17-02 Diamond T US Mail Services Inc.

17-02

On December 28, 2015, the Department denied the Taxpayer’s claim for refund for the CRS reporting period ending July 31, 2015. On January 8, 2016, the Department received the Taxpayer’s protest of the Departments denial of claim for refund. The taxpayer is a mail courier under a Highway Contract Route, with the United States Postal Service transporting mail from and to Lubbock, Texas. The refund denial was based on the Taxpayer being a star route contractor and the lack of sufficient documentation to support the deductions being claimed. The grounds of the protest sent in by the CPA indicated that the Taxpayer was not a “star route” contractor with the United States Postal Service and that the Taxpayer had incorrectly reported receipts earned in interstate commerce. The Taxpayer argued that the refund is due under Section 7-9-55 and Section 7-9-56 NMSA 1978. The CPA response to the denial is that the term “star route” contractor is obsolete and for that reason the claim for refund should not have been denied. Based on one of the Exhibits provided in the hearing by the Taxpayer, a publication from the United States Postal Service suggests that the term “star route” has been replaced by “HCR” or “Highway Contract Route”.  The hearing officer interprets the parenthetical as signifying that the term “star route” has been supplanted by “HCR” or “Highway Contract Route”, but that the underlying definition are functionally equivalent. For this reason it was determined that the activity falls squarely within the scope of Regulation 3.2.213.10 NMAC The Department established that the relevant documentation needed in order to consider the claim for refund are addressed in Regulation 3.2.213.10 NMAC. The Department asked for documents or logs to help assist in apportioning taxes between services provided in New Mexico and those provided in interstate commerce but the documents requested were never received. The Taxpayer argued that the refund is due under Sections 7-9-55 and Section 7-9-56 NMSA 1978. The Department’s position is that the deductions can be claimed if the necessary documents establishing the right to the deduction are provided.  The evidence provided to the Department was insufficient to clearly establish the right to the deduction upon which the claim for refund relies. The Taxpayer did not establish entitlement to any refund with the evidence presented at the hearing for this reason the Taxpayer’s protest is denied.