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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 > 2013

12/13/2013

13-39

River Source Inc.

The Taxpayer provides educational programs and outdoor science activities to schools across New Mexico.  The Taxpayer had always been timely with CRS filings and payments, from its formation in 1997 until the reporting periods ending in June and July 2010, when it did not file CRS returns.  The Taxpayer’s bookkeeper left in June 2010, and the new bookkeeper missed filing and paying for those two periods.  In January 2012, the Department informed the Taxpayer of the unpaid taxes.  On March 7, 2012, the Taxpayer filed its CRS-1 Form for the June 2010 period and paid the outstanding gross receipts and withholding tax principal, penalty and interest for that period.  Also on March 7, 2012, the Taxpayer filed its CRS-1 Form for the July 2010 reporting period, but paid only a portion of the liability.  On March 23, 2012, the Department assessed the Taxpayer for the remaining gross receipts and withholding taxes, penalty and interest.  The Taxpayer filed a protest to the assessment of penalty and interest, but did not contest that it owed the assessed gross receipts and withholding taxes.  Section 7-1-67 NMSA 1978, states that interest “shall” be applied, and the Taxpayer’s failure to file and pay met the definition of negligence that is used to determine if penalty applies.  The Department was required to assess penalty and interest.  The Taxpayer’s protest was denied.


12/09/2013

13-38

Timothy and Teresa Martin

As Texas residents, the Taxpayers did not originally file New Mexico personal income tax returns for the relevant tax years: 2007, 2008, 2009 and 2010.  The Department received information that Mrs. Martin had earned income as a teacher in New Mexico during the relevant years, and sent the Taxpayers a notice of limited scope audit on August 10, 2011, for 2007 and 2008 taxes. In response to the notice, the Taxpayers filed their 2007 and 2008 New Mexico personal income tax returns in October 2011.  The Taxpayers did not make a claim for the Special Needs Adopted Child Tax Credit at that time.  In February or March of 2013, after Mr. Martin returned from a 12-month deployment, he prepared and submitted the Taxpayers’ 2009 and 2010 New Mexico personal income tax returns, and claimed the Special Needs Adopted Child Tax Credit for all eight of the Taxpayers’ children. After being told that his 2007 and 2008 returns had never been processed, the Taxpayers also resubmitted their 2007 and 2008 returns, including a claim for the Special Needs Adopted Child Tax Credit for all eight of the Taxpayers’ children.  The Department partially granted the 2009 and 2010 credits, but applied the Taxpayers’ allocation of income to New Mexico percentage to determine the percentage of the credit to which the Taxpayers were entitled.  On August 20, 2013, the Taxpayers protested the Department’s allocation off the credit for tax years 2009 and 2010, and the denial of the credit for tax years 2007 and 2008.  After the hearing, in response to a request for briefing on the applicability of the Servicemembers Civil Relief Act, the Department allowed the Taxpayers claim for the credit for tax year 2008.  Section 7-2-11 (C) NMSA 1978, provides that credits be apportioned in accordance with the apportionment of income.  The Department properly relied on this statute to apportion the claimed credit. Sections 7-2-12.1 and 7-1-26 NMSA 1978, set statutory limits to when a credit may be claimed or granted.  The Taxpayers were beyond the statute of limitations allowed to claim the credit for tax year 2007.  The Taxpayers’ protest was denied.


12/02/2013

13-37

New Mexico Orthopedic Association

For the February, March and April 2013 periods, the Taxpayer remitted gross receipts tax to the Department, but did not file CRS-1 Forms.  When this error was discovered, the Taxpayer filed the CRS-1 Forms on June 14, 2013.  On July 8, 2013, the Department issued three assessments to the Taxpayer for late-filing penalties for February, March and April 2013.  The Taxpayer filed a protest to the assessments.  The Taxpayer admitted that the returns were filed after the deadlines, but argued that the Department never notified the Taxpayer of the option of entering into a managed audit agreement to avoid the assessment of penalty.  The hearing officer found that the managed audit provisions do not apply to the Taxpayer.  The returns for the periods in question were filed late and the penalty was appropriately assessed.  The Taxpayer’s protest was denied.


11/27/2013

13-36

James and Nora Tutt

On December 15, 2009, the Department issued five notices of assessment to the Taxpayers for unpaid personal income tax, penalty and interest, for the periods ending December 31, 2002, through December 31, 2006.  The Taxpayers protested the assessments.  For the periods in question, the Taxpayers filed their federal and state personal income tax returns as “married filing jointly,” and listed their address as their home in Farmington.  During the tax periods at issue, one of the Taxpayers lived and worked in Farmington, and the Taxpayers paid personal income tax on all of her income.  The other Taxpayer is an enrolled member of the Navajo Nation who, during the relevant period, was president of the Crownpoint Institute of Technology (CIT) in Crownpoint, NM.  CIT is located within the boundaries of the Navajo Nation.  While employed with CIT, and as part of his employment agreement, the Taxpayer was provided with an on-campus apartment and vehicle.  The hearing officer found that the Taxpayer lived and worked on the Navajo Nation during the relevant period, so his income was entitled to the exemption under Section 7-2-5.5 NMSA 1978.  The Taxpayer’s protest was granted.


11/06/2013

13-34

Alan Uffenheimer

On April 28, 2010, the Department sent the Taxpayer assessments for gross receipts tax, penalty and interest for 2005 and 2006, after determining that the Taxpayer was a non-filer for gross receipts tax for those periods.  On August 20, 2010, the Department partially abated the assessments because the Taxpayer provided nontaxable transaction certificates.  At some point in 2010, after being assessed, the Taxpayer went to the Department’s office in Albuquerque to inquire about the amnesty program.  The employee did not know the specifics about the program and told the Taxpayer that she would get back to him.  The employee never got back to the Taxpayer, and the Taxpayer took no further action.  On March 5, 2012, the Department levied the Taxpayer’s bank account and seized an amount that satisfied the outstanding assessments.  On May 14, 2012, the Taxpayer filed a request for refund in regard to the penalty and interest.  The Department denied the request for refund, and the Taxpayer filed a protest to the denial.  The Taxpayer argued that he should not be subject to the assessed penalty and interest, in part because he was never given the information on the amnesty program.  However, the hearing officer found that the penalty and interest were properly assessed and that, even if the Taxpayer had applied for the amnesty program, he would not have been accepted because he had already been assessed.  The Taxpayer’s protest was denied.


11/05/2013

13-35

Easter Seals El Mirador

?The Taxpayer is a non-profit organization who was required to file its monthly returns electronically beginning in 2011.  The Taxpayer continued to file paper returns, and failed to file electronically from September 2011 through September 2012.  For several months, during a grace period, the Department notified the Taxpayer by letter that it was required to file electronically.  After the grace period was over, the Department issued the Taxpayer notices that their returns filed by mail were rejected and the Taxpayer needed to file electronically.  Sometime in September or October 2012, the Department assessed the Taxpayer for penalty for failing to file electronically.  When the Taxpayer was assessed, it re-filed all of the returns electronically, and continues to do so.  The Taxpayer paid the assessed penalty, but filed a request for refund of that payment.  The Department denied the refund request, so the Taxpayer filed a protest of that denial.  The Taxpayer argued that it relied on its former Director of Finance to correctly file, and was not aware of the requirement to file electronically.  Reliance on an employee does not excuse the failure to properly file.  The Taxpayer’s protest was denied.


11/04/2013

13-33

K and N Welding

On May 28, 2010, the Department assessed the Taxpayer for unpaid gross receipts tax, penalty and interest for the tax period ending 2006.  The assessment was the result of a limited scope audit conducted by the Department, after a discrepancy was found between what the Taxpayer reported to the Federal government and to the State government.  The Notice of Limited Scope Audit provided a deadline to produce nontaxable transaction certificates (NTTCs) for the period in question.  The Taxpayer was unable to obtain a NTTC during the 60 day period because the seller of the Taxpayer’s services was not in tax compliance.  The Taxpayer eventually received a NTTC but it was executed outside of the 60 day period.  The Taxpayer was an independent contractor.  The company that resold Taxpayer’s services in the ordinary course of their business charged and collected tax.  Had the Taxpayer obtained the NTTC prior to performing the services, or by the deadline given as part of the audit, his receipts would have been deductible.  Taxpayer did not provide any facts to support equitable recoupment.  However, as the Taxpayer did not have the NTTC, his receipts from performing the services were taxable, and the gross receipts tax, penalty and interest were correctly assessed.  The Taxpayer’s protest was denied.


10/29/2013

13-32

Yvonne C. Gomez

On April 15, 2007, the Taxpayer filed a New Mexico personal income tax return for tax year 2006 that showed tax due to the Department.  The Taxpayer submitted her payment with the return.  The Department determined that the Taxpayer failed to claim a low to mid income exemption which would have resulted in a refund.  The Department issued a refund to the Taxpayer.  On May 13, 2011, the Taxpayer filed an application for refund, for tax year 2006, for the amount of the payment she made with her personal income tax return.  The Department sent a letter to the Taxpayer denying the claim for refund because the application for refund was not filed within three years of the calendar year in which payment was due.  The Taxpayer filed a protest to the denial.  At the hearing, the Taxpayer argued that the Department waited until the end of the statute of limitations to give her notice that she could claim a refund, and because of personal matters, she was unable to complete the application at that time.  The Department argued that the refund could not be issued because it was barred by the statutory limitations set forth in Section 7-1-26 NMSA 1978.  That section of law does not allow for exceptions.  The Taxpayer’s protest was denied.


10/29/2013

13-30

Albuquerque Tents, LLC

 

After an audit, on November 30, 2012, the Department assessed the Taxpayer for gross receipts tax and interest for the CRS reporting periods January 31, 2006 through June 30, 2010.  The Taxpayer filed a protest to the assessment.  The Taxpayer is in the business of renting tents, tables, chairs and other materials needed for social events.  It also makes occasional sales of those items to its customers either directly or a result of damaged, lost, or stolen equipment that originally was leased to its customers. A large portion of the Taxpayer’s customers are government agencies and 501(c)(3) non-profit organizations. The Taxpayer argued that a certain percentage of its gross receipts were deductable sales to governmental agencies and 501(c)(3) non-profit organizations. Under the relevant deductions, leasing of tangible personal property is not deductable while sales of tangible personal property are potentially deductable. However, the Taxpayer presented insufficient factual evidence to establish what percentage of its gross receipts were attributable to sales instead of its customary leasing arrangement. The Taxpayer only presented two invoices from the entire audit period. Those two invoices were not illustrative of the Taxpayer’s claimed percentage of sales during the entire audit period. One invoice had conflicting information that limited its weight and was insufficient to establish a percentage with general application to the entire audit. The other invoice did establish that the Taxpayer had a direct sale that was deductable, but had no broader application to the percentage of sales the Taxpayer may have had over the audit period. Under relevant case law, the Taxpayer had the burden to establish it was entitled to the claimed deductions and overcome the assessment. Further under the statute, the Taxpayer had an obligation to maintain records sufficient to accurately calculate its tax liability. Except for the one direct sale entitled to a deduction, the Taxpayer did not present enough evidence to carry its burden that it was entitled to further deductions. The Taxpayer’s protest was granted as to the one direct sale supported by an invoice and denied as to the remaining assessment.


10/28/2013

13-31

James Otero and Tanja Ford

The Taxpayers were engaged in business in New Mexico in 2005 and 2006 in a vehicle washing service.  The Department determined that the Taxpayers were non-filers for gross receipts tax for 2005 and 2006.  On May 25, 2010, the Department assessed the Taxpayers for gross receipts tax, penalty and interest.  On June 16, 2010, the Taxpayers filed a protest to the assessment.  The Taxpayers produced a properly executed and timely nontaxable transaction certificate issued to them by a truck rental company.  The truck rental company contracted with other truck companies to provide services and maintenance, including vehicle washing.  The buyer subcontracted the Taxpayers to provide vehicle washes on trucks that were too large to fit into the buyer’s wash bays.  The hearing officer found that the Taxpayers were entitled to deduct the gross receipts.  As they do not owe gross receipts tax, the penalty and interest do not apply, so the entire assessments were ordered to be abated.  The Taxpayers’ protest was granted.


10/10/2013

13-29

Rodolfo V. Franco

On April 25, 2007, the Department assessed Taxpayer for personal income tax, penalty and interest for the personal income tax period ending December 31, 2003. Taxpayer protested the assessment, arguing he was not a New Mexico resident in 2003 because he was not present in New Mexico for 185-days in 2003. Taxpayer was employed at a prison in Pecos, TX from 1996-2004, and thus was not physically present in NM for 185-days. However, the hearing officer found that in 2003, an individual was a resident of New Mexico if they were either physically present in the State for 185-days or if they were domiciled in New Mexico during the year without establishing a new domicile by the last day of the year. By regulation applicable at the time, a person registered to vote in New Mexico and licensed to drive in New Mexico during the year, who does not establish a new license and voter registration in another state by the end of the year, is presumed domiciled in New Mexico. Taxpayer remained registered to vote in New Mexico and not in Texas in 2003, and voted in New Mexico elections repeatedly from 2000 through 2004.  Taxpayer also maintained his New Mexico driver’s license in 2003. Therefore, under the then relevant regulation, Taxpayer was presumed domiciled in New Mexico in 2003. Moreover, Taxpayer was domiciled in New Mexico in 2003 under applicable case law. During Taxpayer’s employment in Pecos, TX, Taxpayer built a home on his Anthony, NM land that was larger than his residence in Pecos, TX. Taxpayer claimed a property tax deduction on his Anthony, NM, home that required Taxpayer to be a resident of NM. In 2003, the Taxpayer registered a new vehicle with NM MVD and listed his address as Anthony, NM.  Taxpayer’s wife renewed her NM driver’s license at the end of 2003. Because of uncertainty about his employment situation in Pecos, TX, Taxpayer testified that he maintained his connections to New Mexico, which shows that he considered his Anthony, NM home his true home where he intended to return. This evidence established that Taxpayer was domiciled in NM in 2003 without establishing a new domicile by the end of the year and Taxpayer’s protest was denied.


10/03/2013

13-28

Mountain Moving and Storage Inc.

The Taxpayer was engaged in a storage business from 1999 through 2008, and it filed and paid gross receipts tax for this period.  In 2013, another business owner informed the Taxpayer that its gross receipts taxes were deductible.   In March 2013, the Taxpayer filed claims for refund from gross receipts taxes it paid from 1999 through 2008.  On April 12, 2013, the Department issued a letter denying the refund.  On June 3, 2013, the Taxpayer filed a formal protest to the denial.  Pursuant to Section 7-1-26 NMSA 1978, all claims for refund must be filed within three years of the end of the calendar year in which the payment was originally due.  The claims for refund submitted by the Taxpayer were submitted beyond the statute of limitations.  The Taxpayer’s protest was denied.


09/27/2013

13-27

Ravelle's Jewel's

The Taxpayer is a sole proprietorship engaged in business only in 2006.  The Taxpayer worked in 2006 as an independent contractor providing physical therapy services.  The Taxpayer’s services were resold in the ordinary course of business by the company for which the Taxpayer performed its services.  The Taxpayer did not receive a Nontaxable Transaction Certificate (NTTC) from the company in 2006.  Through a tape match with the IRS, the Department detected that the Taxpayer had a possible gross receipts tax liability.  The Department sent the Taxpayer a notice of limited scope audit, which gave notice of the 60-day statutory deadline for the Taxpayer to obtain any necessary NTTCs.  The deadline to have the NTTCs was January 24, 2010.  The Taxpayer was out of the country and did not receive the notice until 40-days had passed.  Upon reading the notice, the Taxpayer requested the NTTC, but the NTTC was not executed until February 2, 2010, after the 60-day period to obtain the NTTC had expired.  On February 12, 2010, the Department assessed the Taxpayer for gross receipts tax, penalty and interest.  The Taxpayer protested the assessment.  The hearing officer found that the Taxpayer was engaged in business, and did not possess the necessary NTTC to support a deduction for the sale of services for resale. The statute mandates that the Department deny any claimed deduction when the NTTC is not executed by the 60-day deadline.  Therefore, the Taxpayer’s protest was denied.


09/24/2013

13-26

Lawrence and Earnestine Mitchell

The Taxpayers filed and paid their personal income taxes for the 2009 and 2010 tax years.  They did not file a claim for refund or credit for either of these years, but were issued refunds by the department for each of the two years. In December 2011, the Department determined that it had erroneously granted refunds to the Taxpayers.  On January 20, 2012, the Department assessed the Taxpayers for personal income tax and interest for the 2009 and 2010 tax years.  No penalty was assessed.  On February 9, 2012, the Taxpayers filed a protest to the assessment.  The Taxpayers paid the tax principal and a small part of the interest.  The Department later determined that these refunds were as a result of a special needs child adoption credit being applied, that the Taxpayers had claimed previously, but not for the years in question.  The hearing officer determined that the unsolicited refunds were not tax as defined by statute and not subject to interest.  The Taxpayers protest was granted.


09/23/2013

13-25

Tierra Resources Intern Inc.

For 2012, the Taxpayer was above the threshold amount set by Section 9-11-6.4 NMSA 1978, and was thereby required to file its withholding tax electronically.  The Taxpayer paid its withholding tax on time and filed a paper withholding tax return.  After receiving communication from the Department, the Taxpayer re-filed electronically.  On February 14, 2013, the Department assessed the Taxpayer penalty for late filing of the return.  The Taxpayer filed a protest to the assessment.  The Taxpayer argued that it relied upon the advice of its accountant, who indicated that the return and payment could be sent in by mail.  The hearing officer found that the Taxpayer was not late in filing its return, and was not negligent as it relied on advice from its accountant.  The Taxpayer’s protest was granted.


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