Clean Rite Janitorial Services LLC

17-43

On March 31, 2017, the Department issued an assessment for gross receipts tax, penalty, and interest for the tax periods from January 31, 2011 through June 30, 2016. On May 18, 2017 the Taxpayer filed a formal protest only on the penalty assessed. The Taxpayer is in the business of janitorial services. In 2011, the Taxpayer received a letter informing them that it was exempt from paying the New Mexico gross receipts tax for a specific client that it does business with. That letter was then submitted to its accountant. The accountant agreed with the letter and approved the Taxpayers plan to start claiming an exemption. The Taxpayer argued that it should not have to pay the penalty as it relied on an accountant before taking the exemption. However, the accountant was unable to attend due to a recent medical issue and the original letter could not be located. During the hearing, the Hearing Officer determined that there was not enough evidence to support the Taxpayers claims. The Taxpayer argued that is has always been tax compliant and was not trying to evade paying taxes. The Hearing Officer determined that the Taxpayer did not establish a good faith, mistake of law made on reasonable grounds that would allow for abatement of penalty. For the foregoing reasons, the Taxpayer’s protest is denied.