William Wanker

13-3

The Taxpayer is a sole proprietorship, registered in New Mexico, who performs consulting and research services related to public education.  In 2007, the Taxpayer entered into a contract with a Colorado corporation to work as an independent contractor for them, as part of a contact they had with the New Mexico Public Education Department.  The Colorado corporation paid the Taxpayer a yearly base pay, as well as a percentage of gross profits received under the contact.  The Colorado corporation did not provide, nor did the Taxpayer demand, nontaxable transaction certificates (NTTCs).  Through a Schedule C tape-match with the IRS, the Department detected a discrepancy with what was filed on the Taxpayer’s 2007 Schedule C and his 2007 CRS filings.  The Department sent the Taxpayer an application for a temporary amnesty program, and the Taxpayer and the Department provisionally entered into an amnesty agreement.  While in the amnesty program, the Taxpayer corresponded by email with a Department auditor.  In these emails, the Taxpayer reported receiving conflicting information from Department employees, who told him that his receipts from the contract in question were not taxable because the receipts were from an out-of-state company.  The auditor informed the Taxpayer that the receipts were indeed taxable.  On July 29, 2011, the Department sent the Taxpayer a notice of commencement for a limited-scope audit.  The notice notified the Taxpayer that he had 60-days to present all necessary NTTCs related to the audit.  The Taxpayer attempted to get NTTCs from the Colorado corporation, but was unable to, and so did not provide any NTTCs to the Department by the deadline.  On January 9, 2012, the Department assessed the Taxpayer for gross receipts tax, penalty, and interest.  On June 30, 2012, the Taxpayer filed a protest to the Department’s assessment, which resulted in the Department’s cancelling the amnesty agreement with the Taxpayer.  The hearing officer found that the Taxpayer is responsible for the assessed gross receipts tax and interest, but that the penalty is to be abated, because the taxpayer was non-negligent as a result of the erroneous information received from Department employees.  The Taxpayer’s protest granted in part and denied in part.