Albuquerque Tents, LLC

13-30

After an audit, on November 30, 2012, the Department assessed the Taxpayer for gross receipts tax and interest for the CRS reporting periods January 31, 2006 through June 30, 2010.  The Taxpayer filed a protest to the assessment.  The Taxpayer is in the business of renting tents, tables, chairs and other materials needed for social events.  It also makes occasional sales of those items to its customers either directly or a result of damaged, lost, or stolen equipment that originally was leased to its customers. A large portion of the Taxpayer’s customers are government agencies and 501(c)(3) non-profit organizations. The Taxpayer argued that a certain percentage of its gross receipts were deductible sales to governmental agencies and 501(c)(3) non-profit organizations. Under the relevant deductions, leasing of tangible personal property is not deductible while sales of tangible personal property are potentially deductible. However, the Taxpayer presented insufficient factual evidence to establish what percentage of its gross receipts were attributable to sales instead of its customary leasing arrangement. The Taxpayer only presented two invoices from the entire audit period. Those two invoices were not illustrative of the Taxpayer’s claimed percentage of sales during the entire audit period. One invoice had conflicting information that limited its weight and was insufficient to establish a percentage with general application to the entire audit. The other invoice did establish that the Taxpayer had a direct sale that was deductible, but had no broader application to the percentage of sales the Taxpayer may have had over the audit period. Under relevant case law, the Taxpayer had the burden to establish it was entitled to the claimed deductions and overcome the assessment. Further under the statute, the Taxpayer had an obligation to maintain records sufficient to accurately calculate its tax liability. Except for the one direct sale entitled to a deduction, the Taxpayer did not present enough evidence to carry its burden that it was entitled to further deductions. The Taxpayer’s protest was granted as to the one direct sale supported by an invoice and denied as to the remaining assessment.