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  3. Quality Exteriors, Inc.

Quality Exteriors, Inc.



The Taxpayer is a construction business based in Texas. In March 1998, after a standard field audit, the Department assessed the Taxpayer for gross receipts tax, penalty and interest on receipts from performing construction services in New Mexico. The Taxpayer paid the audit assessment following the conclusion of the audit. In March 1999, a former employee of the Taxpayer provided additional information to the Department, which showed certain information had been withheld during the initial audit. A number of discrepancies were uncovered which indicated that there was a balance of unreported receipts in the range of $1 million. A second audit commenced resulting in an assessment, which included additional gross receipts tax, penalty and interest. The penalty portion of the assessment was assessed as a 50% civil penalty for failure to pay tax based on a willful intent to evade or defeat payment of tax [Section 7-1-69(C)]. The Taxpayer filed a protest on the assessment of the 50% percent civil penalty. Held: The Taxpayer’s failure to pay the gross receipts tax was based on a willful intent to evade or defeat the payment of tax, and the Taxpayer is subject to the 50% penalty. Protest denied.