Louis Ortega dba Perfection Flooring Maintenance

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The Taxpayer provides floor maintenance services in New Mexico.  Based on a Schedule C tapematch, the Department conducted a limited scope audit of the Taxpayer’s 2005 and 2006 gross receipts in 2009.  Based upon the Department’s findings, the Taxpayer received assessments for gross receipts tax, penalty and interest for each of the two tax years.  The Taxpayer protested both assessments.  In both 2005 and 2006, the Taxpayer performed services for two non-profit religious charities.  These charities provided the Taxpayer with a Type 9 nontaxable transaction certificate (NTTC) for his services.  Because of this, the Taxpayer did not pass along the tax to the charities, or pay gross receipts tax himself.  At hearing, the Taxpayer conceded that he had improperly relied on this NTTC for his services and that the Department’s assessment on these receipts was correct.  In 2006, the Taxpayer also performed services for a chain of retail stores in New Mexico as a subcontractor to an Illinois company.  The Taxpayer believed that he was entitled to a gross receipts tax deduction for these receipts as a subcontractor performing services for resale.  The Taxpayer was not given an NTTC to support this deduction.  During the audit, on February 18, 2009, the Department sent a notice of audit commencement to the Taxpayer, advising him that he had 60 days (until April 19, 2009) to possess any NTTC’s necessary to support his deductions.  The Taxpayer contacted the Illinois company several times, and was provided with a Type 5 NTTC on June 30, 2009, more than two months after the 60 day deadline.  The Department informed the Taxpayer that it could not honor the NTTC because it was not obtained by the deadline.  The issue to be decided at hearing was whether the Department should have accepted the NTTC, and whether the Taxpayer’s efforts to obtain it could excuse his missing the deadline.  Because the language in the statute is clear, the Department is not authorized to accept the NTTC after the deadline and cannot allow the deduction claimed by the Taxpayer.  The Taxpayer’s protest was denied.