Edward R. Marshall Jr.

11-01

The Taxpayer moved to New Mexico in 2006 having earned income in both New Mexico and Nebraska. For the 2006 tax year, the Taxpayer filed a federal personal income return, indicating gross receipts on a Schedule C, filed a Nebraska return, but was a non-filer in New Mexico.  A tape-match with the IRS revealed this and the Taxpayer was sent a notice of limited-scope audit.  Taxpayer paid the personal income tax, penalty and interest for 2006.  While discussions with the Department employees pertained only to personal income tax, Taxpayer later received an assessment for gross receipts tax, penalty and interest based on the Schedule C information.  The Taxpayer paid the gross receipts tax principal due requesting abatement of the penalty and interest based on an alleged duty by Department employees to notify taxpayers as to their tax responsibilities. The hearing officer determined that the Taxpayer was negligent in failing to file and pay gross receipts tax, and that penalty and interest should be imposed.  However, the hearing officer did order that the Department abate the penalty imposed in excess of ten percent based on the statutory limitation in effect when the tax liability arose. The Taxpayer’s protest was granted in part and denied in part.  
 NOTE: The New Mexico Court of Appeals has overruled the 10% penalty issue mentioned in this decision.  (Case No. 30,932)