On December 9, 2015, the Department assessed the Taxpayer for gross receipts tax, penalty and interest for the CRS reporting periods between January 1, 2009 and December 31, 2011. On January 12, 2016, the Taxpayer prepared a letter of protest, which the Department received on January 14, 2016. The Taxpayer is a sole proprietor who performs music and sells his music on compact discs. The Taxpayer is registered with the Department, has a business license with the City of Santa Fe, and has a business website and business cards. The Taxpayer occasionally performed paid gigs, and performed as a street musician on the Santa Fe Plaza three times a week for two hours at a time. While performing there, the Taxpayer sold compact discs and collection money in a tip jar from passersby. The Taxpayer maintained a ledger where he would note his compact disc sales separately from the money in his tip jar. The Taxpayer reported and paid gross receipts tax on the sales of compact discs, but not on the money received in his tip jar because he believed tips were not subject to gross receipts tax from his previous experience as a waiter. The Taxpayer did report the money received in his tip jar on his federal income tax returns. Through its Schedule C tape match program with the IRS, the Department detected that the Taxpayer reported business income on his Schedule C that did not match his filed CRS returns. Regulation 18.104.22.168 (R) states that a gratuity offered to service personnel to acknowledge a service given is not gross receipts. The tips received by the Taxpayer were voluntary amounts placed in the tip jar by satisfied members of the public, not because of any charge imposed by the Taxpayer, and meet the definition of a gratuity. The Taxpayer’s protest was granted.