Permian Machinery Movers Inc.

17-37

On December 17, 2015, the Department assessed the Taxpayer for corporate income tax, gross receipts tax, penalty, and interest. On March 16, 2016, the Taxpayer filed a timely formal protest with the Department. The Taxpayer rents, sells, buys, trades, and services lift equipment, including forklifts and scissor lifts. It also sells replacement parts and accessories for lift equipment and provides training in proper operation of such equipment. The Taxpayer is located in El Paso, Texas. During the time at issue, the Taxpayer was providing services and delivery of sold items in New Mexico. The Taxpayer explained that the tax for those transactions was remitted to the state of Texas. The Taxpayer believed that the state of New Mexico did not impose a sales tax. At the time, the Taxpayer did not have knowledge that New Mexico has a gross receipts tax in place of a sales tax. During an audit review of the Taxpayers records, the transactions that were for customers with billing addresses in New Mexico made up the amount of gross receipts that were assessed by the Department. The Taxpayer withdrew the protest against the assessment on corporate income tax and the associated penalty and interest. The issue to be determined during this protest is if the gross receipts were subject to New Mexico gross receipts tax. During the protest, the Taxpayer argued that some of the transactions should have been excluded from the audit findings, that credit for taxes paid to Texas should be granted, and that a portion of the assessment should not apply due to the statute of limitations. During the hearing, the Taxpayer provided information that the accounting system that they use indicates that some of the transactions were delivered when in fact they were picked up by the customer at its Texas based location and others were for services performed for the customer in Texas. The Hearing Officer determined that based on the computer issue and the explanation of the transactions against the definition of gross receipts that a partial abatement of specific gross receipts should be allowed. However, the Hearing Officer did determine that the assessments starting December 31, 2008 were timely per Section 7-1-18(C) NMSA 1978. It was also determined that for the remaining transactions the Taxpayer did not overcome the presumption of correctness and failed to establish a right to a credit for taxes paid or for the abatement of penalty. The Taxpayer is ordered to pay the tax, penalty and interest after the Department’s abatement. The Taxpayer’s protest was granted in part and denied in part.