Torrance County Counseling, LLC

14-46

On March 31, 2014, the Department issued two assessments to the Taxpayer for gross receipts tax and interest, for the tax periods from January 31, 2008 through July 31, 2010, and from June 30, 2008, through June 30, 2013.  On June 9, 2014, the Taxpayer filed a protest to the assessments.  The Taxpayer filed gross receipts taxes for the 2005 and 2006 tax years, but later learned of deductions to which it was entitled. On February 23, 2007, the Taxpayer filed for refunds on the 2005 and 2006 tax years based on those deductions.  The Taxpayer included payments made by Medicaid in its deductions at that time.  On July 27, 2007, the Department sent a letter to the Taxpayer advising it that a recent change in law would affect the Taxpayer.  The letter was regarding a double penalty option that had been repealed.  The Taxpayer’s request for refund was granted, and the Department issued a Notice of Refund and a check to the Taxpayer on September 14, 2007.  The Taxpayer filed its gross receipts taxes for the following years, 2008 through 2013, claiming the same deductions indicated in the request for refund, and their deductions included payments made by Medicaid.  At the hearing, the Taxpayer conceded that Medicaid payments were not eligible for the deduction and should have been included in taxable gross receipts.  The Taxpayer argued that the letter on double penalty, along with the refund granted in 2007, amounted to a ruling, and the Department should be estopped from collecting against the Taxpayer.  A ruling must meet certain criteria, including being a written statement interpreting specific statutes, reviewed by legal counsel, and signed by the secretary and counsel.  The letter and granted refund do not meet the criteria to be considered a ruling, nor do they meet the requirements for estoppel.   The Taxpayer’s protest was denied.