On December 21, 2009, the Department assessed the Taxpayer for workman’s compensation tax, penalty, and interest for the tax period from March 31, 2003, through March 31, 2008. On that date, the Department also assessed the Taxpayer for gross receipts tax, withholding tax, penalty and interest for the tax period from January 31 2002, through March 31, 2008. The Taxpayer filed a protest to the assessments. At the hearing, the Taxpayer announced that he was withdrawing his protest as to the workman’s compensation assessment and the assessment on withholding tax. The only remaining issue at protest was the gross receipts tax, and applicable penalty and interest. The Taxpayer was conducting business in New Mexico from 2002 through 2008. The Taxpayer was providing maintenance services on buildings and vehicles for a company who was then reselling those services to its parent corporation. The Taxpayer was also providing these services for the company in three other states. The Taxpayer’s contract with the company indicated that the Taxpayer was not to charge sales tax to the company, and the company would be responsible for paying each state’s applicable sales tax. The company also provided the Taxpayer with multijurisdictional uniform sales and use tax certificates (MTCs). MTCs are applicable for the sale of tangible personal property under certain circumstances, but not for the sale of services. The Taxpayer believed that its sales in New Mexico were not subject to gross receipts tax based on the MTCs provided, the representations made by the company, and the advice of his accountant, who was a CPA. In 2008, the Department conducted an audit of the Taxpayer. After meeting with the auditor, the Taxpayer was served with a letter advising him that he had 60 days to obtain the appropriate nontaxable transaction certificates (NTTCs). The Taxpayer entrusted all documents related to the audit to his accountant. The Taxpayer failed to obtain an NTTC from the company within the 60 days allowed. The hearing officer found that the Taxpayer was liable for the assessed gross receipts tax and interest, but the penalty was abated because the Taxpayer had relied on the advice of his accountant, in addition to the representations made to him by the company with the issuance of the MTC. The Taxpayer’s protest was granted in part and denied in part.
Southwest Mobile Service and Richard Cameron