The Taxpayer is a Texas corporation with its principal office in Texas and two additional business locations in New Mexico. Following an audit, the Department assessed the Taxpayer for gross receipts and compensating taxes, plus penalty and interest, and the Taxpayer protested the assessment. The only issue presented at the hearing was whether the Taxpayer was liable for penalty on receipts from selling goods and services ordered by out-of-state companies and delivered to third parties in New Mexico. The Taxpayer argued that it was not negligent because: (1) the transactions were very complex and the Taxpayer reasonably believed they were not subject to tax; (2) out-of-state companies should be held to a lower standard of negligence than in-state companies; (3) the transactions represented a small percentage of the Taxpayer’s total business volume. Held: (1) the fact that an out-of-state company with business locations in New Mexico is subject to gross receipts tax when it performs services or delivers goods into the state is not a new legal concept, and the Taxpayer was negligent in failing to pay the tax due; (2) out-of-state taxpayers are subject to the same negligence standard as in-state taxpayers; (3) the fact that a taxpayer may have paid 99 percent of its tax correctly does not excuse the Taxpayer from its negligent failure to pay the remaining one percent of tax due. Protest denied.
D & H Pump Service, Inc.