In 1997, the Department notified the Taxpayer of discrepancies between business income reported on his 1994 federal income tax return and amounts reported to the Department for gross receipts tax purposes. Taxpayer was unable to explain the discrepancy and was assessed gross receipts tax, interest and penalty for 1994. Taxpayer protested the assessment and maintained his accountant incorrectly included employee expense reimbursements as business income on his Schedule C. However, the Taxpayer failed to take any action to correct his federal income tax return. Held: Taxpayer failed to meet his burden of proving that the business income reported on Schedule C was incorrect and may not take an inconsistent position concerning that income for purposes of calculating New Mexico gross receipts tax. Protest denied.
Chiles Consulting Company