On December 9, 2016, the Department assessed the Taxpayer for gross receipts tax, penalty, and interest for the tax period starting January 1, 2013 through December 31, 2014. On February 8, 2017, Taxpayer filed a formal protest letter with the Department. The Taxpayers business provides construction services. The Taxpayer relies on a bookkeeper for all tax responsibilities. The bookkeeper is only consulted as-needed and is not employed by the Taxpayer. The Taxpayers standard process has been to charge gross receipts tax on all construction services. However, on one occasion the Taxpayer did not charge gross receipts tax to a non-profit organization. The protest is a result of those transactions. The Taxpayer argued that an NTTC was provided by the organization and the organization informed the Taxpayer that because they are a non-profit they do not pay tax. The Taxpayer confirmed there was no consultation with a tax professional regarding the transactions that took place with the non-profits. Based on the Taxpayers current understanding of NTTCs, it has been requested the non-profits pay gross receipts tax that would have been due, to which they refuse. The Taxpayer argues that it should be entitled to the benefit of good-faith because it accepted the NTTC’s originally in good-faith. During the hearing, it was decided that the Taxpayer accepted the clients information without further inquiry, investigation, or due diligence to check if the information provided by the client was correct. The Hearing Officer also noted that the actual NTTC provided notice that it is not to be utilized for construction services. The Hearing Officer determined that the Taxpayer did not overcome the presumption of correctness and that the receipts from performing construction projects for a non-profit organization are fully taxable. Therefore, as no deduction or certificate covered the transaction at issue, the Taxpayer did not establish good-faith acceptance of the NTTCs and is not entitled to safe harbor protection under Section 7-9-43 (A) NMSA 1978. For the reasons listed above, the Taxpayer’s protest is denied.
Highland Construction LLC