The GEO Group Inc.
On December 27, 2016, the Department issued the Taxpayer a notice of assessment of tax for periods ending January 31, 2010 through September 30, 2015. On March 22, 2017, the Taxpayer filed a timely protest with the Department. The Taxpayer received a refund for similar gross receipts in question in 2008. Once the refund was issued by the Department the Taxpayer stopped remitting gross receipts tax on receipts from Guadalupe County and Lea County. On October 20, 2015, the Department selected the Taxpayer for an audit for gross receipts tax, compensating, withholding, income taxes and worker’s comp fees. During the audit, it was determined that the Taxpayer was providing a service and was not selling a license to Guadalupe and Lea County and that the Taxpayer was not reselling a license as it billed the New Mexico Corrections Department directly instead of billing the Counties. Therefore, the Taxpayer was not entitled to claim the deduction under Section 7-9-47 NMSA 1978. The Taxpayer argued that even if the gross receipts in question did not qualify for the deduction under Section 7-9-47 NMSA 1978, the Taxpayer was entitled to the safe harbor protection of the acceptance of a nontaxable transaction certificate (NTTC) in good faith from their buyer. Furthermore, it was argued that the Department was estopped from assessing the Taxpayer based on the Department’s previous approval of a refund for tax year 2008. Lastly, the Taxpayer argued that if found liable for the assessment civil negligence should be abated as the Taxpayer relied on the advice of the Department employees in not paying the gross receipts tax on its receipts from the operation of the prison facility. The Hearing Officer determined that the gross receipts in question were not eligible for the deduction under Section 7-9-47 NMSA 1978 and that the Taxpayer did not accept the NTTC’s in good faith. For the forgoing reasons, the Taxpayer’s protest was denied in part and granted in part. It was ordered that the Department abate the assessed penalty, but that the Taxpayer was liable for the remaining assessment.