In 1989, the Taxpayer began providing child care services in her home and registered with the Department for payment of gross receipts tax. When she received her first CRS Filer’s Kit, she was confused by the instructions and called a Department employee who told the Taxpayer she was not subject to gross receipts tax and cancelled her registration. Twelve years later, the Department audited the Taxpayer, determined that her receipts were subject to tax, and issued an assessment. The Taxpayer protested, arguing: (1) She is not engaged in business because the City of Albuquerque does not require her to be licensed. (2) The type of care she provides is not specifically mentioned in the Department’s regulations as a service subject to tax. (3) A Department employee and H&R Block both told her she was not subject to gross receipts tax. Held: (1) The Taxpayer is engaging in business as defined in New Mexico’s tax statutes, which are separate and distinct from municipal licensing laws. (2) NMSA 1978, 7-1-5 creates a presumption that all business receipts are subject to tax, and there is no statutory exemption or deduction that would exclude the Taxpayer’s receipts from the general rule of taxation. The Department’s regulations are not all inclusive, and the fact that the regulations do not specify that the type of services provided by the Taxpayer are taxable does not create an exemption or deduction from tax. (3) The fact that the Taxpayer received erroneous information from the Department does not prevent the state from taxing her receipts. There was no proof of deliberate attempts to mislead the Taxpayer. Because the Taxpayer was unable to identify the employee with whom she spoke, there is no way to confirm what information was given to the employee and what questions were asked. Taxpayers are not entitled to rely on the oral advice of a Department employee as a substitute for making their own independent review of statutes and regulations. Although the evidence does not support abatement of tax and interest, it does justify abatement of the negligence penalty. Protest denied in part and granted in part.
In Home Day Care for Children