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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 > 2018

02/15/2018

18-05

CIBL INC. & Subsidiaries

On March 7, 2017, the Department notified the Taxpayer that its claim for refund was untimely because it was received after the statute of limitations and therefore was denied. The deadline to claim a refund for the period ending December 31, 2012 based on the statute of limitations was December 31, 2016. On April 28, 2017, the Taxpayer submitted a timely formal protest with the Department. The Taxpayer argues that based on prior communication that was sent to the Department the claim for refund should be considered timely. The Department argues that a complete request for refund required by Section 7-1-26, NMSA 1978 Regulation 3.1.98 NMAC was not filed with the Department until after December 31, 2016 and therefore had to be denied. The Taxpayer argued that the regulation was asking for an amended return when it was not required by statute. The Hearing Officer determined that the regulation is reasonable and relevant as the amended return helps the Department to determine that the refund claim being requested is accurate. Due to the Taxpayer failing to request a refund as outlined in statute, regulation, and in the forms issued by the Department before the expiration of the statute of limitations, the refund is barred. The Taxpayer’s protest is denied.


01/24/2018

18-04

Chamisa Hills Family Dental

On August 17, 2017, the Department assessed the Taxpayer for gross receipts tax, withholding tax, penalty, and interest. On August 23, 2017, the Taxpayer submitted a formal timely protest with the Department. In May of 2016, the Taxpayer purchased the business from the prior owner. Based on the prior owner’s high recommendation, the office manager stayed working at the business after the change of ownership. In or around May of 2017, the Taxpayer noticed that certain duties assigned to the office manager where not being completed. Among those duties were the Taxpayer’s CRS-1 returns. Upon the resignation of the office manager the Taxpayers filed all late CRS-1 returns. The Taxpayer is asking for an abatement of penalty and interest based on the circumstances surrounding the prior employee. The Department argued that multiple notices were sent to notify the Taxpayer that they were not filing returns and that there was an underpayment of tax due. Based on that underpayment, penalty and interest were calculated and assessed. The Hearing Officer determined that based on the information and Sections 7-1-67 NMSA 1978 and Section 7-1-69 NMSA 1978 the assessment of penalty and interest were properly assessed by the Department. The Taxpayer failed to establish non-negligence so penalty cannot be abated and interest cannot be abated per statute. For the forgoing reasons, the Taxpayer’s protest is denied.


01/10/2018

18-03

ACME Mechanical

On August 16, 2017, the Department assessed the Taxpayer for gross receipts tax, penalty, and interest for the tax period starting January 1, 2012 and ending December 31, 2014. On August 30, 2017, the Taxpayer filed a timely protest with the Department. During the time at issue, the Taxpayer was providing services in New Mexico as a plumbing contractor. The Taxpayer subcontracted with two companies to provide plumbing services on construction projects in New Mexico. The assessment was the result of an audit conducted in 2017. Unfortunately, both of those NTTCs were executed after the deadline given by the Department to the Taxpayer to obtain NTTCs. Due to the NTTCs not being submitted by the deadline of August 2, 2017, the Department rejected them and disallowed the associated deduction. The issue to be decided in this protest is whether the Taxpayer is liable for the gross receipts tax, penalty and interest assessed. The issue hinges on the timeliness of the Taxpayer’s acceptance and submission of the NTTCs. Per Section 7-9-43(A) NMSA 1978, the taxpayer should be in possession of the NTTC when the transaction of the receipts takes place but allows for the Department to give a 60 day window if a taxpayer is placed under audit to give those NTTCs to the Department. This statute specifies that if the taxpayer has not obtained the NTTC within the sixty day time frame the deduction is to be disallowed. It was not disputed that the Taxpayer’s receipts used to calculate the assessment would be deductible if the NTTCs could be allowed. However, the Department cannot allow the deductions based on when the NTTCs were executed and submitted to the Department. The Hearing Officer determined that by the Taxpayer not presenting the NTTCs in a timely manner, as required by statute, the Taxpayer waived its right to the claimed deduction. For the foregoing reasons, the Taxpayer’s protest is denied.


01/09/2018

18-02

Marc A. Gelinas

On March 17, 2017, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for the reporting periods starting January 1, 2010 and ending December 31, 2010. The Taxpayer filed a formal protest with the Department on June 5, 2017. During the time at issue, the Taxpayer was a salesperson selling implantable medical devices, such as prosthetics for knees, hips and shoulders. The Taxpayer’s income was based on commissions from his sales and was reported on IRS form 1099-MISC from the medical devices distributors. When completing a sale the Taxpayer would prepare order forms, the payment of goods was made by the buyer to the manufacturer. Then the manufacturer would pay a portion of the sale price to the distributor, which would then pay the Taxpayer his commission from the sale. The Taxpayer never filed gross receipts reports or made any gross receipts tax payments in relation to this compensation. The assessment was the result of a Schedule C mismatch audit. The Taxpayer argued that the items that were being sold were eligible for the deduction in Section 7-9-73 NMSA 1978 for the sale of prosthetic devices and therefore the commissions would also be deductible under Section 7-6-66 NMSA 1978, which is the deduction of commissions from gross receipts tax. This statute indicates if the receipts are derived from a commission on the sale of tangible personal property that original sale was subject to a deduction the commission would also be deductible. This is further clarified in Regulation 3.2.1.18 HH (6) NMAC. The Hearing Officer indicated that this deduction does not require the use of an NTTC and that the deduction only requires that the originating receipts of the commission were deductible. The Hearing Officer determined that since the original sale that the commission is based on would be subject to a deduction so would the commission that was earned from that sale. The Hearing Officer determined that based on the information above the Department is ordered to abate the assessed gross receipts tax, penalty and interest and the Taxpayer’s protest is granted.


01/09/2018

18-01

Joel W. & Jacqueline R. Draham

On June 6, 2017, the Department issued a return adjustment notice for the Taxpayers’ 2016 personal income tax (PIT) return. On August 23, 2017, the Taxpayers submitted a formal protest with the Department. The adjustment was based on the W-2’s submitted with the return and the Taxpayers’ domicile. At the time of the hearing, the Department indicated that no further documentation was provided to establish that the Taxpayer had any entitlement to the refund amount in dispute. The issue to be decided in the hearing is whether the Taxpayers were entitled to a refund equivalent to the portion of taxes withheld and paid to the State of New Mexico on the W-2. One of the Taxpayers moved out of state for part of the year while the other Taxpayer remained in New Mexico with the Taxpayers’ dependent. The income from the Taxpayer residing in New Mexico with the Dependent is not in question. The Department argued that there was not sufficient evidence to show that the Taxpayer that had moved out of state had changed domicile to another state as early as asserted. The Taxpayers’ claim for refund is premised on an overpayment of tax based on one of the Taxpayers being domiciled in another state. The Department argued that the Taxpayer did not show enough evidence to support the time indicated that was spend out of the state. The Hearing Officer states that everyone is deemed to be domiciled somewhere and once that domicile is established it does not change until the person moves ‘with the bona fide intention” of making a new location that persons permanent home. Domicile is what helps to establish a taxpayer’s residency. Per Regulation 3.3.1.9(C)(4) NMAC, there are thirteen factors to help determine a taxpayer’s domicile. The Hearing Officer determined that eight of those factors weighed in favor of the Department, five were neutral, and zero weighed in favor of the Taxpayer. Based upon the information provided, the Hearing Officer determined that the Taxpayer failed to establish an entitlement to the refund that was subject of the protest. The Taxpayers’ protest was denied.


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