Russell Burris & Janice Silva

14-47

On June 4, 2014, the Department assessed the Taxpayers for gross receipts tax, penalty and interest for the reporting periods ending on December 31, 2007, 2010, and 2011.   The Taxpayers jointly filed personal income taxes for the years in question, but the receipts at issue are directly attributable to Mr. Burris’ income.  The Taxpayers protested the assessments, arguing that Mr. Burris did not have a CRS number, was not in business, and had already paid personal income taxes for commissions he received.  The assessments arose from a limited scope audit that the Department conducted after detecting that the Taxpayers had reported Schedule C income on their federal income tax returns, but had not reported or paid gross receipts tax in 2007, 2010, and 2011.  In these years, the Taxpayer received bonus commission checks from a corporation for referring customers who purchased juice from them.  The Taxpayer did not consider himself a salesperson for this company, but he did receive commissions from them, which were taxable.  The Taxpayer also played the fiddle at weddings, funerals, and other occasions approximately 20 times a year in 2010 and 2011, and was paid for these performances.  In 2010 and 2011, the Taxpayer also used his tractor for leveling, grading, and earthmoving services approximately 6 times per year.  The Taxpayers argued that these services were isolated or occasional, as exempted from gross receipts tax under Section 7-9-28 NMSA 1978.  However, the Taxpayer’s services were performed relatively consistently, and did not meet the criteria set forth in the statute.  The Hearing Officer found that the Taxpayer was engaging in business during the years in question, and his receipts were subject to the gross receipts tax assessed, as well as the interest.  The Taxpayers were able to establish that they relied on CPAs regarding the treatment and reporting of the Schedule C income during the relevant years, so the penalty was ordered to be abated.  The Taxpayer’s protest was granted in part and denied in part.