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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 > 2008



Cumberland Therapy Services

The Taxpayer provides professional therapy services for schools, including five New Mexico school districts.  The Department conducted an audit of the Taxpayer for the period from July 1, 2001 through June 30, 2005.  The Department determined that the Taxpayer improperly deducted all of its receipts. The Department assessed the Taxpayer for gross receipts taxes, including interest but not penalty, as well as withholding tax.  The Taxpayer paid the withholding tax in full, but filed a written protest regarding the gross receipts tax and applicable interest.  The grounds for the protest were that a certified public accountant  researched New Mexico law and requested Type 9 Nontaxable Transaction Certificates (NTTCs) Type 9 NTTCs were executed to the Taxpayer however, a Type 9 may only be used by governmental agencies and 501(c)(3) organizations for the purchase of tangible personal property, not services.  The Taxpayer and their accountant argued that the certificates were accepted in good faith and that on those grounds they should be sufficient to claim the deductions.  The good faith provision was designed to protect taxpayers who had no way of knowing how a customer would use goods once they were purchased.  In this scenario, the problem is not how the goods were later used, but that the certificates could not apply to these transactions, and information on how the certificates could be used was accessible in more than one place.  The Taxpayer’s protest was denied.



Sarah Hunter

The Taxpayer filed a timely New Mexico personal income tax return for the 2004 tax year.  Using the federal tape match the Department found that the income reported on the Taxpayer’s federal income tax  return was substantially higher than the amount reported on her New Mexico return.  This discrepancy occurred because the Taxpayer did not include income she received from her ex-husband’s pension on her New Mexico return.  Upon completion of a limited scope audit of the taxpayer’s  account, the Department determined that she underreported her New Mexico income tax by $1,126.00.  The Department assessed the Taxpayer for the additional tax due plus penalty and interest.  The Taxpayer paid the principal amount to stop the accrual of interest and filed a written protest because she felt that she did not owe the tax, and therefore did not owe the penalty and interest.  If the tax was found to be owed, the Taxpayer did not argue that she would also owe the penalty and interest.  The basis behind the protest was that the Taxpayer believed that if state taxes were not withheld then they were not owed.  She also believed that her taxes may have been withheld from her ex-husband’s portion of the pension.  At the administrative hearing, the Taxpayer claimed that she had received written advice from the Department after she inquired about the same issue on her 2003 tax year return stating that she should not include the income because taxes were not withheld.  The Taxpayer was not able to produce these documents. The Taxpayer was also not able to produce any documents to prove that her ex-husband had paid the tax on the full amount of the pension, including her share.  Further, the instructions on the PIT-1 form clearly state that the federal adjusted gross income is to be entered on line five of the New Mexico PIT-1 form, and the Taxpayer ignored these instructions.  The hearing officer found that the Taxpayer was liable for the tax owed on the retirement income she received, as well as the penalty and interest.  The protest was denied.



Joseph & Kathy Mailander

During the period at issue, the Taxpayer and his wife had a home in Las Cruces and maintained New Mexico voter and vehicle registrations and New Mexico driver’s licenses.  The Taxpayer’s wife also ran a business out of their Las Cruces home.  In 1998, the Taxpayer took a position at an automobile dealership in El Paso, Texas.  He leased a small apartment in El Paso where he stayed when it was too late to commute to his home in Las Cruces.  When he began working in Texas, the Taxpayer asked the Department whether his wages would be subject to New Mexico personal income tax.  He was told that if he established residence in Texas and spent fewer than 185 days in New Mexico each year, his wages would not be subject to tax.  The Taxpayer did not inquire as to the criteria used to establish residency or review New Mexico law or regulations on the subject.  The Taxpayer did not keep a log of the nights he spent in Texas, but after leasing the apartment, he and his wife stopped filing New Mexico income tax returns.  In 2005, the Department contacted the Taxpayer regarding his 2000 and 2001 taxes.  He responded by sending in his Texas lease with a notation that he was a full-time resident of Texas.  He failed to disclose that he maintained a permanent home, voter and vehicle registrations, and a driver’s license in New Mexico.  The Department accepted the Taxpayer’s response and did not make further inquiries until 2007, when a supervisor researched the Taxpayer’s MVD and voter registration records for the 2004 tax year.  An assessment was subsequently issued for 2004.  The Taxpayer protested, arguing that the Department’s acceptance of his Texas residency for the earlier tax years bound the Department for the 2004 tax year.  At the hearing, the Taxpayer conceded that he and his wife were residents of New Mexico during the period in question, but continued to argue that the Department’s previous advice and actions excused him from payment of taxes otherwise due.  The hearing officer held that the facts did not support a finding of estoppel and denied the protest.?



Danny & Enid Grubb

During 1999, Dan Grubb performed construction services for a subcontractor on a large construction project.  The Taxpayers reported Mr. Grubb’s income as business income on a Schedule C to their federal income tax return.  They reported additional business income on a separate Schedule C related to a retail store the Taxpayers owned during 1999.  The Taxpayers did not pay gross receipts tax on any of their income.  On audit, the Department accepted an NTTC supporting a deduction of some of the Taxpayers’ receipts, but assessed gross receipts tax on the balance of the business income reported on their 1999 federal return.  The Taxpayers protested, arguing:  (1) Mr. Grubb was an employee and did not owe gross receipts tax on the payments he received from the subcontractor; and (2) the income reported on the Taxpayers’ second Schedule C was attributable to additional payments from the subcontractor and not to receipts from their retail store.  The hearing officer held:  (1) Mr. Grubb was an employee and was not subject to gross receipts tax on the income reported on the Taxpayers’ first Schedule C; and (2) the Taxpayers failed to provide records or other evidence to prove that the receipts reported on the second Schedule C were not taxable receipts from their retail store.  Protest granted in part and denied in part.  ?

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