This case was first heard as D&O 19-30 and at that time the protest was denied. The decision was appealed to the Court of Appeals which determined that the Taxpayer had overcome the presumption of correctness and returned the case to the Administrative Hearing Office in order to have it consider whether the Department had provided enough evidence to counter the evidence provided by the Taxpayer. All parties agree that an additional hearing should take place to look at further evidence. The Taxpayer is an assisted living community that provides apartments and services for its tenants. Though the Department agreed that the receipts from the lease of real property are deductible, much of the amount that made up the receipts was from providing services which was not deductible. Taxpayers may apportion their receipts using some reasonable basis when consistently applied and the protest hinged on whether the method used by the Taxpayer to determine the deductible receipts was a more reasonable method than the one used by the Department. The evidence presented by the Taxpayer, however, still showed a lack of records to support their method and errors in the evidence undermined the reliability of the methodology. The Department method was reliant on the Taxpayer’s own federal reporting, which appeared very reliable. Since the Taxpayer was not able to provide sufficient evidence that the method used was more accurate than the one used by the Department, the Hearing Officer denied the protest.
Gemini Las Colinas LLC
The Department assessed the Taxpayer gross receipts tax for periods from 2015 through 2020. The Taxpayer contended the gross receipts associated with the protest were for administrative and risk-management services provided to independent contractors that were performing work with extraction companies albeit in New Mexico. Under Section 7-9-13.1, NMSA 1978 (1989, substantially amended 2020), Taxpayer’s receipts must be from selling services performed outside New Mexico and the product of the service must be initially used in New Mexico. The Hearing Officer held that “the service” Taxpayer was selling — administrative and risk-management services —were performed out-of-state and should not be imputed to the work performed by the independent contractors in New Mexico. The protest was granted.