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Magnum Builders of New Mexico, Inc.



On November 7, 2008, the Department issued an assessment to the Taxpayer for gross receipts tax, gross receipts tax penalty, gross receipts tax interest, compensating tax, compensating tax penalty, and compensating tax interest for the CRS reporting periods between January 31, 2002 and June 30, 2007.  On December 4, 2008, the Taxpayer protested the assessment.  After pre-hearing and post-hearing abatements, and payment by the Taxpayer, the only issue remaining at protest is the penalty.  The Taxpayer is a construction company, who hired Padilla and Company, to prepare its CRS returns.  Padilla and Company would advise the Taxpayer of the need to obtain nontaxable transaction certificates (NTTCs) for its customers, but the Taxpayer did not consider this a priority.  In 2007, the Taxpayer was selected for audit for the CRS reporting periods between January 1, 2002 and June 30, 2007.  The Taxpayer completed a Taxpayer Information Authorization naming Padilla and Company as his representative for all state taxes at issue in the audit.  On October 18, 2007, a Department auditor met with the Taxpayer’s designated representatives and hand-delivered to them a letter providing the Taxpayer notice that any required NTTCs be in the Taxpayer’s possession within 60-days, by December 17, 2007, or any claimed deductions requiring an NTTC would be disallowed.  Padilla and Company attempted to assist the Taxpayer in securing the missing NTTCs, and advised that obtaining the missing NTTCs was a necessity.  The Taxpayer did not present the NTTCs by the December 17, 2007 deadline.  Padilla and Company obtained two extensions to provide records for the audit, and erroneously believed that the extensions included an extension for the NTTCs.  The Taxpayer ultimately presented eight untimely NTTCs.  The Department disallowed any claimed deductions related to these NTTCs and issued the assessment based on the audit findings.  The Taxpayer argued that the penalty at issue in the protest should be abated because of Padilla and Company’s belief that the extension included the NTTCs.  Section 7-9-43 NMSA 1978 requires that taxpayers must be in possession of the required NTTCs within 60 days of the Department’s notice, or the deductions must be disallowed.  The statutory language does not allow for any extensions of this time.  The Taxpayer’s protest was denied.