Show Subnavigation

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. 

15-21 Santa Fe TowandEmergency Lock & Key

7:49 AM
Santa Fe TowandEmergency Lock & Key


Santa Fe Tow and Emergency Lock & Key

The Taxpayers are two companies, one a limited liability company, the other a sole proprietorship, who share a common owner.  On September 12, 2012, the Department assessed one of the Taxpayers for gross receipts tax, penalty and interest for the tax period from June 30, 2007 through October 31, 2011.  On September 12, 2012, the Department assessed the other Taxpayer for gross receipts tax, penalty and interest for the tax period from January 31, 2007 through October 31, 2011.  On October 10, 2012, the Taxpayers filed protests to the assessments.  During the period in question, one taxpayer engaged in the business of mobile emergency lock and key services, while the other engaged in the business of automobile towing services.  During the period at issue, the Taxpayer filed their monthly gross receipts tax returns in a timely manner, but deducted all receipts received from the AAA New Mexico, LLC (AAA), the New Mexico affiliate of the American Automobile Association.  Sometime in 2005, the Taxpayers hired a competent certified public accountant (CPA), who has been licensed since 2003, to prepare their gross receipts returns.  This individual testified at the hearing that he believed all the receipts received from AAA were nontaxable, and he advised the Taxpayers to deduct all of the AAA receipts.  The Taxpayers’ owner had complete trust and faith in this CPA.  A Department auditor conducted a field audit of the Taxpayers, which resulted in the assessments due to underreported gross receipts and these disallowed deductions.  The owner of the Taxpayers has worked as an independent contractor for the AAA for 25 years, and relocated his business to New Mexico from California at the request of AAA.  Under the contract with AAA, the Taxpayers were required to adhere to certain standards set by AAA.  The central issue is whether the Taxpayers’ receipts were received from AAA in a disclosed agency relationship.  The Taxpayers argued that even though the contract between AAA and the Taxpayers did not expressly give the Taxpayers the authority to bind AAA in contract, the Taxpayers had apparent authority to act on AAA’s behalf, and were a disclosed agent.  The Hearing Officer found that the contract between the Taxpayers and AAA did not meet the criteria set forth in Regulation NMAC to show that an agency relationship exists.  The Taxpayers receipts from AAA were not exempt or deductible.  The Taxpayers were able to show that they reasonably relied on the advice of a competent CPA, and were not negligent, so penalty was ordered to be abated. The Taxpayer’s protest was granted in part and denied in part.

back to list
View Our Most Popular Pages & Services
Latest News:
Secretary Demesia Padilla

Secretary Demesia Padilla,CPA

Learn more about secretary Padilla

Online Services

Find an Online Service to Serve Your Needs

Taxation and Revenue New Mexico

1100 South St. Francis Drive
Santa Fe, NM 87504
(505) 827-0700

TRD Home          Privacy & Security          Site Policies          Accessibility/Non-Discrimination Statement          
About Us          Contact Us      Site MapLink to New Mexico Tax and Revenue Facebook Page

call us E-Mail Contact Us