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Orders are written statements to implement a decision after a Department administrative hearing. 

A taxpayer may file an appeal with the New Mexico Court of Appeals within 30 days after the date of the decision. Appeals are decided based on the evidence and arguments presented at the administrative hearing. 

All Posts > 2009



JDAP, Inc.

The Taxpayer is a New Mexico corporation. On June 16, 2008, the Department assessed the Taxpayer for gross receipts tax and withholding tax for the period ending August 31, 2007, as well as penalty and interest.  In April 2008, the Taxpayer was aware that the check for gross receipts and withholding taxes had not been deposited by the Department.  The Taxpayer filed a written protest to the assessment of penalty and interest, although at the hearing, the Taxpayer stated that he was only protesting the assessment of penalty.  At the hearing, the Taxpayer argued that an unrelated overpayment meant that the Department had thoroughly reviewed his returns and that everything was properly paid.  The Taxpayer took no action as to the overpayment in filling out the application for refund or in contacting the Department for any further information.  The Taxpayer did not believe he had an overpayment. The hearing officer found that the Taxpayer failed to timely pay his gross receipts and withholding taxes and is liable for all penalty and interest.  The Taxpayer’s protest was denied.



Maria and Robert Cloutier

The Taxpayers were residents of New Mexico during the 2005 and 2006 tax years.  The Department conducted a limited scope audit of the Taxpayers’ gross receipts taxes for those years  and issued assessments for unpaid gross receipts tax, as well as penalty and interest for both years.  When the Department audited the Taxpayers, it found that they had not paid gross receipts taxes on the majority of the business income reported on their federal income tax returns.  The Taxpayer received income from a company for which she was a nonemployee sales person, for which she received a 1099.  The Taxpayer reported and paid gross receipts taxes on sales to customers, but not on the many bonuses and other cash allowances received.  The Taxpayers also received a 1099 for another unrelated business.  The matters to be decided in the hearing are whether all of the Taxpayers income is gross receipts, and if the Taxpayers are liable for penalty and interest.  The Taxpayers did not deny that some of these amount received were taxable as gross receipts.  The Taxpayers argued that the interest and penalty should be waived because the tax laws were too complex to understand.  The hearing officer found that the Taxpayers failed to pay gross receipts tax on all of their receipts, and that the gross receipts tax and interest assessed were correct.  The hearing officer also found that the penalty assessed was in excess of the applicable law in effect at the time the taxes were due, so that any penalty in excess of 10% was to be abated.  The Taxpayers’ protest was granted in part and denied in part.  
 NOTE: The New Mexico Court of Appeals has overruled the 10% penalty issue mentioned in this decision. (Case No. 30,932)



New Mexico Healthy Home Builders Inc.

The Taxpayer is a New Mexico corporation engaged in the business of residential and commercial construction and remodeling.  The Taxpayer contracted in 2006 to remodel cabins, was billed directly for materials and supplies paying gross receipts tax to the suppliers and received reimbursement from the project owner. The Taxpayer reported and timely paid its gross receipts and withholding and then filed amended monthly tax reports requesting a refund of a portion of the taxes paid claiming it was a disclosed agent for the owner had doubly paid taxes. The Department denied the refund. The reimbursements were receipts from engaging in business and therefore subject to gross receipts tax.  The reimbursements were not received by the Taxpayer in a disclosed agency capacity as there were no contracts between suppliers and the Taxpayer indicating a disclosed agency relationship.  The imposition of gross receipts tax on reimbursed expensed does not constitute unconstitutional double taxation. The Taxpayer’s protest was denied.



Larkspur LLC

The Taxpayer was in the business of residential construction.  The Department assessed Taxpayer for failure to pay gross receipts and withholding taxes for the period October 1, 2003 through May 31, 2006.  The Department waived all penalties based on the Taxpayer’s reliance on the reasonable advice and services of its independent accountant. Taxpayer, subsequently, filed gross receipts returns for tax periods July, August and September 2006.    The Department assessed the Taxpayer for the taxes, interest and penalty.  Taxpayer requested that penalty be abated because the Taxpayer relied on the reasonable advice of its accountant.  The Taxpayer failed to provide proof of reliance on an accountant for advice for the later period, and therefore was negligent in  failing to timely file and pay gross receipts and withholding tax.  The Taxpayer’s protest was denied.



Alamo True Value Home Center

The Taxpayer operated a retail hardware store in New Mexico, and was also a construction contractor.  An audit of the Taxpayer by the Department revealed that the Taxpayer did not have all necessary Nontaxable Transaction Certificates (NTTCs), for deduction that were made.  The Taxpayer also took deductions for sales where no deduction was allowed.  Errors were also found regarding late reporting, incorrect reporting location and late or incorrect reporting of compensating tax.  Upon completion of the audit the Department assessed the Taxpayer for gross receipts tax, compensating tax, penalty and interest.  The Taxpayer was given a credit for much of the outstanding principal tax due as payments had been made.  The Taxpayer filed a written protest to the assessment of penalty stating that the imposition was unduly harsh.  In his argument the Taxpayer also stated that he had relied on his out of state CPA, who did not have complete knowledge of New Mexico tax law.  The Taxpayer also stated that his software was not able to distinguish between taxable and nontaxable sales.  The Hearing Examiner found that the penalty was properly assessed and that it cannot be waived based on the issues raised by the Taxpayer.  The Taxpayer’s protest was denied.



Cadworks Home Design & Draft

This is a successor in business case.  Taxpayer was the secretary and a director of CLC, a corporation owned by his brother that provided computer-aided drafting services and designs for homes.  The corporation leased office space and maintained a customer list that included many local businesses.   After the corporation dissolved, the Taxpayer continued the business by leasing the same office.  The Taxpayer kept the office furniture and customer list from the former corporation, though he purchased new computers and software.  The Taxpayer also assumed responsibility and benefit of some of the corporation’s existing jobs.  The Taxpayer registered his new business with the Department and filed monthly CRS-1 forms.   The Taxpayer was assessed for gross receipts taxes, penalty and interest owed by the CLC corporation based on mere continuation of the business. During the hearing, the Department initially assessed 20% negligence penalty and abated 10% of negligence penalty.  Taxpayer’s protest was denied.



Core-Mark Midcontinent, Inc.

The Taxpayer is distributor who is licensed to sell cigarettes in New Mexico.  As a distributor, the Taxpayer must purchase stamps from the Department.  The Department sells cigarette stamps in numbered rolls, and each stamp has a serial number.   The Taxpayer ordered cigarette stamps and charged the payment.  When the payment is charged, the payment for stamps is required to be made on or before the 25th day of the month following the month in which the sale of stamps is made by the Department.  The Taxpayer mailed their payment two days after the due date.    Although the Taxpayer does have a good payment history with the Department, the Taxpayers’ history is not considered grounds for an abatement when they are negligent in late submission of a payment.  The Taxpayers’ protest is denied. 

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