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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 > 1998

12/30/1998

98-59

M. Kory & Lucia Rowberry

Taxpayer provided dental services to patients from the dental office of another dentist. Taxpayer claimed that there was a TS-22 agreement between him and the other dentist, but could not provide evidence of agreement’s existence or payment of tax. The Taxpayer is liable for the gross receipts tax on the non-employee compensation he received from the other dentist. Protest denied.


12/17/1998

98-58

Production Credit Association of Eastern New Mexico

The Taxpayer, a production credit association created under federal law,  protested the Department's denial of its claims for refund of corporate income tax for tax years 1992-1996.  The Taxpayer claimed it was exempt from state income taxes because Congress has designated production credit associations  as  federal instrumentalities.  Under the Supremacy Clause of the U.S. Constitution, federal instrumentalities are immune from state taxation in the absence of congressional authorization to tax.  In the case of production credit associations, since their creation in 1933, Congress had provided that once they were no longer owned in whole or in part by the United States, that they would be subject to state income taxes.  In 1985, however, as part of some technical amendments to the Farm Credit Act, the language giving congressional permission to impose income taxes was removed from 12 U.S.C. Section 2077.  The issue was whether the general rule of immunity from state taxation for federal instrumentalities applied or whether we should determine the congressional intent behind the 1985 amendments.  Because the doctrine of immunity for federal instrumentalities is based upon an implied immunity in the absence of direction from Congress, it is appropriate to determine the congressional intent behind the 1985 amendments.  When that is done, it is clear that Congress did not understand that these amendments would create immunity from state income taxation for production credit associations.  Protest denied. 


12/09/1998

98-57

Bill and Sherri McConnel

Taxpayers (husband and wife) were assessed gross receipts tax on business income reported on their 1994 federal income tax return. Taxpayers argued they were employees entitled to the deduction from gross receipts provided in Section 7-9-17. The Department agreed to abate tax on wife’s income if the Taxpayers amended their 1994 income tax return to reflect wife’s income as wages rather than as business income. The Taxpayers declined to file amended returns. Held: Taxpayers could not deduct husband’s income because he was an independent contractor, not an employee; Taxpayers could not deduct wife’s income because they were required to report their income consistently for both federal and state tax purposes. Taxpayers could not claim wife’s compensation as business income for federal income tax purposes and as employee wages for state gross receipts tax purposes. Taxpayers were also liable for penalty and interest assessed for late payment of gross receipts tax. Protest denied.


12/04/1998

98-56

Joe Anaya, d/b/a Anaya’s Carpet Service

Taxpayer filed a $833.68 claim for refund in April 1998 for the period of Jan. - June 1994. This claim was filed after the three-year limitations period set out in Section 7-1-26(C). The taxpayer acknowledged that the claim was not made timely, however, he maintained that he is still entitled to the refund ($833.68) because he submitted amended reports for this amount with a different claim for refund filed in Sept. 1997. The taxpayer is not entitled to the refund claimed in April 1998 because the claim was not filed within the limitations period set out in Section 7-1-26(C). The taxpayer is not entitled to the $833.68 claimed in Sept. 1997 because he did not exercise either of the remedies available to him when the Department failed to act on the refund request within 120 days. Protest denied.


10/22/1998

98-55

Professional Land Surveying

The Taxpayer primarily engages in surveying for road construction contractors. The Taxpayer failed to keep up with the changes to Section 7-9-43, which was amended in 1992 to require that sellers claiming deductions which require nontaxable transaction certificates obtain the new 1992 series nttcs and have them in their possession at the time they file returns claiming deductions based upon the nttcs. Upon audit, the Department denied claimed deductions for failure to have the new nttcs in its possession at the time the deductions were claimed. The Taxpayer claimed that it was impossible for small taxpayers to keep up with the statutory changes and that it should be allowed the deductions claimed even though it did not have the required nttcs because the transactions otherwise met the statutory criteria for deduction. Held: statutory requirements cannot be waived by the Department or its Hearing Officer. Protest denied. 


10/15/1998

98-54

Actionside Lath & Plaster

The Taxpayer protested the Department's denial of a deduction claimed for receipts from a customer which had given the Taxpayer a nontaxable transaction certificate but the Taxpayer could not produce a copy of the certificate. The Taxpayer also contested the amount of interest assessed based upon its attempt to pay taxes before the commencement of the audit, but the payment was not accompanied by returns providing the Department information as to what tax programs, what tax amounts and what tax periods the tax payment should be applied to.  Held that the Department properly denied the deduction for failure to possess a nontaxable transaction certificate within 60 days of notice to produce such certificates. Also held that tender of a payment does not amount to a payment of tax without concurrent tender of a return or returns showing how the payment is to be applied. Thus, the calculation of interest was correct. Protest denied.


10/01/1998

98-53

Harrington Industrial Plastics

Taxpayer purchased a division of another New Mexico business without following the procedures outlined in the successor in business statutes, Sections 7-1-61 to 7-1-64 that require a purchaser to escrow a portion of the purchase proceeds for taxes and to seek a determination of taxes due from the business being purchased or obtain a tax clearance. Subsequent to the purchase, the Department audited the predecessor business and assessed a liability for periods occurring before Taxpayer's purchase of the business. The Taxpayer was not notified of the assessment or the basis for the assessment until almost six years after the assessment, when the Department made a demand for payment of the Taxpayer as a successor in business. The Taxpayer protested the demand on the basis that its failure to escrow a portion of the purchase price was not wrongful as required by the statute. The Taxpayer also argued that the Department's test month's audit procedure was improper but that Section 7-1-24, which prohibits the Taxpayer from contesting the underlying basis of the assessment because it did not protest the assessment within thirty days of its issuance, unconstitutionally deprived the Taxpayer of the opportunity to dispute the assessment in violation of procedural due process. Held that because the Taxpayer did not follow the statutory procedures requiring the escrow of a portion of the purchase price, this amounted to a wrongful failure to withhold under Section 7-1-64(A) and the Taxpayer was liable for the tax as a successor in business.  Also held that the Department improperly applied its test months audit procedure resulting in an incorrect assessment of taxes and in the circumstance of this case where the Taxpayer was not given notice of the assessment of tax or the basis for the assessment until after the time for protest had expired, that Section 7-1-24, to the extent it denies the Taxpayer an opportunity to contest the basis for the assessment, denies the Taxpayer due process of law. The Department was ordered to adjust the assessment underlying the demand for payment.


09/28/1998

98-52

Louis & Carolyn Bortot

Taxpayers were shareholders of two small, closely held family corporations. The Taxpayers performed all of the management functions for the corporations. The corporations had no other employees. The corporations reported the compensation to the Taxpayers as non-employee compensation on a federal form 1099 and the Taxpayers reported their income on their federal income tax return on Schedule C as income from a business or profession. The Department assessed gross receipts tax upon this compensation. The Taxpayers argue that they are employees of the corporations and that their compensation was exempt as wages or salary pursuant to Section 7-9-17. The Taxpayers were unwilling to amend their federal returns to reflect the compensation as wages. Because of the requirement that taxpayers file their state and federal returns consistently, they will not be considered employees in the absence of amending their federal corporate and personal returns to reflect the compensation as wages. Protest denied. 


09/25/1998

98-51

Antoine Khoury

Taxpayer was notified of discrepancies between his federal Schedule C and NM gross receipts tax filing during a limited scope audit. Taxpayer was notified that he had 60 days to provide any NTTC’s or other documentation that would  support any deductions taken. The Department assessed the taxpayer because he did not provide the NTTC until after the deadline had expired. Taxpayer protested the assessment claiming that his services were for resale and therefore should be deductible under Section 7-9-48. Receipts from sales for resale are not deductible unless the taxpayer is in possession of an NTTC within the 60-day period provided in Section 7-9-43. Protest denied.


09/23/1998

98-50

Lauren Constructors, Inc.

TP protested the assessment of interest on late gross receipts tax payments. TP claimed that the Department should be estopped from assessing interest since the TP received erroneous advice from a Department employee as to when the payment of tax was due. TP did not meet its burden of showing that the Department’s assessment was incorrect. Protest denied. 


09/15/1998

98-49

CRST, Inc.

TP protested the manner in which the Department calculated interest on an assessment of corporation income tax. TP's original income tax returns showed overpayments of tax for the three tax years for which deficiencies were later assessed. TP's original returns had requested that the overpayments be credited to the next year's liability and TP applied the overpayments to its estimated quarterly tax payments for the following tax year. TP requested that the overpayments be applied to offset its assessed underpayments for calculation of interest without regard to the fact that the overpayments had already been applied in accordance with TP's instructions. Protest denied. 


09/04/1998

98-48

Jeffery A. Williams

Taxpayer was notified of a limited scope audit (C-SPAN) based on a discrepancy between the business income reported on his federal income tax return and the receipts reported to New Mexico. Taxpayer was notified that he had a 60-day period to provide evidence (NTTCs) to support any deductions. Taxpayer made the following arguments against the assessment resulting from the limited scope audit: 1) his contract labor did not constitute “engaging in business”; 2) his possession of a Type 7 NTTC would make his receipts deductible; and 3) to deny the deduction under Section 7-9-52 would be double taxation. Taxpayer was engaging in business and the taxpayer did not submit the NTTC to the Department within the 60-day period provided by statute nor was it the appropriate NTTC for the transaction. Protest denied.


09/03/1998

98-47

Michael & Michele Beglau

Taxpayer was denied a portion of a claim for refund attributable to a child day care credit. The Department determined that the Taxpayer was not gainfully employed or disabled during the months for which the credit was claimed as required in Section 7-2-18. Taxpayer argued that he was entitled to the credit because he was disabled and unable to perform the heavy physical labor required by his previous jobs. Protest granted, Taxpayer was disabled for the period in question and entitled to the credit.


09/01/1998

98-45

Berryman Ranch

Taxpayer granted to three hunters a non-exclusive right to go onto its ranch to hunt during the hunting periods designated by the state. Taxpayer did not pay gross receipts tax on the receipts from selling hunting access to its land. Taxpayer protested an assessment by the Department for gross receipts tax, penalty and interest from these receipts. Taxpayer argued that the receipts from the granting of hunting rights is deductible under Section 7-9-53 as the receipts from the sale or lease of real property. Taxpayer was actually granting a license to use its property which is subject to the gross receipts tax. Protest denied.


08/31/1998

98-46

Dain Rauscher, Inc. (Formerly Known as Rauscher Pierce Refsnes, Inc.)

Taxpayer protested the Department's determination that the Department's discretion to grant extensions of time to file a protest under Section 7-1-24(B) is limited to protests of assessments of tax or of other peremptory notices and demands.  Held that the Secretary's discretion to grant extensions of time to file protests pursuant to Section 7-1-24(B) does not apply to protests to denials of or failure to act upon claims for refund under Section 7-1-26.  Since that was the nature of the Taxpayer protest, the protest was denied.


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