Misty Blue

02-26

The Taxpayer was employed as the marketing director of a 501(c)(3) organization from February 1988 through July 1994.  In August 1994, the Taxpayer entered into a contract to perform marketing services as an independent contractor for the same 501(c)(3) organization, at which time the organization gave the Taxpayer a Type 9 nontaxable transaction certificate (NTTC). The Taxpayer did not report gross receipts tax on her receipts from performing services under the contract.  In August 1998, as a result of information received from the IRS, the Department assessed the Taxpayer for gross receipts tax, penalty and interest on her 1995 receipts. The Taxpayer protested the assessment arguing: 1)  it was not clear to the Taxpayer that she was performing services as an independent contractor rather than as an employee; 2)  the Taxpayer was entitled to rely on the Type 9 NTTC issued by the 501(c)(3);  3)  the Department’s delay in assessing the Taxpayer and in setting a hearing should relieve the Taxpayer of her liability for all or part of the assessment, and 4)  the Taxpayer has limited financial resources and is unable to pay the full amount of the Department’s assessment. Held: 1) The Taxpayer’s failure to understand the difference between an employee and an independent contractor does not excuse her from payment of the tax due on her receipts; 2) the NTTC form delivered to the Taxpayer clearly states that Type 9 certificates may be issued “for the purchase of Tangible Personal Property Only” and does not support the Taxpayer’s deduction of receipts from performing services; 3) There was no undue delay in the Department’s assessment, which was issued within the time limitations set by the New Mexico Legislature; the Department’s delay in setting a hearing on the Taxpayer’s protest does not provide a legal basis for abating or reducing the Department’s assessment; and 4) the hearing officer is not authorized to consider a taxpayer’s individual financial circumstances in determining whether the Taxpayer is liable for tax, penalty and interest assessed by the Department.   Protest denied