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Russell and Anne Farrell



On June 23, 2009, the Department assessed the Taxpayers for gross receipts tax, penalty, and interest for reporting periods for the 2006 and 2005 tax year. The Taxpayers filed a formal protest on July 16, 2009 and the Department acknowledged that protest on July 21, 2009. From 2009 until 2016, no action was taken on the protest by the Department or by the Taxpayer. The taxpayers presumed that the matter of the protest had been concluded and the collection activity was no longer valid due to the statute of limitations. On January 23, 2017, the Department requested a hearing in the matter based on the Taxpayer’s protest. On January 23, 2017, the Administrative Hearing Office issued a notice of the hearing based on the Taxpayer’s protest. During the time at issue, the Taxpayer was a manager for a company and was getting paid based on commission from the sale of tickets for individual travel and freight transportation, vending machine sales, and other sources. The Taxpayer was not considered an employee of the company and was not getting paid wages during the time at issue. The company was a bus transportation entity engaged in the business of interstate and intrastate transportation of passengers and freight. The Taxpayer testified that he was not aware of any obligation to report and pay gross receipts tax for the commission based compensation from the company. All of the Taxpayers income from 2005 and 2006 were reported by the company on Form 1099. The Taxpayer testified that all documents were disregarded after he believed the retention was no longer necessary. At the time of the hearing, the Taxpayer had no records to show the different types of commission income that was earned for the time at issue and was unsuccessful in the attempts to get the information from a third party. The issues to be decided in the hearing were: is the Taxpayer entitled to relief due to a statute of limitations, is the Taxpayer entitled to relief due to the delay in time between the filing of the protest and the hearing, is the taxpayer entitled to any deduction or exemption, and is there are any grounds to abate penalty and/or interest. The Hearing Officer determined that the Department acted within the statute of limitations for collection of the tax due based on the assessment issued in June of 2009. Per Section 7-1-19 NMSA 1978, the Department is allowed to collect taxes 10 years from the date of an assessment or notice. Although, there was a delay in the hearing that the Hearing Officer deemed concerning, there was no evidence showing that the Taxpayers suffered any type of prejudice throughout the protest process. The Hearing Officer reviewed the information by the Taxpayers for multiple possible deductions. However, some of the deductions did not apply as the Taxpayer was not performing the service in which the deduction was available for and the Taxpayer lacked records to clearly support the claim of a deduction or exemption. In concerns to interest, the Hearing officer determined that the assessment of interest is mandatory based on statute and the Department is without the legal authority to abate it. When it comes to penalty, the Hearing officer could not find any evidence in the case to allow for an abatement of penalty based on statute qualifications. For the reasons above, the Taxpayer’s protest is denied.