Sunrooms Plus, Inc.



The Taxpayer was a corporation doing business in New Mexico from 1989 until sometime in 2004.  In February 2004, the Department began an audit of the Taxpayer using the bank deposit method of auditing.  The audit period was from January 31, 2001 through December 31, 2003.  The Taxpayer was required to produce certain documents by the audit start date, but the necessary documents were not produced.  In November 2004, the Department subpoenaed the Taxpayer’s records and books.  On December 13, 2004, the audit concluded and the Taxpayer was assessed for gross receipts tax, plus penalty and interest, and withholding tax.  The Taxpayer argued that many of deposits that were identified as gross receipts in the audit were not gross receipts but were loan proceeds, cobra reimbursements, and nonsufficient checks that were returned by the bank to Taxpayer.  The Taxpayer provided evidence to show that a portion of the amount was reimbursement from a former employee for cobra payments, but was unable to provide evidence on any of the rest.  Taxpayer failed to produce sufficient documentation that the amounts it was claiming was either not gross receipts or deductible.  The hearing officer ordered that the amount the Taxpayer showed was from cobra payments and not gross receipts was to be abated, but the rest of the assessment was correct.  The Taxpayer’s protest was granted in part and denied in part.