Sandia Development & Consulting Services Inc.

16-02

On July 10, 2015, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for CRS reporting periods from June 30, 2011 through June 30, 2014.  On September 25, 2015, the Taxpayer protested the assessment.  The Taxpayer is a New Mexico business that provides business consulting services and sells high-grade construction materials.  The Taxpayer was selected for a Department audit, which commenced on August 7, 2014.  On August 7, 2014, the Department sent the Taxpayer a notice that the Taxpayer had 60-days, until October 6, 2014, to possess any necessary executed nontaxable transaction certificates (NTTCs) to support any claimed deductions.  During the relevant period, in 2014, the Taxpayer claimed a deduction for the sale of a geotextile impregnated concrete to LANL.  On or about March 10, 2014, LANL sent the Taxpayer an email entitled “Tax Exempt Form.pdf”.  The Taxpayer testified that the attachment was a blank form for him to fill out and return to LANL.  Neither the Taxpayer or LANL have a copy of the form.  On April 15, 2014, LANL sent the Taxpayer a letter discussing that it had furnished the Taxpayer with an NTTC, but the Taxpayer could not find and did not present a copy of that referenced NTTC to the Department.  The Taxpayer did not produce any NTTC by the October 6, 2014 60-day deadline.  After discussing the potential tax liability with the Taxpayer’s accountant, the Taxpayer reached out to LANL for an NTTC in May 2015.  On May 6, 2015, seven months after the NTTC deadline, LANL executed an untimely Type 6 NTTC to the Taxpayer.  In reviewing this matter, a Department auditor reviewed the Department’s NTTC database, which shows a history of electronic NTTCs executed.  The database showed only the one untimely NTTC executed to the Taxpayer by LANL.  The issue at protest is whether the Department can allow for a deduction when the Taxpayer did not possess the necessary NTTC within the allotted time.  Section 7-9-43 NMSA 1978 provides the statutory deadline and does not give the Department any authority to allow a deduction without an NTTC after that time. The Taxpayer’s protest was denied.