Carlos Chavez dba Mayan Construction

12-09

The Taxpayer operated a concrete service construction company as a sole proprietorship in New Mexico from May 1996 through December 2005, deactivating the CRS number.  He then incorporated the business and obtained a new CRS number for that corporation.  In 2002, the Taxpayer submitted CRS reports, but did not claim the receipts from his services as part of his gross receipts.  The Department conducted a limited scope gross receipts audit due to a tape-match discrepancy between Taxpayer’s 2002 IRS Schedule C and his 2002 CRS filings.  The notice advised the Taxpayer that he must be in possession of all 2002 nontaxable transaction certificates (NTTCs) required to support his deductions within 60 days from the date of the letter.  The Taxpayer requested, and was granted, three extensions of time in which to supply all of the required records to the Department.  Taxpayer received incorrect information from his CPA’s. The Taxpayer did not obtain the necessary NTTCs to support his deductions in the time allowed, so the Department assessed him for gross receipts tax, penalty and interest.  The Taxpayer performed services in New Mexico that were taxable if Taxpayer could not establish possession of a properly executed NTTC. The Taxpayer did not have the NTTCs to support his deductions, so the gross receipts tax and interest were properly assessed.  However, because the Taxpayer showed that he relied on the advice of his CPA’s, he was not negligent, so penalty was ordered to be abated.  The Taxpayer’s protest was granted in part and denied in part.