River Source Inc.

13-39

The Taxpayer provides educational programs and outdoor science activities to schools across New Mexico.  The Taxpayer had always been timely with CRS filings and payments, from its formation in 1997 until the reporting periods ending in June and July 2010, when it did not file CRS returns.  The Taxpayer’s bookkeeper left in June 2010, and the new bookkeeper missed filing and paying for those two periods.  In January 2012, the Department informed the Taxpayer of the unpaid taxes.  On March 7, 2012, the Taxpayer filed its CRS-1 Form for the June 2010 period and paid the outstanding gross receipts and withholding tax principal, penalty and interest for that period.  Also on March 7, 2012, the Taxpayer filed its CRS-1 Form for the July 2010 reporting period, but paid only a portion of the liability.  On March 23, 2012, the Department assessed the Taxpayer for the remaining gross receipts and withholding taxes, penalty and interest.  The Taxpayer filed a protest to the assessment of penalty and interest, but did not contest that it owed the assessed gross receipts and withholding taxes.  Section 7-1-67 NMSA 1978, states that interest “shall” be applied, and the Taxpayer’s failure to file and pay met the definition of negligence that is used to determine if penalty applies.  The Department was required to assess penalty and interest.  The Taxpayer’s protest was denied.