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Layton Talbott d/b/a Silk & Stones



The Taxpayer sells tangible personal property at both wholesale and retail. After a limited scope audit, the Department assessed the Taxpayer for gross receipts tax, penalty and interest on resale receipts he deducted without obtaining NTTCs from his buyers.  The Taxpayer protested the assessments, arguing: (1) he was not required to have NTTCs to support his deductions; (2) the Department should be estopped from assessing tax against him because he reasonably relied on the Department’s instructions and the advice he received from a Department employee; and (3) his failure to pay tax was not negligent because it was based on advice received from his Arizona accountant.  Held:  The Taxpayer is not entitled to deduct receipts from New Mexico sales for resale in the absence of required NTTC’s. Estoppel does not apply to prevent the Department from enforcing its assessments because the Taxpayer failed to read all of the Department’s instructions pertaining to the resale deduction and failed to seek clarification from a Department employee whose advice seemed to contradict the instructions. The Taxpayer is entitled to an abatement of the negligence penalty based his reliance on advice received from his Arizona accountant. The protest is partially granted and partially denied.