RAC Transport Co. Inc.

14-02

The Taxpayer is a freight shipping company who operates in New Mexico.  The Taxpayer was selected for Weight Distance Tax audit for 2009, 2010 and 2011.  There is no dispute that the Taxpayer reported all traveled mileage during the audit period.  The audit focuses on whether the Taxpayer categorized mileage traveled by appropriate weight class and whether the Taxpayer qualified for the one-way haul rate.  The Taxpayer originally registered in New Mexico as a one-way hauler, but its business grew and evolved and the Taxpayer acknowledged that it was no longer able to prove that 45% of its miles were traveled empty of all load.  As a result, the Department concluded that the Taxpayer underreported its tax liability by more than 25%, so the audit was expanded to include 2006, 2007, and 2008.  While the Taxpayer provided complete records for 2009, 2010, and 2011, the Taxpayer did not produce sufficient records in 2006, 2007, and 2008. Using the complete records from 2009, 2010, and 2011 as a foundation, the Department used an alternative and reasonably reliable sampling method to determine the tax liability for 2006, 2007, and 2008.  Upon conclusion of the audit, the Department assessed the Taxpayer for Weight distance tax, penalty and interest.  The Taxpayer filed a protest to the assessment.  The Taxpayer was unable to provide any records to dispute the findings of the Department.  The Taxpayer’s commerce clause arguments were not persuasive. There was no basis to abate weight distance tax penalty, civil negligence penalty, or interest. The Taxpayer’s protest was denied.