Inez Bay



Taxpayer provided proofreading services to a professional court reporting service. Taxpayer was notified of a limited scope audit (C-SPAN) based on a discrepancy between the business income reported on her 1995 federal income tax return and the receipts reported to New Mexico. Taxpayer was notified she had 60 days to provide evidence (NTTCs) to support any deductions claimed for the audit period (Section 7-9-43). Taxpayer submitted an NTTC applicable to selling tangible personal property for leasing, which was rejected by the Department. Taxpayer protested the Department’s subsequent assessment. Taxpayer claimed the Department was responsible for her failure to obtain an acceptable NTTC in a timely manner because the Department failed to notify her that the NTTC submitted was not applicable to her business. Taxpayer also claimed that imposing the gross receipts tax on her services resulted in double taxation since the tax had already been paid by her client. Held:  Taxpayer’s services were not eligible for a deduction and so submission of the wrong NTTC was irrelevant; payment of tax by the court reporting service did not relieve taxpayer of her liability for tax.  Protest denied.