product lines. However, corporation K performed centralized warehousing, accounting functions, and inventory control for itself and the three subsidiaries. Because of the control exerted by corporation K over the subsidiaries, example D concluded that all the companies were engaged in a unitary business activity. 86 Ill. Adm. Code \u00a7 100.3010(c)(4)(D) (1998).\nIn example E, however, the Code states the following:\n\u201cSame facts as in Example D, except that, although corporation K\u2019s board of directors and executive officers maintained overall management control of all the acquired corporations with regard to major policy matters such as personnel and capital expenditures, there was insufficient integration because of the absence of such centralized operations as warehousing, purchasing inventory control or marketing strategy. Consequently, due to the absence of strong centralized management, the corporations were not engaged in the conduct of unitary business.\u201d 86 Ill. Adm. Code \u00a7 100.3010(c)(4)(E) (1998).\nTaxpayer argues that example E is identical to the relationship between PPG and Oil & Gas in this case.\nWe disagree and conclude that the Department correctly determined that PPG and Oil & Gas were engaged in a unitary business activity as defined by the Act, Illinois Administrative Code, and pertinent case law. As recognized by both parties and as noted above, the Act sets forth criteria for illustrating unitary business activity:\n\u201c[W]here the activities of the members are: (1) in the same general line (such as manufacturing, wholesaling, retailing of tangible personal property, insurance, transportation or finance); or (2) are steps in a vertically structured enterprise or process (such as the steps involved in the production of natural resources, which might include exploration, mining, refining, and marketing); and, in either instance, the members are functionally integrated through the exercise of strong centralized management (where, for example, authority over such matters as purchasing, financing, tax compliance, product line, personnel, marketing and capital investment is not left to each member).\u201d 35 ILCS 5/1501(a)(27) (West 1994) (formerly Ill. Rev. Stat. 1991, ch. 120, par. 15\u20141501(a)(27)).\nIn its brief, Taxpayer contends that PPG and Oil & Gas were not unitary because the parent and subsidiary were not in the same general line of business, were not steps in a vertically structured enterprise, and were not tied together by strong centralized management. In our view however, Taxpayer offers few facts as evidence that PPG and Oil & Gas were not a unitary business activity. Rather, the record reveals the opposite conclusion.\nIt is undisputed that one of PPG\u2019s general lines of business is the sale of chemicals. When PPG discovered oil in Michigan, it incorporated Oil & Gas, which was brought under the supervision of PPG\u2019s chemical division. It is also undisputed that Oil & Gas was an outgrowth of PPG\u2019s potash operations, which were part of PPG\u2019s chemical division. We agree with the Department, which concluded that, although PPG may view its oil and gas operations as a part of a different product line than the other chemicals it sold, the operations of Oil & Gas were in the same general line as PPG\u2019s chemical division: specifically, the business of manufacturing and selling chemicals. Further, the record also supports vertical integration of PPG and Oil & Gas through PPG\u2019s strong centralized control over Oil & Gas. The record demonstrates that all of the directors of Oil & Gas were officers or employees of PPG. Further, Hafenbrack, the principal person in charge of Oil & Gas\u2019 daily operations, was a contract employee for PPG. PPG paid the salaries of those employed by Oil & Gas. Further, accounting, legal, and tax services were provided to Oil & Gas by PPG. In its annual reports, PPG referred to oil and gas operations as part of its chemical division. Also, PPG executed all contracts for the sale of Oil & Gas products in Michigan. Finally, when Taxpayer decided to sell Oil & Gas, PPG approved and executed the contract. Based on these facts, we conclude that sufficient evidence exists in the record to support the Department\u2019s finding that PPG and Oil & Gas were a unitary business activity under the Act.\nSection 1501(a)(27), cited above, is clear in defining what constitutes a unitary business activity under Illinois law. 35 ILCS 5/1501(a)(27) (West 1994) (formerly Ill. Rev. Stat. 1991, ch. 120, par. 15\u20141501(a)(27)). The existence of numerous facts which form a basis for concluding that PPG and Oil & Gas were in the same general line of business and that they were a vertically integrated enterprise indicates that PPG did not exercise ordinary business care when it unilaterally determined that no unitary business group existed between the two entities. Therefore, we find that PPG did not have reasonable cause to conclude that PPG and Oil & Gas failed to meet the criteria for a unitary business activity under the Act. We thus affirm the imposition of penalties on this question.\nWe turn to the second question, which is whether the Department\u2019s determination that the gain PPG realized from the sale of Oil & Gas was business income apportionable to Illinois. On its 1987 tax return, PPG excluded Oil & Gas from its unitary business group and, as a result, excluded the gain on the sale of assets of Oil & Gas to Marathon. The auditors, however, included the gain on the sale of Oil & Gas\u2019 assets in PPG\u2019s unitary business income. The Act defines business income, in relevant part, as:\n\u201cThe term \u2018business income\u2019 means income arising from transaction and activity in the regular course of the taxpayer\u2019s trade or business, net of the deductions allocable thereto, and includes income from tangible and intangible property if the acquisition, management, and disposition of the property constitute integral parts of the taxpayer\u2019s regular trade or business operations. Such term does not include compensation or the deductions allocable thereto.\u201d 35 ILCS 5/1501(a)(1) (West 1994) (formerly Ill. Rev. Stat. 1991, ch. 120, par. 15\u20141501(a)(1)).\nThe Act defines nonbusiness income as \u201call income other than business income or compensation.\u201d 35 ILCS 5/1501(a)(13) (West 1994) (formerly Ill. Rev. Stat. 1991, ch. 120, par. 15\u20141501(a)(13)).\nThe principal Illinois cases on this question are National Realty & Investment Co. v. Department of Revenue, 144 Ill. App. 3d 541, 553-54, 494 N.E.2d 924 (1986), Kroger, 284 Ill. App. 3d at 480, and Texaco-Cities Service Pipeline Co. v. McGaw, 182 Ill. 2d 262, 695 N.E.2d 481 (1998). In National Realty, the court noted that it is the taxpayer\u2019s burden to show that the gain in question was nonbusiness income. Further, the court established two applicable tests for determining whether a gain was business income under section 1501(a)(1) of the Act. In Kroger, this court reinforced the decision in National Realty by holding that the two tests established in that case are appropriate for determining business income. Kroger, 284 Ill. App. 3d at 480.\nThe first test is the transactional test, where \u201cincome is classified as business income if it is attributable to a type of business transaction in which taxpayer regularly engages. [Citation.]\u201d National Realty, 144 Ill. App. 3d at 554. The second test is the functional test, where \u201call gain from the disposition of property is considered business income if the property disposed of was used by the taxpayer in its regular trade or business operations. [Citation.] If either test is met, the income is business income.\u201d National Realty, 144 Ill. App. 3d at 554.\nPPG claims that, because Oil & Gas was not part of PPG\u2019s unitary business group, it was reasonable for it to apply the transactional test to the gain realized from the sale of Oil & Gas. In support of its argument, PPG cites the circuit court\u2019s decision in Kroger Co. v. Department of Revenue, which determined that only the transactional test was the law in Illinois during the relevant audit period. Further, PPG claims that the adoption of the functional test in addition to the transactional test in National Realty was merely dicta because the parties in that case stipulated that the two tests existed in law. We disagree with PPG\u2019s interpretation of Kroger and National Realty. First, in Kroger, this court rejected the trial court\u2019s reasoning on appeal and concluded that both the transactional and functional approach existed for determining business income under section 1501(a)(1) of the Act. Kroger, 284 Ill. App. 3d at 480. Second, this court also held in Kroger that \u201cNational Realty\u2019s discussion of the functional test *** was not obiter dictum because the court there held that the gain was taxable as business income by finding that both tests were sufficiently met.\u201d Kroger, 284 Ill. App. 3d at 480. Further, our supreme court, relying in part on the reasoning established in Kroger, has recently upheld the applicability of the functional test in Texaco-Cities. Texaco-Cities Service Pipeline Co., 182 Ill. 2d at 273. We reject PPG\u2019s contention that the status of the law at the time supported the exclusive application of the transactional test and conclude that National Realty was the controlling law to be applied during the relevant audit period.\nIn addition to the decision in National Realty, we note that the Department\u2019s own regulations required application of the functional test during the tax years 1987, 1988, 1989, and 1990. \u201cGain or loss from the sale, exchange or other disposition of real or tangible personal property constitutes business income if the property, while owned by the person, was used in its trade or business.\u201d 86 Ill. Adm. Code \u00a7 100.3050(d)(3) (1985) (now 86 Ill. Adm. Code \u00a7 100.3010(d)(3) (2000)). The above language is virtually identical to the functional test set forth in National Realty. National Realty, 144 Ill. App. 3d at 554. As a result, we further determine that, during the relevant audit period, both the transactional and functional tests were applicable for purposes of determining business income under the Act.\nDisregarding the functional test established in National Realty and the Illinois Administrative Code, PPG elected to follow the transactional test exclusively. Under that test, PPG claims that it was appropriate to conclude that the sale of Oil & Gas was not a transaction that occurred in the regular course of its business. According to PPG, the sale of Oil & Gas\u2019 assets was an extraordinary event because the discovery of oil that led to the formation of Oil & Gas was so unique in PPG\u2019s history that the sale of the assets of Oil & Gas could not be considered within its regular course of business. Therefore, PPG asserts that it was reasonable to conclude that the sale of Oil & Gas was not a transaction within the regular course of business and, thus, it was appropriate to exclude this gain from its 1987 Illinois income tax return.\nThe Department asserts that it properly apportioned the gain on the sale of Oil & Gas\u2019 assets as part of PPG\u2019s Illinois business income and that it correctly imposed penalties on Taxpayer for failing to use reasonable cause in deciding not to report the gain. The Department also contends that Taxpayer failed to meet its burden by showing that the gain was nonbusiness income under the holding in National Realty. We agree.\nAs pointed out by the Department, its own rules, available during the audit period at issue, set forth an example for companies to follow for the purpose of determining business versus nonbusiness income. The example states, in relevant part, \u201c[a] corporation constructed a plant for its use in its multistate manufacturing business and 20 years later sold the property at a gain while it was in operation by the corporation. The gain is business income.\u201d We agree with the Department that the above example is analogous to the facts in this case.\nThe record reveals that, upon the discovery of petroleum in Michigan, PPG incorporated Oil & Gas and its processing plant to further the exploration, extraction, and refinement of oil and natural gas. The record also discloses that PPG sold Oil & Gas at a gain while it was in operation by PPG. Based on the law available to Taxpayer during the relevant period, we conclude that Taxpayer did not have reasonable cause to determine that the gain realized from the sale of Oil & Gas was not business income as defined under section 1501(a)(1) of the Act. By failing to even apply the functional test, Taxpayer failed to meet its burden of demonstrating that the gain was nonbusiness income. We note that, in the event the functional test were to be applied, PPG\u2019s argument that the sale of Oil & Gas was an extraordinary event would fail. \u201cUnder the functional test, *** the extraordinary nature or infrequency of the sale is irrelevant.\u201d Texaco-Cities Service Pipeline Co., 182 Ill. 2d at 269.\nIn addition, in the event the transactional approach were to be applied, evidence in the record supports the Department\u2019s conclusion that part of PPG\u2019s regular business activity was the buying and selling of other businesses. Specifically, a review of PPG\u2019s 1987 annual report indicates that PPG acquired several businesses in that year alone and further verifies the selling of several businesses as part of PPG\u2019s strategic and performance objectives.\nAs recognized by the Department, the Illinois Administrative Code provides that, \u201c[i]n general, all transactions and activity which are dependent upon or contribute to the operations of the economic enterprise as a whole will be transactions and activity arising in the regular course of trade or business.\u201d 86 Ill. Adm. Code \u00a7 100.3050(a) (1985) (now 86 Ill. Adm. Code \u00a7 100.3010(a) (2000)).\nWe conclude that PPG was engaged in the acquisition and divestiture of other companies in the regular course of its business and that the sale of Oil & Gas\u2019 assets was attributable to a type of business transaction in which the Taxpayer routinely engaged. Therefore, we determine that PPG failed to demonstrate that the gain realized from the sale of the assets of Oil & Gas was nonbusiness income under the functional or transactional tests set forth in section 1501(a) of the Act.\nThe applicable statutes and case law were sufficiently clear concerning the application of both the functional and transactional tests for the purpose of determining nonbusiness income. We conclude, therefore, that the Department\u2019s classification of the gain as business income was not against the manifest weight of the evidence and that PPG did not have reasonable cause to categorize the gain in question as nonbusiness income. We therefore affirm the imposition of penalties on the sale of Oil & Gas as business income.\nWe turn to the fourth question, which is the subject of the Department\u2019s cross-appeal. That question is whether the Department properly taxed and penalized Taxpayer for PPG\u2019s reversionary or \u201cthrowback\u201d sales emanating from Illinois during the audit period. As a preliminary matter, we apply a clearly erroneous standard of review to this question. Where a case involves an examination of the legal effect of a given set of facts, a mixed question of fact and law is presented and a clearly erroneous standard is used by the court on review. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 205, 692 N.E.2d 295 (1998).\n\u201c \u2018Clearly erroneous\u2019 is said to rest somewhere between the \u2018manifest weight of the evidence,\u2019 and de novo, requiring us to afford some deference to the agency\u2019s experience and expertise. [Citations.] Under this standard, we must accept the administrative agency\u2019s findings unless we are firmly convinced the agency has made a mistake. [Citation.]\u201d Randolph Street Gallery v. Zehnder, 315 Ill. App. 3d 1060, 1064, 735 N.E.2d 100 (2000).\nBecause we must determine the legal effect of the reversionary sales statute within the context of a certain set of facts, we determine that our standard of review is clearly erroneous on the fourth question.\nAs correctly noted by Taxpayer, the basis of the \u201cthrowback rule\u201d for reversionary sales is found in section 304(a)(3)(B) of the Act, which provides, in relevant part, that sales of tangible personal property are subject to taxation in Illinois if the property is shipped from Illinois and the purchaser is not taxable in the purchaser\u2019s state. 35 ILCS 5/304(a)(3)(B)(ii) (West 1998) (formerly Ill. Rev. Stat. 1991, ch. 120, par. 3\u2014304(a)(3)(B)(ii)). In other words, section 304(a)(3)(B)(ii) provides that \u201csales of tangible personal property that occur in states where the [Taxpayer] is not taxable are deemed to be sales \u2018in this State\u2019 and thus apportioned to Illinois [as business income], [Citation.]\u201d Hartmarx Corp. & Subsidiaries v. Bower, 309 Ill. App. 3d 959, 965, 723 N.E.2d 820 (1999). Thus, the auditors in this case attempted to determine if PPG\u2019s property was shipped from an Illinois location and if a sale was made to a purchaser in a state where PPG was not subject to taxation.\nIn order to make such a determination, the auditors requested throwback sales data from PPG which reflected the origin and destination of PPG\u2019s sales. As noted above, a calculation of throwback sales requires both a determination of where sales were shipped and where they were destined. Zamboldi testified that the auditors did request origin and destination sales documents from PPG. He further stated that PPG did not keep sales records by origin and that the only way PPG could provide that information was by examining the invoice for each sale. These sales invoices, according to Zamboldi, were \u201cvoluminous\u201d in nature and were kept on microfiche. He also testified that he offered to make the invoices available for the auditors\u2019 inspection and that the invoices were located at PPG\u2019s office in Pittsburgh. The record reveals that PPG made no effort to compile or tender the invoices to the auditors in response to the document request.\nAs a result, the auditors made throwback sales calculations based on a formula without reviewing the invoices indicating origin of sales. One of the two auditors testified that the formula was based on a percentage that was computed by comparing Illinois inventory with PPG\u2019s inventory everywhere (or worldwide). The formula was applied to certain sales figures in Alaska, Hawaii and certain foreign countries where the auditors believed reversionary sales apportionable to Illinois existed. Further, the auditor testified that the application of the formula could result in reversionary sales where, in fact, none had been made by Taxpayer. Nonetheless, a formula was implemented as the method of calculation and a tax liability for reversionary sales was imposed on Taxpayer.\nAt the administrative hearing, Getty, PPG\u2019s tax counsel, testified that, during the audit period, PPG maintained, and he had reviewed, records which would reflect PPG\u2019s sales made by destination. He further said that PPG collects destination sales from every possible source within the company for those states whose law requires apportionment by destination sales. In addition, Getty stated that destination sedes documentation would have been available to Zamboldi during the audit period. Getty also testified that destination sales records indicating that PPG did not make sales out of Illinois to the State of Alaska would not have been tendered to the auditors. At the hearing, PPG did not tender any documentation indicating an accurate calculation of sales from Illinois into Alaska, Hawaii, or any foreign country. The Department upheld the auditor\u2019s computation of throwback sales. PPG claims that the Department improperly imposed throwback penalties because it never established a prima facie case that the formula, applied in lieu of actual PPG sales originating in Illinois and ending in Alaska, Hawaii, or a foreign country, represented the appropriate amount of tax due as required under Illinois law. PPG further claims that, for whatever reason, the auditors elected not to review the invoice records maintained on microfiche but instead chose to utilize the formula to calculate hypothetical sales fr\u00f3m Illinois to Alaska, Hawaii, and foreign locations. According to PPG, this is not a case where the taxpayer refused to provide the requested records. Rather, PPG submits that the auditors chose to ignore the original sales invoices, which were located in the Pittsburgh office building. Further, PPG contends that access to the invoices was made available to the auditors as evidenced by the testimony of Zamboldi above. Because the invoices were kept on microfiche, tendering the documents to the auditors by hand was impossible according to PPG. The auditors, from PPG\u2019s standpoint, needed only to accept the offer to examine the invoices which would have allowed a review of the information requested.\nPPG claims that, \u201c[w]here a taxpayer has made records available to the Department, and the Department has refused to review those records, but instead has used an arbitrary formula method to calculate a tax, then that method is unreasonable.\u201d In support of this proposition, PPG relies on Fillichio v. Department of Revenue, 15 Ill. 2d 327, 335, 155 N.E.2d 3 (1958), and Goldfarb v. Department of Revenue, 411 Ill. 573, 580, 104 N.E.2d 606 (1952). In Fillichio, the court found that, under the Retailers\u2019 Occupation Tax Act (now 35 ILCS 120/1 et seq. (West 1994)), the Department\u2019s correction of taxpayer\u2019s tax returns\n\u201cis deemed to be prima facie correct and prima facie evidence of the correctness of the amount of tax shown to be due therein. [Citations.] The taxpayer, thus, has the burden of proving by competent evidence that the proposed assessment is not correct, and when such evidence is not so inconsistent or improbable in itself as to be unworthy of belief, the burden then shifts to the Department which is required to prove its case by competent evidence.\u201d Fillichio, 15 Ill. 2d at 333.\nUnder the facts in Fillichio, the court found that the documents tendered by the taxpayer were so improbable that they were unworthy of belief and, therefore, were insufficient to overcome the prima facie case put on by the Department. Fillichio, 15 Ill. 2d at 334. We presume PPG cited this case, not for its facts, but for the principle that the taxpayer, by furnishing competent evidence to the contrary, can shift the burden back on the Department to prove its case by competent evidence.\nIn Goldfarb, another Retailers\u2019 Occupation Tax Act case, the court found that the Department ignored records furnished by the taxpayer that were not inconsistent, improbable, or unworthy of belief. Thus, the court found that the prima facie case made by the Department was defeated. Goldfarb, 411 Ill. at 578. PPG further relies on a case decided by this court which held that:\n\u201c[Under the Retailers\u2019 Occupation Tax Act,] [a] corrected return prepared by the Department is deemed prima facie correct. [Citation.] At the administrative hearing, the Department successfully established a prima facie case simply by submitting the corrected return into evidence. [Citation.] If the corrected return is challenged, the Department must show that its method of preparing the return meets some minimum standard of reasonableness. [Citation.]\u201d Central Furniture Mart, Inc. v. Johnson, 157 Ill. App. 3d 907, 910, 510 N.E.2d 937 (1987).\nThe trial court in this case relied on the reasonableness principle set forth above when it ruled that \u201c[t]o simply ignore the records a taxpayer has in its possession without examining them does not constitute a proper audit or investigation, nor a showing [that the Department] has established a prima facie case.\u201d Specifically, the trial court relied on Puleo v. Department of Revenue, 117 Ill. App. 3d 260, 266, 453 N.E.2d 48 (1983), which adhered to the reasonableness principle set forth above. In this case, the trial court elected to focus on the reasonableness of the Department\u2019s audit as opposed to examining the findings of the administrative law judge (ALJ).\nBecause the Department did not review the actual sales invoices, PPG concludes that the trial court correctly found that a reasonable audit was not conducted concerning the alleged reversionary sales made by PPG that were attributable to Illinois. As such, PPG claims that the imposition of any tax or penalty on PPG based on throwback sales is contrary to the law and that the trial court\u2019s decision should be affirmed on this question.\nThe Department argues that, by properly making corrections on reversionary sales, it has established a prima facie case and that PPG failed to rebut the presumption by competent evidence. Under Illinois law, the Department claims that, once the burden is placed on the taxpayer, it has the responsibility to introduce evidence at the hearing to prove the legitimacy of its claim. Balla v. Department of Revenue, 96 Ill. App. 3d 293, 296, 421 N.E.2d 236 (1981). Further, the Department claims that PPG had the burden of overcoming its prima facie case through documentary evidence, meaning books and records, and not mere testimony. Jefferson Ice Co. v. Johnson, 139 Ill. App. 3d 626, 632, 487 N.E.2d 1126 (1985); Mel-Park Drugs, Inc. v. Department of Revenue, 218 Ill. App. 3d 203, 217, 577 N.E.2d 1278 (1991); A.R. Barnes & Co. v. Department of Revenue, 173 Ill. App. 3d 826, 832, 527 N.E.2d 1048 (1988); Masini v. Department of Revenue, 60 Ill. App. 3d 11, 15, 376 N.E.2d 324 (1978); Copilevitz v. Department of Revenue, 41 Ill. 2d 154, 157-58, 242 N.E.2d 205 (1968). Based on these cases, the Department claims that the testimony of Zamboldi and Getty is insufficient to overcome its prima facie case that the reversionary sales were properly computed based on the formula. We agree.\nFirst, we conclude that the formula applied by the auditors was proper. The combined apportionment formula is measured as follows:\n\u201c \u2018[T]o determine the apportionment factor for a [taxpayer] subject to the Illinois income tax, the property, payroll, and sales factors would be computed by using the [taxpayer\u2019s] Illinois property, payroll, and sales as numerators, and the entire unitary group\u2019s property, payroll, and sales as denominators. The average of these three factors would be the [taxpayer\u2019s] apportionment factor. This apportionment factor then would be applied to the group\u2019s total business income to derive the amount of business income on which the [taxpayer] would pay Illinois income tax.\u2019 (Emphasis omitted.) [Citation.]\u201d Hartmarx Corp., 309 Ill. App. 3d at 965.\nAs noted by the ALJ, the sales factor component of the combined apportionment formula measures the sales made in Illinois versus the sales made everywhere else. Because the auditors could not obtain PPG records reflecting origin and destination sales pertinent to Illinois, the record reflects that they compared PPG\u2019s Illinois inventory with PPG inventory worldwide to determine reversionary sales. Under Illinois law, the formula employed must not be arbitrary or unreasonable. Fillichio, 15 Ill. 2d at 366. Because the auditors were not tendered the sales invoices they requested, we find that it was reasonable for them to substitute inventory to determine reversionary sales in Illinois.\nMoreover, in its brief, PPG does not affirmatively claim that the formula, itself, was improper. Rather, it claims that applying the formula was inappropriate as PPG offered the auditors an opportunity to examine its sales invoices. Thus, we conclude that the formula employed by the auditors was reasonable.\nFurther, we determine that the Department established a prima facie case that its reversionary sales calculations were correct. As noted above, \u201c[a] corrected return as prepared by the Department is *** deemed prima facie correct.\u201d Jefferson Ice Co., 139 Ill. App. 3d at 630. Further, the law establishes that, \u201c[t]o overcome the Department\u2019s prima facie case, a taxpayer must present more than its testimony denying the accuracy of the assessments, but must present sufficient documentary support for its assertions.\u201d Mel-Park Drugs, Inc., 218 Ill. App. 3d at 217.\nThe record reveals that the auditors requested documents reflecting origin and destination sales by PPG that pertained to Illinois. The record also demonstrates that PPG may have had records from which an accurate count of Illinois sales could have been made. Specifically, Getty testified that he reviewed printouts which could be used to establish that PPG products were shipped from Illinois to Alaska. Further, Getty admitted that, during 1987, minimal sales were made from an Illinois location to a location in Hawaii. The ALJ found that Getty\u2019s determination that minimal sales were made to Hawaii must have been based on some documentation. However, PPG only offered the testimony of Getty and Zamboldi instead of tendering any of the documents requested. The record reveals that the ALJ placed significant emphasis on the fact that PPG was not forthcoming in providing the documents requested by the auditors.\nThe ALJ determined that PPG distributed monthly financial statements to its chemical division sales managers which included detailed sales information such as net sales figures, domestic sales figures, tolled sales figures, export sales figures, and captive sales figures. In an interoffice memo, PPG also informed its chemical division managers that detailed sales information by SKU number was available in the \u201cOP&I\u201d (computer) system. The ALJ found that PPG\u2019s data gathering and record-keeping capabilities most likely produced the records Getty reviewed prior to testifying at the hearing before the Department. He further determined that such a data analysis system could have produced the documentation requested by the auditors.\nWhen asked by the auditors for the sales by origin records, Zam-bold! testified that PPG did not keep such records and that the only way PPG would be able to supply such information is through the original sales invoices, which were voluminous in number and were maintained on microfiche at PPG\u2019s Pittsburgh office. Zamboldi did claim that he made the invoices available for the auditors\u2019 inspection. However, he also stated that he did not prepare or tender any of the sales invoices to the auditors.\nWe agree with the ALJ\u2019s determination that merely making the sales invoices available to Illinois auditors via microfiche in Pittsburgh is not tendering the requested documents \u201csubject to inspection\u201d as required under the Act. 35 ILCS 5/913 (West 1998) (formerly Ill. Rev. Stat. 1991, ch. 120, par. 9\u2014913). The ALJ also determined that PPG\u2019s computerized record-keeping system would have contained information PPG included in its original sales invoices. Because the evidence indicated that PPG maintained a \u201cwell-kept\u201d and \u201cautomated\u201d record-keeping system, the ALJ gave little weight to the testimony of Getty and Zamboldi that records indicating origin and destination sales were not maintained and could not be produced by PPG. Giving proper deference to the Department, under our clearly erroneous standard of review, we will not disturb its findings unless we are firmly convinced the agency has made a mistake.\nPPG also contends that the cases relied on by the Department are based on the Retailers\u2019 Occupation Tax Act, not the Act, and thus the Department\u2019s authority is inapplicable to this case. Unlike the retailers\u2019 occupation tax, PPG claims that there is not a statutorily imposed requirement to maintain books and records under the Act. We disagree. This court held in Balla, a case involving the Act, that petitioner\u2019s testimony concerning her entitlement to certain tax exemptions was insufficient absent records corroborating her statements. Balla, 96 Ill. App. 3d at 296. As noted by the Department, the petitioner in Balla was a single mother who sought review of the Department\u2019s decision disallowing income tax exemptions that she claimed for her three minor children. In affirming the decision of the Department, the trial court relied on Retailers\u2019 Occupation Tax Act cases in finding that petitioner had failed to sustain her burden of proof. This court concluded:\n\u201cWhile we do not hold the type of proof required to establish the petitioner\u2019s claim must rise to the level of that expected under the Retailers\u2019 Occupation Tax Act, we do not believe it is unreasonable to expect her to do more than simply state that she supported the children.\u201d Balla, 96 Ill. App. 3d at 296.\nThe court further concluded that a request that petitioner produce some written documentation in support of her claim was not unreasonable. Balla, 96 Ill. App. 3d at 296-97. We find the court\u2019s decision in Balla instructive and conclude that PPG, a sophisticated business entity, was obliged to provide written documentation refuting the Department\u2019s prima facie case that taxes based on reversionary sales were owed.\nIn addition, PPG did not have reasonable cause to conclude that it was exempt from payment of taxes based on the claim that no rever-sionary sales emanated from Illinois. Getty admitted that minimal sales were made to Hawaii. PPG is subject to taxation for those rever-sionary sales made to Hawaii, Alaska, or anywhere else. As. noted above, PPG did not enter any documentary evidence supporting the claim that no throwback sales were made. Rather, it relied solely on the testimony of Zamboldi, who said there were no sales, and Getty, who admitted that minimal reversionary sales were made to Hawaii.\nThe ALJ concluded, after hearing all the testimony, that documents existed upon which PPG unilaterally determined that it was not subject to taxation for reversionary sales that emanated from Illinois. Instead of introducing these records at the hearing, PPG chose to rely on the testimony of Zamboldi and Getty. The ALJ further gave little credence to the testimony of these witnesses which concluded that the only records from which PPG\u2019s Illinois origination sales could be gleaned were original sales invoices. Therefore, we reverse the trial court\u2019s decision that the Department\u2019s audit on reversionary sales was unreasonable.\nFurther, under a clearly erroneous standard of review, we must accept the administrative agency\u2019s findings unless we are firmly convinced the agency has made a mistake. Randolph Street Gallery, 315 Ill. App. 3d at 1064. Based on this record, we are not firmly convinced that the agency was mistaken. Accordingly, we reverse that portion of the trial court\u2019s decision that overturned the Department\u2019s determination on reversionary sales. In addition, we determine that the penalty imposed on PPG by the Department was proper.\nFor reasons above, we affirm the trial court\u2019s order in all respects except as to the reversionary sales. The Department\u2019s decision concerning the reversionary sales is reinstated.\nAffirmed.\nGORDON and COUSINS, JJ., concur.\nBecause of the page limitations imposed under revised Supreme Court Rule 23 (166 Ill. 2d R. 23), we must delete from the published opinion our discussion of the royalty income and tax penalty questions (issues three and five). A discussion of these issues appears in the full, unabridged order which is on file with the clerk of the court under docket No. 1\u201499\u20142487.", "type": "majority", "author": "JUSTICE McBRIDE" } ], "attorneys": [ "Paul D. Frenz, of McBride Baker & Coles, of Chicago, for appellant.", "James E. Ryan, Attorney General, of Chicago (Joel D. Bertocchi, Solicitor General, and Brian E Barov, Assistant Attorney General, of counsel), for appellant." ], "corrections": "", "head_matter": "PPG INDUSTRIES, INC., Plaintiff-Appellant/Cross-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellee/Cross-Appellant.\nFirst District (2nd Division)\nNo. 1\u201499\u20142487\nOpinion filed January 29, 2002.\nPaul D. Frenz, of McBride Baker & Coles, of Chicago, for appellant.\nJames E. Ryan, Attorney General, of Chicago (Joel D. Bertocchi, Solicitor General, and Brian E Barov, Assistant Attorney General, of counsel), for appellant." }, "file_name": "0016-01", "first_page_order": 34, "last_page_order": 54 }