Sarcon Construction Corp.

02-22

The Taxpayer is registered with the Department for monthly payment of CRS taxes. In 1999, the Taxpayer switched its accounting software to accommodate growth in its business and insure the system would be Y2K compliant.  The software change increased the workload on the Taxpayer’s bookkeeper, to the extent that she simply forgot to file CRS-1 returns for January and February of 2000. In March 2000, the bookkeeper discovered her oversight and filed the Taxpayer’s delinquent tax returns.  A check in payment of the tax principal accompanied the returns. In April 2000, the Department assessed the Taxpayer for penalty and interest on its late payments.  The Taxpayer protested the assessment on the grounds that the error was unintentional. Held: The Taxpayer was late in paying CRS taxes due to the state and interest was properly assessed pursuant to Section 7-1-67 NMSA 1978.  The 10 percent negligence penalty was properly assessed because forgetting to file tax returns clearly comes within the definition of negligence set out in Section 7-1-69(A) NMSA 1978 and the Department’s regulations. Protest denied.