Economics of Dignity, LLC

11-14

The Taxpayer is a single-member limited liability company, organized in New Mexico, whose purpose is starting new companies.   The Taxpayer created a second limited liability company, World Wide Art Sellers, LLC (WWAS), whose membership included the Taxpayer and one other member. WWAS Taxpayer a 1099 for non-employee compensation for consulting services.  The Taxpayer filed and paid gross receipts tax on this income for tax years 2005 through 2008 and then completed an application for refund for the same taxes. In July 2009, the Taxpayer’s accountant filed a formal protest based on the Department’s inaction requesting that the refund be granted.  The Department determined the gross receipts tax was properly due and paid. The Taxpayer’s single member acknowledged that services were being provided to WWAS, but argued that because he was the single member of Taxpayer and Taxpayer was also a member of WWAS, he was being taxed for providing services to himself.  The Taxpayer also argued that the payments were capital distributions rather than gross receipts and that he received faulty information from the Department. The Taxpayer did not provide sufficient evidence to prove that it was entitled to a refund.  The Taxpayer’s protest was denied.