Estes Spehar Design



The Taxpayer is in the advertising business and accepts Type 2 nontaxable transaction certificates (NTTCs) for the purchase of tangible personal property for resale. She entered into a contract to create a billboard display, not realizing that the contract to purchase space and create a billboard display is a service in New Mexico for which a Type 5 NTTC is the appropriate NTTC.  The Taxpayer did not contact the Department, consult her accountant, or research the state statutes and regulations on the issue. In 2002, the Department audited the Taxpayer and notified her that she must be in possession of required NTTCs within 60 days from the date of the notice. In June 2002, the Taxpayer contacted the Department employee assigned to the audit and produced records that included Type 2 NTTCs from her customers. The employee said that “everything looked okay” and she would forward the file to her supervisor. The 60-day period expired in August 2002 without further contact between the Taxpayer and the Department or the Taxpayer’s accountant. The Department subsequently assessed the Taxpayer on the receipts from her billboard contract and the Taxpayer protested the assessment. When the Protest Office explained that the Taxpayer should have had a Type 5 NTTC for the billboard contract, the Taxpayer obtained the NTTC from her client in January 2003. The Department rejected the NTTC because it was not in the Taxpayer’s possession within the 60-day period required by statute. At the administrative hearing, the Taxpayer argued that she was misled by the Department employee initially assigned to the audit, who told her that her records “looked okay.” The Taxpayer maintained that she could have obtained a Type 5 NTTC in a timely manner if the Department had told her she needed one.  Held: The Taxpayer’s argument does not provide a basis for equitable estoppel under the law and does not relieve her of the liability for tax, penalty and interest.  New Mexico has a self-reporting tax system, and it was the obligation of the Taxpayer—not the Department—to determine her liability for tax.  A taxpayer is not entitled to rely upon oral advice from the Department as a substitute for making his or her own independent review or consulting a qualified tax professional. Protest denied.