Dell Catalog Sales, L.P

06-11

Dell Catalog Sales L.P. (“DCSLP”), a Texas limited partnership with no offices, stores, employees or sales agents in New Mexico, sells computers and related products to New Mexico consumers via mail and the internet.  Following an audit, the Department assessed DCSLP for gross receipts tax on its sales of computers to New Mexico customers and compensating tax on its distribution of catalogs within New Mexico during the audit period.  DCSLP protested the assessment, arguing:  (1) it did not have sufficient nexus with New Mexico to subject it to the state’s taxing jurisdiction; (2) its sales of computers took place outside New Mexico and were not subject to gross receipts tax; and (3) its distribution of catalogs to potential customers in New Mexico was not a taxable “use” of those catalogs.  The Hearing Officer ruled for the Department, finding:  (1) the in-state activities of BancTec, USA, an unrelated company that contracted with DCSLP to perform on-site repair services for DCSLP customers who purchased service contracts from DCSLP, was sufficient to establish DCSLP’s nexus with New Mexico under the United States Supreme Court’s rulings in Scripto and Tyler Pipe; (2) DCSLP’s sales of computers to New Mexico customers were consummated upon transfer of possession of the goods to the customer in New Mexico and were subject to New Mexico’s gross receipts tax; and (3) the distribution of catalogs within the state was a taxable use subject to New Mexico’s compensating tax.  Protest denied.