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Kevin H. Pham dba Pro Nails



On June 6, 2014, the Department issued four assessments to the Taxpayer for gross receipts tax, penalty and interest, for the tax years ending December 31, 2008, 2009, 2010 and 2011.  The Taxpayer filed a protest to the assessments.   The Taxpayer is a nail tech, providing nail services at two different nail salons during the relevant period.  The Taxpayer set his own hours at both salons, was paid with weekly checks from which no tax was withheld, and was provided with 1099 Forms for the income received. The Taxpayer argued that he was an employee of the salons, but the evidence was contrary to this claim and therefore the Taxpayer failed to establish that he was an employee.  The Department detected that the Taxpayer had reported Schedule C income on his federal returns, but had not reported or paid any gross receipts tax.  In February 2014, the Department sent the Taxpayer a Notice of Limited Scope Audit Commencement, which advised him that he had 60 days, until April 22, 2014, to produce any nontaxable transaction certificates (NTTCs) necessary to support any claimed deductions.  The Taxpayer did not provide the Department with any NTTCs executed by that deadline. The Taxpayer later did receive untimely NTTCs from the salons.  However, because the Taxpayer did not have the necessary NTTCs by the deadline, the Department properly denied the claimed sale of services for resale deduction and issued the assessments.  The Taxpayer also argued that the salons had paid the gross receipts tax on his receipts..  However, there was no evidence of the salons having paid gross receipts taxes on his behalf.  The Taxpayer’s protest was denied.