The GEO Group, Inc.

14-36

On December 28, 2012, the Taxpayer timely filed a claim for refund of gross receipts tax for the periods of December 31, 2008, through December 31, 2009.  The Department took no action to approve or deny the claim within 120 days.  On July 24, 2013, the Taxpayer timely filed a protest to the Department’s failure to approve or deny the claim for refund.  After several motions from both parties, a summary judgment motion hearing occurred on July 22, 2014.  The Taxpayer is a private prison company, contracted to construct, manage, and operate the Town of Clayton’s jail and detention facility.  The Taxpayer timely reported and paid its gross receipts tax for the period in question.  After the protest was initiated, the Taxpayer was given 60 days to obtain any applicable nontaxable transaction certificates (NTTCs) related to its claim for refund.  During that period, the Town of Clayton executed a Type 2 NTTC to the Taxpayer, which the Taxpayer provided to the Department.  The Type 2 NTTC covered the purchase of a license for resale, which was related to the basis of the Taxpayer’s claim for refund was based on the deduction for the sale of a license for resale (Section 7-9-47 NMSA 1978).  While the Taxpayer argued that its gross receipts came from the sale of a license, based on the Qualified Management Agreement in place, the Hearing Officer found that the Taxpayer was predominantly in the business of performing a service.  The Taxpayer was not able to establish that it was entitled to the deduction provided in Section 7-9-47 NMSA 1978.  The Taxpayer’s protest was denied.