New Mexico Depot

18-37

On October 12, 2017 the Department issued assessments to New Mexico Depo totaling $16,700.24 in gross receipts tax and penalty for periods January 1, 2012 through December 31, 2012. An assessment was also issued on this date to Haute Mountain Girl, an entity also owed by the Taxpayer, for an amount totaling $29,009.95, but the Department later conceded that this assessment had been intended for New Mexico Depo also, and because of this, abated this assessment entirely. On January 9, 2018, the Taxpayer filed a protest of the assessments. The primary issue in this protest was whether Ana Koeblitz, who initially registered New Mexico Depo as sole proprietorship, should be personally liable for gross receipts tax the entity incurred during the time when it was later organized as a limited liability company. The Taxpayer did not update its business tax registration with the Department when it reorganized. The Taxpayer stated that it did this because it was relying on information provided in publication, FYI-105, that it interpreted as suggesting that only corporations needed to re-register with the Department and not other types of entities. This portion of the publication, the Hearing Officer pointed out however, came in a frequently asked question that concerned a business that was a sole proprietorship and then became a corporation. The Hearing Officer determined there was no reason to think objectively this statement meant that an LLC did not need to change registration. The Taxpayer also suggested that it was told by Department employees the registration did not need to be changed but could not remember the names of these individuals. The Taxpayer argued that the registration, which was later updated in 2018, should be retroactive, but provided no legal support for this. The Hearing Officer explained that it was vital for the Department to identify the Taxpayer specifically. The identity of the Taxpayer affects who is responsible for its tax obligations and how the Department will track the Taxpayer’s reporting. If the Taxpayer had changed the registration it would have changed who was responsible, but it did not do this. Therefore, the Hearing Officer ordered that New Mexico Depo, the sole proprietorship, is responsible for the liability and the penalty assessed is correct.