Southern Oasis, Inc.

13-6

The Taxpayer is an S corporation who provides consulting and management services for the solid waste industry, primarily to government entities.  The Taxpayer provided timely Type 5 NTTCs to the Department, which the Taxpayer had accepted in good faith for the purchase of its services for resale.  The Department assessed the Taxpayer for gross receipts tax, penalty and interest because it claimed that the services sold were not similar or identical to the services resold.  The issue to be decided was whether the Taxpayer’s sales were eligible for the deduction of a sale of services for resale pursuant to NMSA 1978, Section 7-9-48.  Taxpayer’s services were resold and the governmental gross receipts tax was imposed on the second transaction.  Taxpayer and the Department differed in their interpretation of when the deduction applied.   The hearing officer found that the sale of services by the Taxpayer qualified to be deducted because they were sold in the ordinary course of business and a governmental gross receipts tax was imposed by the buyer on the second transaction.  Without Taxpayer’s services the buyer would not have been able to operate or to resell its services.  The amounts assessed on those deductible receipts were to be abated, but the amounts assessed for other receipts that did not have a tax imposed on the resell were due and owing.  The Taxpayer’s protest was granted in part and denied in part.