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Rio Grande Electric Co. Inc.



The Taxpayer is an electrical contractor that installs lighting fixtures, wiring, telephone lines, and other related items, on behalf of its customers.  In 2007, the Department selected the Taxpayer for an audit of gross receipts tax for reporting periods January 31, 2004 through December 31, 2006. The Department disallowed several of the Taxpayer’s claimed deductions and issued an assessment for gross receipts tax, penalty and interest.  At hearing, the Taxpayer protested only the disallowed deductions attributable to receipts from two of its customers, Customer X and Customer Y. The Taxpayer had received NTTCs from both customers, but both were of the incorrect type for the claimed deductions. Had the correct type of NTTC been executed, the Department’s witness indicated that the Taxpayers receipts were eligible for the claimed deductions. The hearing officer found that the Taxpayer had timely accepted the executed Type 2 NTTC from Company X in good faith and that under the conclusive evidence provision of Section 7-9-43 NMSA 1978 and the case Leaco Rural Tel. Coop. v. Bureau of Revenue, 86 N.M. 629 (N.M. Ct. App. 1974), the Taxpayer was entitled to the deduction of the Company X receipts. While the conclusive evidence provision of Section 7-9-43 NMSA 1978 might have also extended to the incorrect Type 5 NTTC the Taxpayer received from Company Y, the Taxpayer could not establish which specific receipts were from Customer Y.  Without sufficient proof of which receipts were covered by Company Y’s Type 5 NTTC, the Taxpayer was not entitled to any further deductions.  The Taxpayer’s protest was granted in part and denied in part.