Sandia Oil Company



Taxpayer protested only the imposition of penalty with respect to gross receipts tax and gasoline tax returns which were filed late. The Taxpayer’s bookkeeper and office manager was a long time employee who was responsible for preparing and filing its gross receipts tax and gasoline tax returns in the state of New Mexico and several other states. The bookkeeper had reliably done so for many years. The Taxpayer argued that it was not negligent because it was reasonable to rely upon the bookkeeper to timely prepare and file its tax returns. With respect to the November, 1998 filing period, the Taxpayer failed to present any evidence as to why those returns were not timely filed by the bookkeeper. Because the bookkeeper was an employee of the Taxpayer whose actions are attributable to the Taxpayer, the mere fact that the Taxpayer had delegated its tax filing responsibilities to an employee is insufficient to overcome the presumption of correctness which attached to the assessment of penalty and the protest was denied with respect to the November, 1998 filing period. With respect to the July, 1999 through October, 1999 filing period, the Taxpayer presented evidence that the bookkeeper seemed to be depressed during that period of time and that assistance had been offered with respect to getting the tax filings done.  Assistance had been rejected. The Taxpayer’s management had also observed the bookkeeper working on the tax returns and when the bookkeeper had been asked if the returns had been filed, the bookkeeper affirmatively misled the manager and informed him that the returns had been timely filed. Under these circumstances, where the Taxpayer was affirmatively misled by its employee and the Taxpayer had taken actions, by offering assistance, and by observing the bookkeeper work on the returns, to ensure that they were being filed in a timely manner, the Taxpayer acted with ordinary business care and prudence which a reasonable taxpayer would have exercised under similar circumstances such that the Taxpayer was not negligent with respect to the late filing of the returns for this reasonably short time. Taxpayer’s protest is granted with respect to the returns for July through October, 1999.