On February 3, 2011, the Department assessed the Taxpayer for gross receipts tax, penalty, and interest for the tax periods starting January 31, 2004 through December 31, 2009. On February 24, 2011, the Taxpayer filed a timely formal protest with the Department. The assessment was a result of an audit that was conducted for the period at issue. The Taxpayer argues that there are deductions and exemptions they are allowed to claim that were not allowed during the Departments audit. The Hearing Officer indicated that the Taxpayer was not eligible for specific deductions under Section 7-9-54, NMSA 1978, as the deduction is only eligible for the sale of tangible personal property and it specifically excludes services. The Hearing Officer recognized that the Taxpayer may have been eligible to claim a deduction under Section 7-9-57, NMSA 1978, but points out that the deduction specifically references that a nontaxable transaction certificate (NTTC) or other evidence acceptable to the Department must be provided. The Department did not disagree that the Taxpayer may be eligible to claim the deduction but it does not believe that the evidence provided met the necessary requirements to establish entitlement to the deduction. It was not disputed by the Taxpayer that it did not have the NTTC’s for the transactions in question. The Hearing Officer also pointed out that even if the NTTC’s were submitted there was no evidence provided to establish that the buyer of the service did not make initial use or take delivery of the product of the service in New Mexico. The Hearing Officer determined that in regards to Section 7-9-57, NMSA 1978, the Taxpayer failed to establish entitlement to this deduction. However, the Taxpayer was able to provide evidence to establish that a specific amount of sales were exempt from gross receipts. The Hearing Officer determined that the Taxpayer provided enough evidence to establish that the amount specified was not gross receipts and that the amount of gross receipts tax associated to that amount should be abated. The Taxpayer is liable for the remaining gross receipts tax, penalty, and interest. For the foregoing reasons, the Taxpayer’s protest is denied in part and granted in part.