The Taxpayer operated a retail hardware store in New Mexico, and was also a construction contractor. An audit of the Taxpayer by the Department revealed that the Taxpayer did not have all necessary Nontaxable Transaction Certificates (NTTCs), for deduction that were made. The Taxpayer also took deductions for sales where no deduction was allowed. Errors were also found regarding late reporting, incorrect reporting location and late or incorrect reporting of compensating tax. Upon completion of the audit the Department assessed the Taxpayer for gross receipts tax, compensating tax, penalty and interest. The Taxpayer was given a credit for much of the outstanding principal tax due as payments had been made. The Taxpayer filed a written protest to the assessment of penalty stating that the imposition was unduly harsh. In his argument the Taxpayer also stated that he had relied on his out of state CPA, who did not have complete knowledge of New Mexico tax law. The Taxpayer also stated that his software was not able to distinguish between taxable and nontaxable sales. The Hearing Examiner found that the penalty was properly assessed and that it cannot be waived based on the issues raised by the Taxpayer. The Taxpayer’s protest was denied.
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