Healing Through Hypnosis

14-09

On January 14, 2010, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for the period ending on December 31, 2006.  The Taxpayer filed a protest of the assessment.  The Taxpayer is a sole proprietorship that was formed in 2006.  In 2006, the Taxpayer worked as an independent contractor, providing counseling services.  The person who the Taxpayer was a contractor for had a contract with a medical insurance company to provide group counseling services.  This person’s receipts from the contract were deductible under a healthcare services medical deduction.  The Taxpayer worked as an independent contractor to fulfill the contracted counseling services, and assumed that, because this other person’s receipts were deductible, that the Taxpayer’s wages were as well.  The Taxpayer did not file 2006 gross receipts tax returns, nor did the Taxpayer obtain a nontaxable transaction certificate (NTTC) for the independent contracting services.  On June 3, 2009, the Department sent the Taxpayer a notice of limited scope audit, and giving the Taxpayer until August 2, 2009, to produce any NTTCs supporting claimed deductions.  Shortly thereafter, the Department issued a second notice of limited scope audit, setting a September 29, 2009 deadline for NTTCs. On October 29, 2009, after the deadline, the Taxpayer received a Type 5 NTTC to support a deduction of the sale of services for resale, but this NTTC was both incomplete and untimely.  Additionally, the deduction for the sale of services for resale under Section 7-9-48 NMSA 1978, which the Taxpayer was attempting to support with the NTTC was not applicable to the Taxpayer’s receipts from these counseling services.  The deduction requires that the subsequent sale be taxable, and there was no evidence presented to show that the receipts of the person to whom the services were sold were subject to gross receipts tax.  The Taxpayer’s protest was denied.