Granding Testing Lab, Inc.

13-22

The Taxpayer provides geotechnical engineering and testing services in New Mexico.  The Department assessed the Taxpayer for gross receipts tax and interest for the tax periods January 31, 2000 through October 31, 2005.  The Taxpayer was also assessed for withholding tax and interest for the same tax period.  The assessed amounts were reduced prior to the hearing due to the statute of limitations.  The Taxpayer argued that the disallowed deductions should have been allowed because he thought he was entitled to a managed audit.  The Taxpayer did not enter into a managed audit agreement with the Department.  Therefore he was liable for the interest and penalties.  Most of the disallowed deductions were disallowed because they were for sales of services to government agencies or 501(c)(3) organizations.  Sales of services to these types of entities are fully taxable.  The Taxpayer did not make any arguments regarding the withholding tax.  The Taxpayer’s protest was denied.