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Orders are written statements to implement a decision after a Department administrative hearing. 

A taxpayer may file an appeal with the New Mexico Court of Appeals within 30 days after the date of the decision. Appeals are decided based on the evidence and arguments presented at the administrative hearing. 



06/21/2016

16-28

Vidia Wesenlund

On January 31, 2015, the Department mailed the Taxpayer a Notice of Limited Scope Audit commencement for tax years 2008 through 2011.  The Taxpayer was audited through the Department’s Schedule C mismatch program with the Internal Revenue Service.  It was found that the Taxpayer reported business income for the years in question, yet failed to register or file gross receipts tax for the years in question.  During the taxable years at issue, the Taxpayer was an associate for a “down the line” sales organization.  The Taxpayer received commissions from the company when customers purchased products, and commissions are subject to the gross receipts tax.  The Taxpayer recruited customers in New Mexico who would make purchases from the company’s website using a code specific to the Taxpayer, and the company would ship the products to the customers from its headquarters in Utah.  The Taxpayer also recruited distributors in New Mexico, who would then recruit customers.  The Taxpayer also received a commission when the customers of the distributors she recruited made a purchase.  On July 23, 2015, the Department issued four gross receipts tax assessments for principal, penalty and interest for the tax years 2008 through 2011.  On October 21, 2015, the Taxpayer protested the assessments.  For the tax years at issue, the Taxpayer received 1099s from the company.  The company entered into a TS-22 agreement with the Department beginning in 2011, which was retroactively applied to the 2009 tax year.  This agreement allows a taxpayer to pay gross receipts tax on behalf of another taxpayer.  Per this agreement, the company charged and collected gross receipts taxes on the resale of its products by a New Mexico distributor on behalf of that distributor.  In February 2011, the company stopped collecting gross receipts tax on the sale of its products to New Mexico customers because of advice from multiple Department employees that the company did not have sufficient nexus with New Mexico.  The company has no employees in New Mexico, no offices, no ownership of inventory, and uses outside shipping companies to deliver products into New Mexico.  The company did have independent contractors working in New Mexico to establish and maintain a market in New Mexico by recruiting and shepherding customers to purchase products through the company’s website.  The Taxpayer believed that her commissions were not taxable pursuant to Section 7-9-66 NMSA 1978, because the underlying sales were not taxable.  The hearing officer found that, due to its use of independent contractors in New Mexico, the company did have nexus and the underlying transactions were taxable, despite the incorrect information previously received from a few Department employees.  As a result, the Taxpayer’s commissions received from the company were taxable as well.  The hearing officer did order the penalty to be abated as the Taxpayer had reasonable grounds to believe that her commissions where not taxable because of statements made to her by the company as a result of their communications with the Department.  The gross receipts tax principal and interest were correctly assessed.  The Taxpayer’s protest was granted in part and denied in part.


06/17/2016

16-27

Luscous Music

On December 9, 2015, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for the CRS reporting periods between January 1, 2009 and December 31, 2011.  On January 12, 2016, the Taxpayer prepared a letter of protest, which the Department received on January 14, 2016.  The Taxpayer is a sole proprietor who performs music and sells his music on compact discs.  The Taxpayer is registered with the Department, has a business license with the City of Santa Fe, and has a business website and business cards.  The Taxpayer occasionally performed paid gigs, and performed as a street musician on the Santa Fe Plaza three times a week for two hours at a time.  While performing there, the Taxpayer sold compact discs and collection money in a tip jar from passersby.  The Taxpayer maintained a ledger where he would note his compact disc sales separately from the money in his tip jar.  The Taxpayer reported and paid gross receipts tax on the sales of compact discs, but not on the money received in his tip jar because he believed tips were not subject to gross receipts tax from his previous experience as a waiter.  The Taxpayer did report the money received in his tip jar on his federal income tax returns.  Through its Schedule C tape match program with the IRS, the Department detected that the Taxpayer reported business income on his Schedule C that did not match his filed CRS returns.  Regulation 3.2.1.18 (R) states that a gratuity offered to service personnel to acknowledge a service given is not gross receipts.  The tips received by the Taxpayer were voluntary amounts placed in the tip jar by satisfied members of the public, not because of any charge imposed by the Taxpayer, and meet the definition of a gratuity. The Taxpayer’s protest was granted.


06/14/2016

16-26

Mobile Blood Services 

On March 10, 2016, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for the tax periods from January 31, 2009 through May 31, 2015.  The Taxpayer was also assessed for withholding tax, penalty and interest.  The Taxpayer filed a protest on April 11, 2016.  The Taxpayer has been in business since January 1996, and was registered with the state of New Mexico and filed and paid gross receipts tax during the period at issue.  The Taxpayer’s primary business is to conduct laboratory testing, including DNA testing and drug screening.  All of the receipts at issue are from the New Mexico Children, Youth and Families Department (CYFD).  The Taxpayer began providing services to CYFD in 1999.  In 1999, an employee of CYFD told the Taxpayer that he should not charge them gross receipts tax.  On September 16, 1999, CYFD executed a Type 9 NTTC to the Taxpayer.  A Type 9 NTTC is for the purchase of tangible personal property, as is stated on the back of the document.  The Taxpayer did not charge or collect gross receipts taxes on its receipts from CYFD.  Sometime in July 2015, a different CYFD employee notified the Taxpayer that he should be charging CYFD gross receipts tax.  The Taxpayer began to charge and remit gross receipts taxes for his services to CYFD at that time.  During the audit period in question, an accountant prepared the Taxpayer’s gross receipts tax returns, and at no time informed the Taxpayer that a Type 9 was not valid for his transactions with CYFD.  Services sold to a government agency are taxable pursuant to Regulation 3.2.212.9 NMAC.  The Taxpayer was misinformed by a CYFD employee that his services were not taxable, but a Taxpayer is responsible for understanding the tax laws and paying taxes accordingly.  Penalty is imposed when a Taxpayer is negligent in not filing a return or paying tax when it is due, but Regulation 3.1.11.11 NMAC provides some exceptions and indicators of nonnegligence.  The Taxpayer was able to meet this by showing that it reasonably relied on its accountant to file and pay gross receipts tax returns.  The hearing officer ordered the penalty on the gross receipts tax to be abated.  The Taxpayer’s protest was granted in part and denied in part.


06/07/2016

16-25

M & M Stores, Inc.

On October 1, 2015, the Department issued five assessments to the Taxpayer.  On October 8, 2015, the Department issued an additional nine assessments to the Taxpayer.  Each of the fourteen assessments were for gross receipts tax, penalty and interest for a monthly CRS reporting period between March 2014 and April 2015.  On October 20, 2015, the Taxpayer protested the assessments, asking for abatement of penalty because of a hospitalization.  The Taxpayer did not dispute that it owed the assessed gross receipts tax principal and interest.  The Taxpayer operates three gas stations and convenience stores in Albuquerque.  In 2013 or 2014, the Taxpayer’s manager and accountant, who is responsible for preparing and paying the Taxpayer’s CRS returns, developed a medical condition that required significant medical testing, observation and procedures.  The manager continued to work to ensure basic operations of the Taxpayer’s business, but did let some business obligations slip.  When the medical condition was stabilized in 2015, the accountant returned his focus to the Taxpayer’s business.  Although the health situation of the Taxpayer’s manager was unfortunate, it was not enough to be able to abate penalty.  To meet the requirements to abate penalty under Regulation 3.1.11.11 NMAC, the Taxpayer must also demonstrate an inability to procure the services of another person to prepare the return.  The Taxpayer’s protest was denied.


06/06/2016

16-24

MANS Construction Company

On November 10, 2015, the Department denied the Taxpayer’s claim for refund for CRS taxes for the reporting period ending October 31, 2012.  On December 8, 2015, the Taxpayer protested the Department’s denial.  As grounds for the protest, the Taxpayer indicated that its accountant forgot to back out the tax before paying the CRS tax, so they paid a much higher amount than necessary.  On November 26, 2012, the Taxpayer filed its CRS report and timely paid the balance indicated.  On July 16, 2015, the Taxpayer filed an amended CRS return for the reporting period ending on October 31, 2012, indicating a reduced amount of gross receipts tax liability for that period.  On August 3, 2015, the Taxpayer requested a refund in the amount of its overpayments of gross receipts tax for the CRS reporting period ending on October 31, 2012.  On August 17, 2015, the Department sent the Taxpayer a letter requesting additional information so that it could review the Taxpayer’s claim for refund.  On November 10, 2015, the Department denied the Taxpayer’s claim because it failed to provide the requested documentation to support the refund claim.   The Taxpayer filed a refund claim for another period for the same reason and the Department granted and paid that refund claim without delay.  At the hearing, the hearing officer directed the Taxpayer to submit additional documentation showing the accounting error to support its refund claim within seven days.  The Taxpayer submitted documentation, which did support the claim of an accounting error for one project, but not the others.  As a result, the hearing officer ordered that the portion on the refund claim attributable only to that project be refunded.  The Taxpayer’s protest was partially granted and partially denied.


06/02/2016

16-23

S.J. Tile   

On March 28, 2013, the Department issued two assessments to the Taxpayer for gross receipts tax, penalty and interest for the tax periods ending December 31, 2008 and December 31, 2009.  The Taxpayer filed a protest to the assessments on April 24, 2013.  The Taxpayer was audited through the Department’s Schedule C mismatch program whereby the Internal Revenue Service provides computer records of Schedule C returns which are compared to the Department’s gross receipts tax program.  On May 7, 2012, the Department mailed the Taxpayer a Notice of Limited Scope Audit Commencement which provided that the Taxpayer was required to provide any nontaxable transaction certificates (NTTCs) within 60 days or by July 6, 2012.  The Taxpayer did not file gross receipts returns for the periods at issue.  The Taxpayer was in business from 1987 through 2012, and was a one-person operation in the business of tile setting for construction contractors.  The Taxpayer only provided services for construction contractors because he did not want to have to pay gross receipts taxes.  The Taxpayer obtained some NTTCs from the construction contractors he provided services to, but was not able to get NTTCs from all of them.  The Taxpayer provided the NTTCs to the Department and the principal amounts for both tax years were reduced to the amounts that were then assessed.  Sometime during the reporting period, the Taxpayer’s health began failing.  The Taxpayer argued in the protest that he did not collect gross receipts tax, therefore he should not have to pay it.  He also requested that penalty be forgiven because he suffered from a number of health issues.   New Mexico has a self-reporting tax system and it is the obligation of the Taxpayer to obtain and retain the necessary NTTCs, as well as file any necessary gross receipts taxes.  The Taxpayer was not able to prove that he was non-negligent in not filing gross receipts taxes.  The Taxpayer’s protest was denied.


05/31/2016

16-22

Jimmy Stuart 

On December 11, 2015, the Department assessed the Taxpayer for withholding tax, penalty and interest for the CRS reporting periods between January 1, 2010 and December 31, 2012. On February 15, 2016, the Taxpayer protested the assessment.  In his protest the Taxpayer acknowledged that he owed the tax principal, but asked for the interest and penalty to be abated.  The Taxpayer asked that the interest and penalty be abated due to economic hardship.  Section 7-1-67 NMSA 1978 states that interest “shall be paid” on taxes that are not paid on or before the date on which they are due.  The Department does not have the authority to abate interest due.  When a Taxpayer fails to pay taxes due because of negligence, Section 7-1-69 NMSA 1978 also states that penalty “shall be added”.  The Taxpayer does fit the definition of negligence as he failed to report and pay taxes during the period at issue.  The Taxpayer presented evidence that his wife was diagnosed with cancer in 2013, after the period the assessment is for, to show his economic hardship.  The Taxpayer was assessed correctly, and inability to pay is not grounds for abatement of an assessed tax liability.  The Taxpayer’s protest was denied.


05/26/2016

16-21

Emcore Solar New Mexico, LLC

On December 18, 2013, the New Mexico Environment Department granted the Taxpayer a Certificate of Eligibility for the Taxpayer’s qualified generating facility.  The Taxpayer is listed as the only financial entity holding an interest in its qualifying generating facility.  The Taxpayer submitted an application for approval with the Department for an advanced energy combined reporting tax credit on October 1, 2014.  On July 13, 2015, the Department partially approved the Taxpayer’s request, but for a slightly lower amount than requested.  The Taxpayer did not protest the partial denial of the credit.  Between October 9, 2015 and November 24, 2015, the Taxpayer’s consultant discussed with a Department employee the possibility of selling a portion of the ownership interest in the Taxpayer to a third party for the sole purpose of allowing the third party to utilize the credit.  The Taxpayer has not sold any interest in its business to a third party, nor has it merged with any corporation or changed its organizational structure, those possibilities are all hypothetical at this point.  On November 24, 2015, the Department denied the Taxpayer’s request to allocate the credit because the third party entity did not have ownership interest in the Taxpayer at the time it applied for the credit with the New Mexico Environment Department.  The Department stated in its denial that any allocation of the credit should have been done at the time of applying for the credit.  The entity who applies for the credit is the one who may claim the credit, and Regulation 3.13.8.12(B) NMAC prohibits the transfer of the credit to any other person, including an affiliate.  Only when two or more corporations merge or if an entity changes its organizational form and the resulting entity is a continuation of the predecessor, may the resulting entity claim the credit.  On February 1, 2016, the Taxpayer protested the denial of the transfer of the credit to a hypothetical third party.  The hearing officer found that the facts in this case were too speculative and hypothetical in nature.  The Taxpayer’s protest was denied.


05/25/2016

16-20

Robert G. Hooper 

On October 26, 2015, the Department denied the Taxpayer’s October 16, 2015 submission of a protest related to three assessments dated February 9, 2015.  On November 10, 2015, the Taxpayer submitted a protest of the Department’s denial.  On February 9, 2015, the Department issued three assessments to the Taxpayer for tax liabilities for CRS reporting periods ending on December 31, 2009, December 31, 2010, and December 31, 2011.  Section 7-1-24 NMSA 1978 provides that a protest shall be filed within 90-days of the mailing date of an assessment.  In this case, 90-days after the mailing date of the assessments was May 11, 2015.  The Taxpayer did not file a protest on or before that date.  At some point in the spring of 2015, the Taxpayer engaged the services of a CPA, who made contact with a Department auditor about the assessments.  The CPA submitted additional documentation to the auditor related to the assessments.  On September 22, 2015, the auditor sent the CPA a letter indicating that the documents had been reviewed and the Department was able to abate a portion of the assessment for the 2011 reporting year.  The Taxpayer contended in his protest letter and at hearing that the September 22, 2015 date of the Department’s letter is the controlling date for purposes of starting the 90-day protest period.  The Taxpayer does not dispute that the original February 9, 2015 assessments were timely mailed and that he did not file a protest within 90-days of the mailing of those assessments.  The hearing officer found that the statute clearly states that a protest must be filed within 90-days of the mailing of the assessment, and the Department is not able to entertain untimely filed protests.  The Department’s partial abatement of tax at a later date does not restart or reopen the 90-day protest period.  The Taxpayer’s protest was denied.


05/20/2016

16-19

Reggie Olguin

On February 3, 2016, the Department denied the Taxpayer’s January 28, 2016 submission of the protest letter originally dated January 11, 2016 as untimely.  On March 4, 2016, the Taxpayer submitted a formal protest of the Department’s denial.  On October 26, 2015, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for the CRS reporting periods from January 1, 2008 through January 31, 2011.  The Department mailed the assessment on October 27, 2016.  90-days from the Department’s October 27, 2016 mailing of the notice was January 25, 2016.  Included with the notice was the FYI-402: Taxpayer Remedies, which explains the Taxpayer’s ability to protest the assessment.  The document also provides the Department’s mailing and physical addresses for the filing of protests.  On January 11, 2016, the Taxpayer prepared a protest letter, but inadvertently transposed the P.O. Box number for the department with the street address number.  The Department did not receive this incorrectly addressed letter.  The Taxpayer never received his mailing back from the postal service.  On January 26, 2015, the Taxpayer called the Department’s protest office to inquire about the status of his protest, and was told that the Department had never received his protest letter.  On January 28, 2016, the Taxpayer emailed a copy of his January 11 protest letter to an employee of the protest office.  Section 7-1-24 NMSA 1978 requires a protest to be filed within 90-days of the date of mailing of the Department’s assessment.  As a result, the Department was unable to accept a protest after the January 25, 2016 deadline.  The Taxpayer’s protest was denied.


05/20/2016

16-18

Linda Wasko

On October 6, 2015, the Department issued two assessments to the Taxpayer for gross receipts tax, penalty and interest for the CRS reporting periods from January 1, 2012 through June 30, 2012, and from July 1, 2012 through December 31, 2012.  On October 14, 2015, the Taxpayer protested the assessments.  The receipts at issue in the protest are from the Taxpayer providing in-home elder care services for a company.  In order to qualify for the deduction for the sale of a service for resale, the Taxpayer needed a Type 5 nontaxable transaction certificate (NTTC), issued by the company.  The Taxpayer did not receive an NTTC at the time her taxes were due, nor did she report, file or pay gross receipts tax during the period in question.  As part of its Schedule C Tape Match program with the IRS, the Department discovered that the Taxpayer had sole proprietorship income reported on her federal income tax return that was not reported as gross receipts on a CRS filing.  On June 26, 2015, the Department prepared a Notice of Limited Scope Audit Commencement-60 Day Notice asking the Taxpayer to explain the mismatch and provide any necessary NTTCs to support claimed deductions.  The Taxpayer claimed to have not received the notice until a week to ten days after the date on the document, and upon questioning, the Department auditor acknowledged that based on his experience, the notice could have been mailed Friday, June 26 2015, or Monday, June 29, 2015.  The notice indicated a deadline of August 25, 2015 for the Taxpayer to present the necessary NTTCs.  The Taxpayer worked with the company to get the NTTC beginning sometime in August.  On August 24 and 25, they contacted the Department because they were having trouble executing the NTTC.  On August 26, 2015, the company executed a Type 5 NTTC to the Taxpayer.  The Department disallowed the claimed deduction because the NTTC was executed after the August 25 deadline.  The hearing officer found that a genuine issue as to the date of mailing of the notice was established and the NTTC should then have been accepted as it was executed only one day after the deadline.  The Taxpayer’s protest was granted.


05/16/2016

16-17

Bogle Management Co., Inc. 

On December 19,2007, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for the tax periods from January 31, 2000 through June 30, 2006.  On January 24, 2008, the Taxpayer filed a protest to the assessment.  The Taxpayer is an Arizona corporation that began operations in 1976, as was first registered in New Mexico for gross receipts tax purposes in 1977.  The Taxpayer was originally affiliated with two farming operations that are located and engaged in agricultural business in New Mexico.  At the time of its incorporation, the Taxpayer was owned by the same people who owned the farms.  The Taxpayer was created as a separate entity to provide retirement and medical benefits for the managers of the farms, which they did not want to provide to the general employees.  In 1997, the Taxpayer was acquired by new owners and operators, a man who had provided all of the accounting services for the farms and the taxpayer and was aware of how they interacted, and his wife.  Under this new ownership, the Taxpayer entered into a management agreement with each of the farms, under which the Taxpayer agreed to supply the farms with knowledgeable and skilled persons to act as the managers of the farms.  The agreement set that the farms would reimburse the Taxpayer for payments issued to the managers, to include salary, the cost of worker’s compensation, payroll taxes, benefits, and other associated costs.  The agreement also set the Taxpayer’s compensation for management fees as an amount equal to 10% of the gross salary of the managers.  The Taxpayer did its calculations and other activities related to the payroll services for the managers in Georgia, where the Taxpayer’s owners resided.  The Taxpayer paid the managers’ compensation, withholding tax, and took care of the benefit programs, issued paychecks by mail to the farms to distribute to the managers and, at the end of the tax years, would issue W-2s to the managers.  As the entity in charge of issuing the managers’ paychecks, the Taxpayer was required to pay withholding taxes and issue W-2s, which meant that the Taxpayer was the employer of the managers.  As a result, the Taxpayer had a physical presence in New Mexico through the managers.  The farms would dictate to the Taxpayer who the managers were, what each manager’s salary would be, and if any existing manager’s salary should be increased.  The farms controlled and supervised all of the work performed by the managers.  In 2007, the Taxpayer was audited by the Department, which resulted in the assessment of gross receipts taxes on the receipts related to the management fees and the payroll reimbursements.  The Taxpayer argued that even if it was doing business in New Mexico, its payments from the farms were excluded from gross receipts tax because the Taxpayer was acting as a disclosed agent on behalf of the farms.  As related to the management fees, even if the Taxpayer were acting as an agent, the fees belonged solely to the Taxpayer in exchange for the provision of services and are subject to gross receipts tax.  Regulation 3.2.1.19 NMAC interprets what constitutes a disclosed agency relationship, and the Taxpayer was not able to show that it met the requirements of actual disclosure, or the bookkeeping requirements.  The Taxpayer also argued that it was a joint employer, which is a determination made by the United States Department of Labor, however the Taxpayer never provided any evidence showing that such a determination was ever made.  The hearing officer found that the receipts of the Taxpayer were subject to gross receipts tax and interest as assessed, but did order the penalty to be abated because the Taxpayer failed to pay the taxes due to a mistake of law in believing in good faith that it was a disclosed agent of the farms, due the long-standing relationship between the farms and the Taxpayer.  The Taxpayer’s protest was granted in part and denied in part.


05/11/2016

16-16

HealthSouth Rehabilitation 

In late 2014 and early 2015, the Taxpayer applied for refunds of gross receipts tax for three tax periods.  The Department denied two of these refunds on the basis that the Taxpayer was a hospital and failed to meet the definition of “health care provider” for purposes of Section 7-9-93 NMSA 1978, which provides the deduction the Taxpayer used as their basis for the refund claims.  The Department did not act on the third application for refund.  The Taxpayer protested each of the denials, as well as the inaction, which were eventually consolidated into one protest.  The Taxpayer operates an inpatient rehabilitation hospital in New Mexico, which is staffed by physicians, physical therapists, occupational therapists, social workers, speech-language pathologists, and others.  The Taxpayer has receipts from payments for services performed by these professionals.  The Department conceded that the Taxpayer is entitled to the deduction for receipts from payments by federal Medicare administrators, and therefore entitled to some of the refund that it applied for.  The Hearing Officer found that the Taxpayer met the requirements found in Section 7-9-93 NMSA 1978, and that the Section does not prohibit a for-profit hospital from taking the deduction, though the Department had promulgated regulations to that effect which limited the availability of the deduction.  The Taxpayer’s protest was granted.


05/11/2016

16-15

Mountain Liquors LLC

On September 9, 2015, the Department assessed the Taxpayer for tax, penalty and interest as a successor in business to Trail House Enterprise LLC.  On September 22, 2015, the Taxpayer protested the assessment.  The Taxpayer is a limited liability company operated by a sole member, who is also the sole member of Trail House, LLC.  The Taxpayer and Trail House LLC jointly own commercial property at which the two LLCs operated a grocery store, liquor store and deli, using the Taxpayers liquor license. Trail House Enterprise LLC is a separate entity owned by two other individuals.  On February 22, 2012, the Taxpayer entered into lease agreements with Trail House Enterprise LLC for the lease of both the commercial property and liquor license.  Under the terms of the lease, Trail House Enterprise LLC was liable for the payment of all federal state and local taxes and failure to do so would be grounds for default under the agreement.  After entering into the leases, Trail House Enterprise LLC took over operation of the grocery store, liquor store and deli.  Trail House Enterprise LLC fell significantly behind in its payment of both gross receipts taxes and liquor excise taxes.  It also fell behind in its payments to the Taxpayer.  On or before February 16, 2015, the Taxpayer met with the owners of Trail House Enterprise LLC, who indicated that they wished to voluntarily terminate the lease agreements due to financial difficulties.  As part of the termination, the Taxpayer and the LLC owners agreed to conduct a full inventory of all merchandise at the property.  Upon termination of the leases, the Taxpayer took possession of the property, liquor license, and all of the inventory, and began operating the grocery store, liquor store and deli again, using some of the same signage as when Trail House Enterprise LLC operated the business.  In order to protect the value of the businesses, the Taxpayer paid off some of Trail House Enterprise LLC’s outstanding liabilities, including the outstanding liquor excise tax.  The Taxpayer’s sole member asserted at the hearing that when the Taxpayer paid the outstanding liquor excise tax liability it was informed that the payment extinguished all liability, although the email exchanges between the member and Department employees did not support that.  Regulation 3.1.10.16 NMAC addresses what constitutes a successor in business, and if one of the eight indicia are present, the Department may presume that ownership of a business has transferred to a successor in business, who is then responsible for tax liability due under Section 7-1-61 NMSA 1978.  In this case, at least four of the factors listed are met, and the Taxpayer was presumed to be a successor in business.  The Taxpayer argued that the Department should pursue the owners of Trail House Enterprises LLC, but given the way the statute is structured, the Taxpayer is liable as a successor in business, though it may choose to pursue contractual legal action against them if it wishes to do so.  The hearing officer ordered the penalty and interest to be abated based on a prior appellate court decision regarding the imposition of penalty and interest on a successor in business, but found that the tax was properly assessed.  The Taxpayer’s protest was granted in part and denied in part.


05/09/2016

16-14

John & Susan Grazier

The Taxpayers failed to timely file their New Mexico personal income tax returns for tax years 2008, 2009 and 2010.  They filed these returns on or about November 19, 2015, claiming a refund for each tax year.  The Department denied the refund requests on January 21, 2016 because the returns were filed beyond the three year statute of limitations.  The Taxpayers protested the refund denials on January 30, 2016.  Prior to and during the tax periods at issue, the Taxpayers supported themselves, their daughter and two grandchildren.  In August 2007, the Taxpayers both lost their jobs.  Shortly after, one of the Taxpayer’s became ill and the Taxpayers became overwhelmed by the loss of their jobs and this illness.  During the period at issue, the Taxpayers could not afford to hire someone to prepare their tax returns.  In 2009, the Taxpayers spoke to two Department employees who told them that tax years 2006, 2007, 2008, 2009 and 2010 were being reviewed and that the Department would owe them money, or they may owe a very small amount.  The Taxpayers did not know there was a statute of limitations for filing refund claims.  The Taxpayers argued that, because they spoke to two Department employees in 2009 who indicated that the Taxpayers would likely be owed a refund, they were misled and now the Department should be required to grant their requests for refund.  The statements made by the Department were not incorrect, and the Taxpayers were precluded from receiving the refunds by waiting six years to file the returns after they spoke to the Department employees.  The Taxpayer’s protest was denied.


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