On October 24, 2016, the Department sent a denial letter to the Taxpayer for an untimely submission of a protest letter postmarked September 14, 2016. On November 3, 2016 the Department received a timely protest of the Department’s denial to the submission of the untimely protest letter, which was acknowledged on November 9, 2016. The Taxpayer received a notice of limited scope audit commencement dated January 1, 2016, and a reminder notice for the limited scope audit dated February 10, 2016, for the filing periods January 1, 2009 through July 10, 2016. During that time period the Taxpayer provided construction services to the film industry in New Mexico. Before the notice from the Department was received, the Taxpayer made undocumented communication with the Officer of the Governor and the State Auditor in which the Taxpayer determined from the conversations that tax was not owed. The Taxpayer also made undocumented communication with the Department by email and telephone in reference to the limited scope audit per the Taxpayer’s wife and the Taxpayer’s CPA. As no correspondence was received by the Department in reference to the limited scope audit, an assessment letter was sent on April 11, 2016 for outstanding gross receipts tax, penalty, and interest for periods January 1, 2009 through December 31, 2012. During the hearing, the Taxpayer’s wife indicated that a protest was not sent to the Department in regards to the assessment letter, the amount was not paid, and documentation was not submitted to the Department to support that the assessment was in error. The Taxpayer received a statement of account dated June 28, 2016 at that time the Taxpayer contacted a CPA for assistance in the matter. The CPA indicated that correspondence was submitted to Audit and Compliance Division but not the Department’s protest office on July 21, 2016. The Taxpayer characterized the correspondence as an “official protest” during the hearing the CPA admitted that the intent of the correspondence was to work out the issue with the Department before having to go to protest. There was not any evidence that the letter was submitted to the Department’s protest office. During the hearing, it was established that no other attempts at a formal written protest were sent to the Department before July 21, 2016 which is after the protest period expired. Per Section 7-1-24(C) NMSA 1978, a protest should be filed within ninety days of the date the letter was mailed or delivery in person to the Taxpayer by the Department. In order to challenge this assessment the Taxpayer would have needed to file the protest with the Department by Sunday, July 10, 2016. As the date falls on a weekend it is extended to a business day which was Monday, July 11, 2016. The CPA noted that after July 21, 2016 date numerous pieces of correspondence were submitted to the Department. One of those pieces of correspondence postmarked September 14, 2016 was received by the protest office and at that time a denial letter was sent based on the timeliness of the protest by the protest office at the Department. The Taxpayer argued that he acted in good faith and attempted to address the communication about the limited scope audit and the assessments. The Taxpayer also admitted that the address being used by the Department on the assessment, notice, and reminder letters is correct. The hearing officer determined from the information presented that the Taxpayer did not act on his right to protest until it had expired. Due to the Taxpayer not submitting in a written formal protest until after the 90-day period for protest, the Department lacked jurisdiction to entertain the protest. The hearing officer determined that for the reasons above the Taxpayer’s protest of the denial of untimely protest letter is denied.
Ronald O. Jaynes