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GEA Integrated Cooling Technology



The Taxpayer is a Colorado based company that builds and renovates cooling towers for power plants.  During the audit period, June 2003 through May, 2008, the Taxpayer was working on projects in New Mexico for the Public Service Company of New Mexico.  The Taxpayer was audited by the Department, commencing on July 16, 2008.  As a result of the audit, on September 21, 2009 the Department issued an assessment to the Taxpayer gross receipts tax, penalty and interest for the periods covered by the audit.  Effective January 1, 2008, an amendment to Section 7-1-69(A) NMSA 1978 raised the maximum rate of penalty imposed for the failure to pay taxes from a maximum of 10% of the unpaid taxes to a maximum of 20%.  The Department applied the amended statute in calculating the penalty assessed the Taxpayer.  The Taxpayer protested only the penalty portion of the assessment, arguing that for reporting periods prior to the effective date of the amendment, the Department was prohibited from imposing the higher penalty provided for in the amended statute because it amounted to giving the amendment a retroactive effect, which is prohibited.  The hearing officer determined that although the language of Section 7-1-69(A) looks to whether taxes were unpaid in determining whether penalty should be imposed, penalty is imposed under the language of the statute only at the time that the unpaid taxes are assessed.  Because the unpaid taxes were assessed after the effective date of the statutory amendment, the amended version of Section 7-1-69(A) applied and it was not a prohibited retroactive application of the statutory amendment to assess penalty at the higher percentage of the amended statute.  The Taxpayer’s protest was denied.