US Field Service Inc.

16-56

On June 16, 2010, the Department assessed the Taxpayer for gross receipts tax and interest for the CRS reporting periods from December 31, 2004 through December 31, 2006.  On August 6, 2010, the Taxpayer filed a protest to the assessment.  During the period at issue, the Taxpayer was engaged in business doing construction, maintenance and equipment rental.  The Taxpayer was hired to do work in New Mexico by a wind power company, who was a subcontractor to the project manager.  The Taxpayer provided a crane and a crane operator to the wind power company and assisted in the construction of several windmills.  The Taxpayer invoiced the wind power company for the services it provided and included gross receipts tax on its invoice.  The wind power company executed a nontaxable transaction certificate (NTTC), a Type used for construction, to the Taxpayer.  The Taxpayer accepted payment from the project manager on behalf of the wind power company and, due to relying to the NTTC, did not collect gross receipts tax.  The Taxpayer filed its gross receipts tax return, and deducted the receipts related to this situation because of the NTTC.  Several years later, the Department issued a notice of audit to the Taxpayer and issued a letter informing the Taxpayer that it had 60 days to obtain any NTTCs to support its deductions.   The Taxpayer responded to the audit and provided documentation, including the NTTC, invoice and payment information.  The Taxpayer paid the assessed tax, but does not believe it was owed.  The Taxpayer only protested the assessed interest.  The Taxpayer argued that it should not have to pay interest because it relied on the NTTC in good faith.  The Department argued that the reliance on the NTTC was not reasonable because it was not the correct type to use for leasing, and that the Taxpayer conceded the tax was owed by paying it and therefore interest is due as well.  The Department also argued that the NTTC could not be used to deduct receipts from the wind power company because the project manager made the payment.  The hearing officer found that the Taxpayer reasonably relied on the NTTC and accepted it in good faith.  The interest was ordered to be abated.  The Taxpayer’s protest was granted.