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Jose L. and Clara Arrieta



The Taxpayer reported his 1999 income from performing paralegal services as business income on Schedule C to his 1999 federal income tax return.  In May 2002, the Department assessed the Taxpayer for gross receipts tax, penalty and interest on this income.  The Taxpayer protested the assessment, arguing that he did not have a sole proprietorship in 1999, but worked as a paralegal for an attorney and had also submitted an NTTC to the attorney.  Held:  The Taxpayer failed to meet his burden of proving the Department’s assessment was incorrect by failing to appear at the formal hearing.  In addition, based on evidence the Department presented at the formal hearing, the Taxpayer performed services as an independent contractor during 1999 and was not entitled to the exemption for employee wages set out in NMSA 1978, 7-9-17.  Nor was the Taxpayer entitled to the deduction for receipts from selling services for resale.  Contrary to advice previously received from the Department, the Taxpayer issued an NTTC to the attorney for whom he performed services, rather than obtaining an NTTC from the attorney as required by NMSA 1978, 7-9-48.  Protest denied.