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Southwest Copy Systems, Inc.



On December 21, 2005, the Department assessed the Taxpayer for gross receipts tax and interest for the tax period of January 31, 1998 through March 21, 2003.  On January 18, 2006, the Taxpayer filed a protest to the assessment.  The Taxpayer is in the business of selling, leasing, and servicing copiers to other businesses located in New Mexico.  The issue at hearing revolved around the Taxpayer being able to deduct the sale of tangible personal property sold to government entities or nonprofit organizations, in the course of servicing and maintaining copiers, from their gross receipts.  The hearing officer found that the Taxpayer’s record keeping was reliable, and that they were able to show which receipts were from the sale of tangible personal property, and which receipts were attributable to services.  As a result, a portion of the assessed gross receipts tax was abated, while the Taxpayer still owed some of the assessed gross receipts tax, plus interest, along with the assessed compensating tax and interest.    The Taxpayer’s protest was granted in part and denied in part.