Marcelino Sanchez



In 1996, the Taxpayer worked as an independent contractor performing auto repair services. The Taxpayer was not aware that New Mexico gross receipts tax applied to his receipts from working as an independent contractor.  Therefore, the Taxpayer did not charge gross receipts tax on his services, and did not report or pay gross receipts tax to the Department. In December 1999, following a limited scope audit, the Department assessed the Taxpayer for gross receipts tax, penalty and interest. The Taxpayer protested the assessment, arguing that his services did not qualify as a business subject to gross receipts tax and that penalty and interest should be reduced because he was not aware of his liability for gross receipts tax. Held: The Taxpayer was engaging in business in New Mexico as defined in Section 7-9-3(E) NMSA 1978, and is subject to gross receipts tax on his receipts from performing services as a independent contractor. Pursuant to Section 7-1-67 NMSA 1978, interest was properly assessed on his unreported gross receipts tax, and pursuant to Section 7-1-69 NMSA 1978, the Taxpayer was negligent in failing to report gross receipts tax.  Protest denied.