Commodore Advanced Sciences, Inc

02-11

The Taxpayer is engaged in business in New Mexico and is registered with the Department for payment of gross receipts, compensating and withholding taxes (“CRS taxes”). The Taxpayer was one month and three days late paying CRS taxes due for the September 2000 reporting period. In November 2000, the Department assessed the Taxpayer for one month’s penalty and interest.  By the time the Taxpayer paid the outstanding tax principal, a second month’s penalty and interest had accrued.  In December 2000, the Taxpayer mistakenly sent a check for the initial assessment to the New Mexico Department of Labor. The error was not corrected until February 2001, when the Taxpayer mailed a new check to the Department to cover the initial assessment of penalty and interest, plus the additional amounts that had accrued after the Taxpayer received the Department’s original notice.  In June 2001, the Taxpayer filed a claim for refund of the penalty and interest it had paid.  The claim for refund was denied and the Taxpayer protested, arguing first, that it should not be penalized for its inadvertent error in mailing the first check to the wrong state agency, and second, that the Department should make allowances based on the Taxpayer’s past reporting history. Held: The accrual of penalty and interest stopped when the tax principal was paid and the Taxpayer’s subsequent mistake in mailing its check to the Department of Labor did not result in any additional liability. The Taxpayer was late in paying CRS taxes due to the state, and the Department had no discretion to waive imposition of penalty and interest pursuant to Sections 7-1-67 and 7-1-69 NMSA 1978.  Protest denied.