On November 28, 2016, the Department assessed the Taxpayer as a successor in business to West Rock, Inc for an amount of $127,764.92 in tax and $143,594.85 in interest. On December 8, 2016, the Taxpayer filed a formal protest letter. The main issue in the protest was whether the Taxpayer was a successor in business to West Rock, Inc, a company that repossesses cars, and therefore is responsible for the tax. Mr. Daniel Brown, the owner of High Dessert Recovery, LLC, was also the owner and operator of West Rock. The company had gone out of business when its sales dropped off and was no longer able to meet its liabilities. The Department contended that the Taxpayer was a successor in business because it was operated by the same person, involved in the same type of business, had taken ownership of one of its assets, and was using one of its same employees. It also shared many of the same customers and for a time used the same address. The Taxpayer argued that it should not be considered a successor since it did not purchase the company and did not share all the same shareholders. The Hearing Officer, however, agreed with the Department, determining that several factors followed by the Department provided in Regulation 184.108.40.206 NMAC had been met, any one of which would have defined the company as a successor in business. Section 7-1-61 (B) states that “tangible and intangible property used in any business remains subject to liability for payment of the tax due,” even if the business is transferred to a new owner. However, West Rock’s assets were not liquidated and were simply put in storage and, according to Mr. Brown, were not worth but a few thousand dollars. In its final tax return, however, West Rock listed its tangible property alone as valued at more than $300,000. The Hearing Officer concluded, that Mr. Brown was simply avoiding the tax liability of the previous business and attempting to keep possession of its assets for later use in his current business. This having been decided, the Hearing Officer ordered the assessment to be paid by the Taxpayer and the protest was denied.
High Desert Recovery, LLC