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Frank’s Electric LLC



On July 8 and 15, and on August 5, 2015, the Department issued several assessments to the Taxpayer for gross receipts tax, withholding tax, penalty and interest for CRS reporting periods ending on May 31, 2012 through the period ending on January 31, 2015.  On July 20, 2015, the Taxpayer protested the Department’s assessments, arguing that it should not be liable for the assessed penalty because it had detected and reported its errors to the Department.  The Taxpayer agrees that it owes the assessed tax principal, so the issue at protest is whether the assessments of penalty should be abated.  The Taxpayer is engaged in the electrical business in New Mexico and had previously been subject to Department audit and assessment.  As a result, the Taxpayer engaged the services of numerous bookkeepers and accountants, and filed and paid CRS taxes in accord with the protocols developed by these bookkeepers and accountants.  On or about April 2015, the Taxpayer hired a bookkeeper who detected that the system the Taxpayer developed resulted in underreporting during the relevant time and reported this to the owner.  The Taxpayer’s owner directed the bookkeeper to correct the problem, including amending previously filed returns, to remain compliant.  After receiving the amended returns, the Department issued the assessments to the Taxpayer.  As a result of the protest, the Department made a series of adjustments and credits to certain periods on the Taxpayer’s account, which resulted in abatement of penalty for a few of the reporting periods.  The Taxpayer argued that it was non-negligent under Regulation NMAC, because the under reporting was a result of the errors in the Taxpayer’s accounting system.  The Hearing Officer found that none of the indicators of non-negligence listed in the regulation were present.  The Taxpayer’s protest was denied.