On April 27, 2015, the Department issued four assessments to the Taxpayer for gross receipts tax, penalty and interest for CRS reporting periods from January 1, 2008 through December 31, 2011. On June 8, 2015, the Taxpayer protested the assessments. The Taxpayer is employed as a math and physical education teacher with Albuquerque Public Schools (APS). Over his thirty years at APS, the Taxpayer has also been employed as a basketball coach and athletic director for the school where he works. During the relevant period, APS had an arrangement with the Albuquerque Youth Basketball League (AYBL) whereby the organization could use APS facilities for practices and sports events not otherwise part of APS’ formal athletics programming. APS would only allow AYBL to use their facilities if an APS employee was present. As part of his job as the athletic director, and at the direction of the school’s principal, the Taxpayer was responsible for supervising school and sports activities in the school gym. The Taxpayer opened the facility, monitored the practice/activity, and closed the facility at the conclusion of the event when AYBL used the gym at his school. This activity occurred approximately five months a year, one to four times a week. AYBL paid the Taxpayer for his time on a weekly basis, and provided the Taxpayer with a 1099-MISC at the end of the year. In the summer, the Taxpayer also served as a teacher-chaperone on one overseas student trip per year with an APS Board approved educational program. At the end of the trip, the Taxpayer is paid by that program, and is also provided with a 1099-MISC at the end of the year. The Taxpayer receives a W-2 from APS for his annual teacher wages. The Taxpayer’s accountant prepared the Taxpayer’s returns for each of the relevant years. The Taxpayer did not file or pay gross receipts tax in any of the relevant years because he did not believe he was engaged in business, and he thought all his income was earned within the scope of his employment with APS. The Taxpayer did report and pay income tax on all of the 1099-MISC income listed on his federal Schedule C each year, and the Department issued the assessments as a result of detecting the mismatch between the federal Schedule C income reported and the lack of CRS reporting. The Department abated the assessed penalty prior to the hearing on this issue. The Hearing Officer found that, under Regulation 184.108.40.206 NMAC, the Taxpayer established that he was acting as an employee of APS in his monitoring of the gym facilities. In regard to the receipts from the once a year overseas trip, the Taxpayer was not engaged in business and his receipts are exempt under Section 7-9-28 NMSA 1978, as isolated and occasional. The Taxpayer’s protest was granted.
Larry J. Gonzales