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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 > 2014

12/31/2014

14-47

Russell Burris & Janice Silva

On June 4, 2014, the Department assessed the Taxpayers for gross receipts tax, penalty and interest for the reporting periods ending on December 31, 2007, 2010, and 2011.   The Taxpayers jointly filed personal income taxes for the years in question, but the receipts at issue are directly attributable to Mr. Burris’ income.  The Taxpayers protested the assessments, arguing that Mr. Burris did not have a CRS number, was not in business, and had already paid personal income taxes for commissions he received.  The assessments arose from a limited scope audit that the Department conducted after detecting that the Taxpayers had reported Schedule C income on their federal income tax returns, but had not reported or paid gross receipts tax in 2007, 2010, and 2011.  In these years, the Taxpayer received bonus commission checks from a corporation for referring customers who purchased juice from them.  The Taxpayer did not consider himself a salesperson for this company, but he did receive commissions from them, which were taxable.  The Taxpayer also played the fiddle at weddings, funerals, and other occasions approximately 20 times a year in 2010 and 2011, and was paid for these performances.  In 2010 and 2011, the Taxpayer also used his tractor for leveling, grading, and earthmoving services approximately 6 times per year.  The Taxpayers argued that these services were isolated or occasional, as exempted from gross receipts tax under Section 7-9-28 NMSA 1978.  However, the Taxpayer’s services were performed relatively consistently, and did not meet the criteria set forth in the statute.  The Hearing Officer found that the Taxpayer was engaging in business during the years in question, and his receipts were subject to the gross receipts tax assessed, as well as the interest.  The Taxpayers were able to establish that they relied on CPAs regarding the treatment and reporting of the Schedule C income during the relevant years, so the penalty was ordered to be abated.  The Taxpayer’s protest was granted in part and denied in part.


12/29/2014

14-46

Torrance County Counseling, LLC

On March 31, 2014, the Department issued two assessments to the Taxpayer for gross receipts tax and interest, for the tax periods from January 31, 2008 through July 31, 2010, and from June 30, 2008, through June 30, 2013.  On June 9, 2014, the Taxpayer filed a protest to the assessments.  The Taxpayer filed gross receipts taxes for the 2005 and 2006 tax years, but later learned of deductions to which it was entitled. On February 23, 2007, the Taxpayer filed for refunds on the 2005 and 2006 tax years based on those deductions.  The Taxpayer included payments made by Medicaid in its deductions at that time.  On July 27, 2007, the Department sent a letter to the Taxpayer advising it that a recent change in law would affect the Taxpayer.  The letter was regarding a double penalty option that had been repealed.  The Taxpayer’s request for refund was granted, and the Department issued a Notice of Refund and a check to the Taxpayer on September 14, 2007.  The Taxpayer filed its gross receipts taxes for the following years, 2008 through 2013, claiming the same deductions indicated in the request for refund, and their deductions included payments made by Medicaid.  At the hearing, the Taxpayer conceded that Medicaid payments were not eligible for the deduction and should have been included in taxable gross receipts.  The Taxpayer argued that the letter on double penalty, along with the refund granted in 2007, amounted to a ruling, and the Department should be estopped from collecting against the Taxpayer.  A ruling must meet certain criteria, including being a written statement interpreting specific statutes, reviewed by legal counsel, and signed by the secretary and counsel.  The letter and granted refund do not meet the criteria to be considered a ruling, nor do they meet the requirements for estoppel.   The Taxpayer’s protest was denied.


12/29/2014

14-45

Covenant Transportation Group Inc.

This Decision and Order was withdrawn and an amended Decision and Order, number 15-11 was issued in its place on March 24, 2015.


12/29/2014

14-44

Shawn & Lindy Edwards

On September 3, 2009, the Department assessed the Taxpayers for gross receipts tax, penalty and interest for the tax years ending December 31, 2005 and December 31, 2006. The Taxpayers filed a protest to the assessments A brief hearing was held on June 19, 2014, but then continued to allow the Taxpayers more time to submit paperwork to the IRS to show that Mr. Edwards was an employee rather than an independent contractor. The paperwork was never filed, and the Taxpayers did not appear at the continued hearing on December 11, 2014. The Taxpayer failed to produce any evidence showing that he was an employee and therefore exempt from gross receipts. The Taxpayer’s protest was denied.


12/23/2014

14-43

Golf New Mexico / Golf West

On February 11, 2013, the Department issued two assessments to the Taxpayer for gross receipts tax, penalty and interest, for the tax years ending December 31, 2008 and December 31, 2009, after determining through a federal mismatch that the Taxpayer was a nonfiler.  The Taxpayer filed a protest to the assessments.   The Taxpayer’s owner explained that, due to depression issues in 2008 and 2009, she stopped filing gross receipts tax reports.  She also explained that some money was mistakenly included in the federal returns, and the Taxpayer’s gross receipts were actually less than the amounts assessed.  The Department adjusted the assessments, and the Taxpayer no longer disputed the assessed gross receipts tax, but still wished to pursue the protest on the penalty and interest.   The Taxpayer argued that penalty should be abated, because the failure to pay taxes was because of the owner’s depression.  However, there was not sufficient evidence that this rendered her incapable of taxing care of the taxes, especially because she filed the federal returns.  Interest is mandatory and was correctly assessed.  The Taxpayer’s protest was denied.


12/23/2014

14-42

Kevin H. Pham dba Pro Nails

On June 6, 2014, the Department issued four assessments to the Taxpayer for gross receipts tax, penalty and interest, for the tax years ending December 31, 2008, 2009, 2010 and 2011.  The Taxpayer filed a protest to the assessments.   The Taxpayer is a nail tech, providing nail services at two different nail salons during the relevant period.  The Taxpayer set his own hours at both salons, was paid with weekly checks from which no tax was withheld, and was provided with 1099 Forms for the income received. The Taxpayer argued that he was an employee of the salons, but the evidence was contrary to this claim and therefore the Taxpayer failed to establish that he was an employee.  The Department detected that the Taxpayer had reported Schedule C income on his federal returns, but had not reported or paid any gross receipts tax.  In February 2014, the Department sent the Taxpayer a Notice of Limited Scope Audit Commencement, which advised him that he had 60 days, until April 22, 2014, to produce any nontaxable transaction certificates (NTTCs) necessary to support any claimed deductions.  The Taxpayer did not provide the Department with any NTTCs executed by that deadline. The Taxpayer later did receive untimely NTTCs from the salons.  However, because the Taxpayer did not have the necessary NTTCs by the deadline, the Department properly denied the claimed sale of services for resale deduction and issued the assessments.  The Taxpayer also argued that the salons had paid the gross receipts tax on his receipts..  However, there was no evidence of the salons having paid gross receipts taxes on his behalf.  The Taxpayer’s protest was denied.


12/22/2014

14-41

Christopher X. O’Conner

Reissued as 15-3


12/17/2014

14-40

Edward Chavez

On August 21, 2014, the Department issued three assessments to Taxpayer, for gross receipts tax and interest for the tax periods ending December 31, 2008, 2009, and 2010.  On August 28, 2014, the Taxpayer protested the assessments.  During the years in question, the Taxpayer performed maintenance services on 14 homes that were part of an estate, as directed by the estate’s personal representative.  He would perform 20 to 30 hours of work per week, and received an hourly salary for his work.  The estate considered the Taxpayer a contractor rather than an employee, and provided him with 1099-MISC’s in 2008, 2009, and 2010, rather than W-2’s.  The Taxpayer did not have a CRS number, and was unaware of the gross receipts tax implications of the services he was performing.  The Taxpayer’s CPA did not inform him of his gross receipts tax obligations, and sent a letter to the Department acknowledging that failure.  Through a tape match with the IRS, the Department detected that that the taxpayer had Schedule C income for 2008, 2009, and 2010.  The Taxpayer fit the majority of the criteria under Regulation 3.2.105.7 NMAC, establishing that he was an independent contractor and not an employee.  The Taxpayer’s protest was denied.


12/15/2014

14-39

Kevin Fenner

On February 27, 2007, the Department assessed the taxpayer for personal income tax, penalty and interest for the tax period ending on December 31, 2003.  The Taxpayer filed a timely protest to the assessment.  On November 20, 2013, the Department assessed the Taxpayer for personal income tax, penalty and interest for the 2005 through 2010 tax years.  The Taxpayer filed a timely protest to the assessments.  The Taxpayer conceded that he was a resident of New Mexico in 1994, and remained a resident until at least 1997.  The Department argued that the Taxpayer continued to be a resident through the 2010 tax year.   The Taxpayer argues that he intended to be a resident of Alaska since the 1980s, and established residency by renting a room from a friend, registering vehicles, obtaining driver’s licenses, and registering to vote in Alaska.  However, during the period in question, the Taxpayer registered vehicles in New Mexico, obtained and kept a New Mexico driver’s license, purchased multiply residences in New Mexico, opened bank accounts in New Mexico, and signed bank documents stating that he intended to make his homes in New Mexico his primary residences.   The Hearing Officer found that the Taxpayer did not successfully change his domicile from New Mexico during the tax years at issue.  The Taxpayer also provided fraudulently altered and redacted documents at the hearing which, along with the other evidence, show evidence that he was willfully attempting to evade tax, so he was correctly assessed a higher rate of penalty.  The Taxpayer’s protest was denied.


12/05/2014

14-38

Kathleen Franklin

On January 13, 2014, the Department assessed the Taxpayer for personal income tax, penalty, and interest, for the tax periods ending on December 31, 2010, 2011, and 2012.  On January 31, 2014, the Taxpayer filed a formal protest to the assessments.  On February 24, 2014, the Department assessed the Taxpayer for personal income tax, penalty, and interest for the tax period ending on December 31, 2009.  The Taxpayer filed a protest to this assessment and requested that the protest be consolidated with the previously filed protest.  For the tax years in question, the Taxpayer filed timely New Mexico personal income tax returns.  For each of these years, the Taxpayer claimed the exemption for active duty armed forces pay.  The Taxpayer was working as a commissioned officer with the United States Public Health Service, and was on active duty during the tax years at issue.  The Taxpayer was relying of the advice of her accountant in claiming this exemption.  The Public Health Service does not meet the definition of “armed forces” for purposes of the exemption.  The Taxpayer is liable for the assessed personal income tax and interest.  However, the Hearing Officer found that the Taxpayer was not negligent for purposes of penalty, as she relied on the advice of her accountant in claiming the exemption.  The penalty was ordered to be abated.  The Taxpayer’s protest was granted in part and denied in part.


12/04/2014

14-37

Southwest Copy Systems, Inc.

On December 21, 2005, the Department assessed the Taxpayer for gross receipts tax and interest for the tax period of January 31, 1998 through March 21, 2003.  On January 18, 2006, the Taxpayer filed a protest to the assessment.  The Taxpayer is in the business of selling, leasing, and servicing copiers to other businesses located in New Mexico.  The issue at hearing revolved around the Taxpayer being able to deduct the sale of tangible personal property sold to government entities or nonprofit organizations, in the course of servicing and maintaining copiers, from their gross receipts.  The hearing officer found that the Taxpayer’s record keeping was reliable, and that they were able to show which receipts were from the sale of tangible personal property, and which receipts were attributable to services.  As a result, a portion of the assessed gross receipts tax was abated, while the Taxpayer still owed some of the assessed gross receipts tax, plus interest, along with the assessed compensating tax and interest.    The Taxpayer’s protest was granted in part and denied in part.


11/25/2014

14-36

The GEO Group, Inc.

On December 28, 2012, the Taxpayer timely filed a claim for refund of gross receipts tax for the periods of December 31, 2008, through December 31, 2009.  The Department took no action to approve or deny the claim within 120 days.  On July 24, 2013, the Taxpayer timely filed a protest to the Department’s failure to approve or deny the claim for refund.  After several motions from both parties, a summary judgment motion hearing occurred on July 22, 2014.  The Taxpayer is a private prison company, contracted to construct, manage, and operate the Town of Clayton’s jail and detention facility.  The Taxpayer timely reported and paid its gross receipts tax for the period in question.  After the protest was initiated, the Taxpayer was given 60 days to obtain any applicable nontaxable transaction certificates (NTTCs) related to its claim for refund.  During that period, the Town of Clayton executed a Type 2 NTTC to the Taxpayer, which the Taxpayer provided to the Department.  The Type 2 NTTC covered the purchase of a license for resale, which was related to the basis of the Taxpayer’s claim for refund was based on the deduction for the sale of a license for resale (Section 7-9-47 NMSA 1978).  While the Taxpayer argued that its gross receipts came from the sale of a license, based on the Qualified Management Agreement in place, the Hearing Officer found that the Taxpayer was predominantly in the business of performing a service.  The Taxpayer was not able to establish that it was entitled to the deduction provided in Section 7-9-47 NMSA 1978.  The Taxpayer’s protest was denied.


11/20/2014

14-35

Cornell Corrections of Texas

On December 28, 2012, the Taxpayer timely filed a claim for refund of gross receipts tax for the periods of December 31, 2008, through December 31, 2009.  The Department took no action to approve or deny the claim within 120 days.  On July 24, 2013, the Taxpayer timely filed a protest to the Department’s failure to approve or deny the claim for refund.  After several motions from both parties, a summary judgment motion hearing occurred on July 22, 2014.  The Taxpayer is a private company, engaged in the business of managing and operating the Bernalillo County Regional Correctional Center in Albuquerque.  The Taxpayer timely reported and paid its gross receipts tax for the period in question.  After the protest was initiated, the Taxpayer was given 60 days to obtain any applicable nontaxable transaction certificates (NTTCs) related to its claim for refund.  During that period, Bernalillo County executed a Type 9 NTTC to the Taxpayer, which the Taxpayer provided to the Department.  The Taxpayer’s representative knew that the Type 9 NTTC covered tangible personal property, while the Taxpayer’s claim for refund was based on the deduction for the sale of a license for resale (Section 7-9-47 NMSA 1978).  While the Taxpayer argued that its gross receipts came from the sale of a license, based on the Operating and Management Agreement in place, the Hearing Officer found that the Taxpayer was predominantly in the business of performing a service.  The Taxpayer was not able to establish that it was entitled to the deduction provided in Section 7-9-47 NMSA 1978.  The Taxpayer’s protest was denied.


10/08/2014

14-34

Richard Lopez

On March 17, 2014, the Department served a warrant of levy to a bank that had accounts with the Taxpayer’s name on them. On April 23, 2014, the Taxpayer’s sister filed a protest regarding the levy. The Taxpayer died on September 7, 2013. His sister misplaced the Taxpayer’s death certificates and did not inform the bank of his death for that reason. The Taxpayer’s sister opened the accounts, and was the only person to deposit money into them. A few years prior to his death, she had put the Taxpayer’s name on her accounts to assist him and their father financially. She was unaware that he had an outstanding tax liability until her account was levied. The issue to be decided at hearing was whether the accounts were legally levied. The Taxpayer’s sister conceded that the levy was properly prepared and served, but disputed the Department’s right to take funds that were her sole property. By not notifying the bank of the Taxpayer’s death, or removing him from the accounts, the Taxpayer’s right to the funds was not terminated, and the Department acted in accordance with the law by levying those funds. The Taxpayer’s protest was denied.


09/22/2014

14-33

BBCB, LLC

The Taxpayer is a regional developer for a corporation based in Arizona.  The Taxpayer’s principal place of business is in Bernalillo County, New Mexico.  As a regional developer, the Taxpayer sells licenses to franchisees, helps the franchisees with set-up, and has limited duties related to checking in on the franchisees once the business is operating.  The Taxpayer receives a commission on every license sold, as well as a monthly commission on monthly royalties paid to the corporation by franchisees.  The Taxpayer was filing and paying gross receipts tax to include the commission on the monthly royalties it received.  The Taxpayer began working with an enrolled agent, who advised that the commission on monthly royalties was not subject to gross receipts tax.  Based on this advice, the Taxpayer filed an application for refund on October 11, 2012, for the December 2008 tax period, and included a copy of its royalty reports from the corporation for the 2008 tax year.  On October 31, 2012, the Department denied the request for refund.  On November 26, 2012, the Taxpayer filed a formal protest to the denial.  In April 2013, the Department granted a partial refund for the December 2008 tax period.  This refund was determined by a review of the royalty report, a determining which commissions on royalties were related to franchisees within the state of New Mexico, and applying the gross receipts tax to those commissions at the rate where the franchisees were located.  The Taxpayer and the Department both presented arguments at the hearing related to the taxability of the commissions on royalties.  It was determined by the hearing officer that the commissions were taxable, as they are included in the definition of gross receipts, and in this situation, were dependent upon the Taxpayer performing its later check-ins on the franchisees to continue receiving these commissions.  However, it was also decided at hearing that the refund the Taxpayer received was not calculated correctly, as the rate used should have been the rate of the Taxpayer’s business location, rather than where the franchisees were located.  This resulted in the Taxpayer being owed an additional amount.  The Taxpayer’s protest was granted in part and denied in part.


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