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  3. Paragon Acquisitions Inc.

Paragon Acquisitions Inc.



The Taxpayer was engaged in business in New Mexico for the tax periods from January 2004 through October 2009.  The Taxpayer filed gross receipts tax returns for the tax periods, but either reported and deducted the entire amount, or filed zero gross receipts.  Both methods of reporting resulted in claims of zero gross receipts tax liability for this entire period of time.  The Department determined that the Taxpayer has understated its gross receipts tax liability by more than 25% for the applicable tax periods and assessed the Taxpayer for gross receipts tax and interest for the period in question.  No penalty was assessed.  The Taxpayer filed a written protest to the assessment.  The Taxpayer was not present for the hearing.  In its protest, the Taxpayer did not dispute that it was providing services and that receipts from the services were taxable.  Additionally, Section 7-1-67 NMSA 1978 states that interest “shall be paid” on taxes not paid on or before their due date.  Interest is mandatory and was properly added in this situation.  The Taxpayer stated that it had contacted Department employees in 2004 and determined that its receipts were not taxable.  In 2004, the Taxpayer filed an application for refund for the December 2003 and January 2004 tax periods.  The Taxpayer filed amended returns showing its receipts as deductible and was issued a refund.  The Taxpayer argued that this refund constituted a ruling by the Department, and that it had relied upon this when filing for later periods.  However, rulings must be written statements of the Department secretary that interpret the statutes to which they relate.  Neither a refund notice, or the letter accompanying the refund, constitute a ruling.  The Taxpayer’s protest was denied.