Title
Date
Taxpayer and Description
  • 98-01
  • 1998
  • 1/14
  • B.R. Gordon Construction Co., Inc.
  • TP was assessed penalty and interest for a CRS-1 report that was filed late using an ACH transfer. TP claims that the report was late because the person responsible for sending the report was ill on the day the report. TP also claims the department should have notified them that they were no longer required to use a special payment method. Protest denied.
  • 98-02
  • 1998
  • 1/20
  • Timothy and Sandra Read
  • TP performed “handyman” services on a house owned by himself and his wife. TP filed a Schedule C and reported the income from providing handyman services for himself. The department received the Schedule C information through a tape match and assessed the TP for the GRT. The income was not gross receipts. Protested granted.
  • 98-03
  • 1998
  • 1/20
  • Pecos Valley Dairy Supply, Inc.
  • An assessment was sent to the TP’s address of record. TP did not receive the notice because the department was not notified of a change of address. The assessment was not protested in a timely manner. Protest denied at untimely.
  • 98-04
  • 1998
  • 1/26
  • Mark Smith
  • TP argued that his wages were not subject to federal income tax or NM income tax. TP is not entitled to a refund of the taxes withheld from his wages. Protest denied.
  • 98-05
  • 1998
  • 1/26
  • Shawn and Denise Tilman
  • TP claimed that they were not engaged in business and that their receipts are deductible under Section 7-9-66. TP also claimed penalty should not be assessed because there was no intention to defraud the state. Protest denied.
  • 98-06
  • 1998
  • 1/29
  • Sybase, Inc.
  • TP was assessed gross receipts tax, penalty and interest on the receipts from a software licensing agreement for which the TP accepted a Type 9 NTTC. TP claimed that they were not negligent and should not be assessed penalty. Protest denied.
  • 98-07
  • 1998
  • 2/6
  • Que Linda
  • TP claimed to be an employee and that the receipts from performing engraving services were exempt from GRT under Section 7-9-17. TP was found to be an independent contractor not entitled to the exemption. A deduction under Section 7-9-48 was available to the TP, however the TP did not obtain the documentation required. Protest denied.
  • 98-08
  • 1998
  • 2/12
  • Douglas & Brenda Ratliff
  • TP argued that their wages earned in NM were not subject to NM income tax on various grounds which challenged the federal income tax system. TP is not entitled to a refund of the taxes withhold from their wages. Protest denied.
  • 98-09
  • 1998
  • 2/16
  • Canon de Carnue Land Grant Heirs Ass’n
  • TP claimed that their receipts were exempt under Section 7-9-29. TP was not granted tax exempt status under the provisions of Section 501(c)(3) of the Internal Revenue Code. TP also claimed that they were not negligent because they relied on the advice from their bookkeeper/accountant. TP was found to be not negligent for tax years 1991-1993. Protest denied in part and granted in part.
  • 98-10
  • 1998
  • 2/18
  • Kent and Jorge Jones
  • TP claimed that he was an employee and therefore his receipts were exempt under Section 7-9-17. TP was an independent contractor. Protest denied.
  • 98-11
  • 1998
  • 3/9
  • American Hospitality Resources, Inc.
  • TP was held liable for 50% fraud penalty. Evidence established the TP’s officers were aware of the GRT, knew they would be liable for payment of GRT if the corporation maintained a presence in NM and knowingly misrepresented the nature of the corporation’s activities in order to evade payment of GRT. Protest denied.
  • 98-12
  • 1998
  • 3/11
  • Harold and Betty Burris
  • TP amended their federal income tax return and failed to amend their NM personal income tax return. TP was assessed for additional tax plus penalty and interest. TP objected to the assessment of penalty and interest because the department did not notify them in a timely manner. TP was found to be negligent in underreporting their taxes. Protest denied.
  • 98-13
  • 1998
  • 3/11
  • Cathleen Tomlinson
  • TP claimed that she was unaware that her activities were subject to the GRT and had she known about the liability the taxes would have been paid. TP claims that to impose penalty and interest on her would cause hardship. TP was found to be negligent. Protest denied.
  • 98-14
  • 1998
  • 3/18
  • NMSU, Office of Business and Finance
  • TP made an ACH payment after the due date. TP argued that interest should not be imposed because they acted reasonable in attempting to pay their taxes. TP also argued that they were not negligent and therefore penalty should not be imposed. Protest granted in part.
  • 98-15
  • 1998
  • 3/27
  • Jim and Margaret Tilghman
  • TP incorrectly filed a NM personal income tax return. Through the department’s sharing agreement with IRS a discrepancy was found between the federal and state returns. TP amended the NM return and remitted the additional tax due. TP argues that penalty and interest should not be assessed because the department failed to notify the TP in a timely fashion and the error in completing the return was human error. Protest denied.
  • 98-16
  • 1998
  • 4/2
  • Long John Silver’s, Inc.
  • TP received a 5% or receipts royalty payment and 4% of receipts advertising fee from its NM franchisees upon which the department assessed gross receipts tax. TP argued that as an out-of-state corporation, it was neither engaged in business in NM nor was there sufficient nexus to impose tax. In the alternative, the TP argued that the royalty fee and advertising fee was imposed for services performed out-of-state. Held that entire amount of franchise fees represented payment for the leasing of TP’s intangible property in NM and was therefore subject to gross receipts tax. Protest denied.
  • 98-17
  • 1998
  • 4/6
  • Dependable Maintenance Service
  • TP claimed that he was an employee and therefore his income was exempt from GRT. TP also argued that since he relied on advice from a department employee and that it took three years to receive an assessment that the department should be estopped from assessing him for the GRT. Protest denied.
  • 98-18
  • 1998
  • 4/10
  • Dr. Christopher Nelson
  • TP was engaged in business in NM as a Chiropractor. The TP had retired his CRS registration number some years ago and had not reported or paid gross receipts tax or income tax on his receipts or income from performing chiropractic services. The department issued estimated assessments of gross receipts and income tax, and assessed a 50% fraud penalty. The department failed to prove that the TP intended to defraud the state. The TP’s protest of the fraud penalty was granted, and the remainder of the protest was denied.
  • 98-19
  • 1998
  • 4/14
  • Gerald M. and Bernice Thompson
  • TP argued that he was a partner to a partnership and his receipts were distributions of partnership profits and not subject to the GRT. TP also argued that he was selling construction services which were deductible under 7-9-52 and that to deny this deduction would be a “double taxation”. TP was found to be negligent.
  • 98-20
  • 1998
  • 4/17
  • Tedken Oil Co.
  • TP was denied a refund because the statute of limitations for claiming the refund had expired. TP argued that the department’s failure to advise taxpayers on how the petroleum products loading fee is applied should estop the department from denying the refund. Protest denied.
  • 98-21
  • 1998
  • 4/17
  • AAA Air and Water Filter Systems
  • TP claimed that she was an employee and that her receipts were wages and exempt under Section 7-9-17. TP argued that there would be a double taxation if she were assessed for the GRT on her receipts. Protest denied.
  • 98-22
  • 1998
  • 4/21
  • James M. and Dona H. Curl
  • TP argued that as a subcontractor they were not responsible for paying the GRT and requiring them to do so would be “double taxation”. TP also argued that they relied on their accountant for tax advice. Protest denied.
  • 98-23
  • 1998
  • 4/22
  • Los Alamos Public Schools
  • TP was assessed for penalty for late reporting and payment of taxes using a special payment method required under Section 7-1-13.1. TP argued that they should not be considered negligent because they made a good faith effort to comply with statutory requirements. TP also argued that to impose a penalty on them would serve no public purpose and it would reduce the resources for public classrooms. Protest denied.
  • 98-24
  • 1998
  • 4/23
  • Jobe Concrete Products, Inc.
  • TP argued that the NM Legislature intended the 1997 amendment to 7-9-43 to be retroactive. TP also claimed that they were not negligent. Protest denied.
  • 98-25
  • 1998
  • 4/24
  • Pete Sisneros as corporate officer of Comfort Air Systems, Inc.
  • TP argued that he was unaware that his withholding taxes were unpaid and that the department’s assessments were based on incorrect information. TP also argued that the department should have notified him in a timely manner. Protest denied.
  • 98-26
  • 1998
  • 4/27
  • Kids Love to Dance
  • TP argued that the assessment of penalty & interest was excessive and that it should only be assessed for criminal activity. TP also argued that the department did not make an effort to provide her with accurate information. Protest denied.
  • 98-27
  • 1998
  • 4/29
  • Gary & Feliz Tixier
  • TP argued that the gross receipts on his commissions were unfair. TP also claims that he should not be assessed for penalty and interest because the department did not notify him in a timely manner and that paying it would create a hardship. Protest denied.
  • 98-28
  • 1998
  • 5/15
  • Maize Elford-White
  • TP had not understood that she was subject to gross receipts tax and did not pay it for that reason.  TP requested relief from assessment of gross receipts tax, penalty and interest in return for her agreement to pay future taxes after date of assessment.  TP also requested relief from assessment because of financial hardship payment would cause.  Held TP failed to overcome presumption of correctness of assessment and financial hardship is not grounds for abatement of assessment.  Protest denied.
  • 98-29
  • 1998
  • 5/18
  • Connie Schaekel
  • TP failed to pay the gross receipts tax on income earned as an independent contractor based on incorrect advice from an accountant. TP claimed that the assessment of interest would create a financial hardship for her. Protest denied.
  • 98-30
  • 1998
  • 5/26
  • Centex Corporation
  • TP claimed a refund for an overpayment of corporate income taxes that were offset against a prior tax liability of penalty & interest for late estimated payments. TP argued that the penalty & interest was not due under the provisions of Section 3001(d) of the Revenue Reconciliation Act waiving penalties under IRC Section 6655. TP also argued that the department had no authority to offset their refund since the tax liability had not been assessed. Held that federal law does not govern imposition of penalty and interest under state law and that offset was authorized by Tax Administration Act. Protest denied.
  • 98-31
  • 1998
  • 5/27
  • M. L. Roush Construction
  • TP, a licensed contractor, constructed three homes, lived in them for a short period of time and then sold them. TP protested the assessment of gross receipts tax, arguing 1) the sales were isolated and occasional; 2) because he paid gross receipts tax on the materials & services used to build the homes, taxing his receipts would be a double taxation; and 3) some of the bank deposits picked up by the auditor were loans, not receipts from services. Held: sales of three homes in three years do not qualify as isolated or occasional; there is no prohibition against double taxation; taxpayer failed to meet his burden of proof concerning the loans. Protest denied.
  • 98-32
  • 1998
  • 5/26
  • Charles L. Forkner
  • TP was assessed gross receipts tax upon commissions received as a commodities futures broker. Taxpayer argued that imposition of tax was barred because commodities futures trades were transactions in interstate commerce and because the comprehensive federal regulation of commodities futures trading preempted imposition of state tax.  Held that imposition of tax was not prohibited under the Commerce Clause nor was tax preempted by federal regulation of commodities futures trading.  Protest denied.
  • 98-33
  • 1998
  • 6/2
  • Luis Tamayo & Amanda Llerena
  • TP was assessed interest for the failure to pay the gross receipts tax on income earned as independent contractors.  TP requested that the interest be abated because his failure to pay the tax was unintentional and it would create a hardship for his family. The department does have the discretion to abate interest. Protest denied.
  • 98-34
  • 1998
  • 6/15
  • Jim D. Dodson
  • TP, first-year resident incorrectly allocated income on his New Mexico personal income tax return and was assessed for the additional tax, penalty and interest. TP argued that 1) the instructions for completing the return were confusing; 2) a department employee failed to provide clear directions on how to file the taxes; and 3) the department was negligent in failing to notify him of the error in a more timely fashion. Hold that the Department’s instructions gave TP sufficient notice of allocation requirements and it was TP’s responsibility to correctly determine his tax liability to the state. Protest denied.
  • 98-35
  • 1998
  • 6/18
  • John F. Gilliam Jr. & Martha L. Gilliam
  • The Department had seized the assets of the taxpayer's bank account pursuant to two Warrants of Levy served upon the Taxpayer's bank on the same day. The Department's letter informing the Taxpayer of the Department's action only referred to one of the two Warrants of Levy. The Department conceded that the Warrant of Levy referenced was invalid because the assessments secured by the levy were not yet delinquent, and never became delinquent because the Taxpayer protested those assessments. The Taxpayer protested the seizure of his bank account on the grounds that the levy referenced in the Department's notification levy was invalid. Protest denied because the assessments secured by the second levy were delinquent and the proceeds of the levy were applied to those delinquent assessments.   
  • 98-36
  • 1998
  • 7/6
  • Rauscher, Pierce, Refnes, Inc.
  • Taxpayer is a securities broker-dealer.  Taxpayer protested assessment of gross receipts tax, claiming its receipts from dealer concessions for its role in handling purchases of mutual fund shares for its customers are exempt as receipts from the sale of securities pursuant to Section 7-9-25, or alternatively, that they are not gross receipts as defined at Section 7-9-3(F).  Additionally, Taxpayer argued that its receipts from "trails" or 12(b)(1) fees were not gross receipts from performing services and were not subject to gross receipts tax.  Held that although taxpayer did not act as an agent for its customers in handling mutual fund purchase transactions, the receipts did amount to commissions or fees from acting as a broker and are gross receipts as defined in Section 7-9-3(F) and thus are not receipts from the sale of securities.  Additionally, the trails are receipts from performing the service of encouraging its clients to retain their holdings of mutual funds.  Protest denied.
  • 98-37
  • 1998
  • 7/15
  • Ken Miller Real Estate
  • Taxpayer was audited by the Department and given a 60-day notice pursuant to Section 7-9-43 that all NTTCs and other evidence to support the taxpayers deductions must be provided to the auditor by January 2, 1998. On December 31, 1998 the Department issued its assessment. Taxpayer filed a motion for summary judgment arguing that until expiration of the 60-day period, his deductions were presumed to be correct. Held: No presumption of correctness was created by the 60-day notice, nor does the notice provision affect the Department’s authority to issue an assessment against the taxpayer. Motion for summary judgment denied.
  • 98-38
  • 1998
  • 7/17
  • Eileen P. Cahoon
  • Taxpayer was notified of a limited scope audit (C-SPAN) based on a discrepancy between the business income reported on her 1994 federal income tax return and the receipts reported to New Mexico. Taxpayer was notified that she had a 60-day period to provide evidence (NTTCs) to support her deductions. Taxpayer failed to provide the NTTCs before the 60-day period expired. Taxpayer relied on the erroneous advice of her accountant that she did not need to obtain the NTTCs. The taxpayer was not negligent. Taxpayer’s protest is granted as to the assessment of penalty. The protest is denied for all other issues.
  • 98-39
  • 1998
  • 7/15
  • Mark Sisson
  • Taxpayer protested the imposition of penalty and interest on the grounds that he is unable to pay.  Inability to pay is not a basis for compromising or abating an assessment.  Grounds existed for both imposition of penalty and interest.  Protest denied.
  • 98-40
  • 1998
  • 7/21
  • Fluorescent Technology International, Inc.
  • Taxpayer was assessed penalty and interest for failure to file and pay New Mexico CRS taxes. Taxpayer claimed that it should not be held liable for the negligence penalty since it was a specific corporate officer in charge of the financial affairs who failed to file and pay the taxes. A corporation is liable for penalties arising out of the acts of a corporate officer. Protest denied.
  • 98-41
  • 1998
  • 7/31
  • Wheeler & Sons Trucking
  • TP was assessed gross receipts tax upon its receipts from hauling hot mix asphalt and other materials for Western Mobile, Inc.  TP protested the assessment arguing that it was an employee of Western Mobile and therefore its receipts were wages, exempt from gross receipts tax pursuant to Section 7-9-17.  Held that although there were some elements of control which would indicate and employee-employer relationship, fact that TP owned own truck and could have any qualified driver perform the work established that TP was an independent contractor.  Protest denied.
  • 98-42
  • 1998
  • 8/6
  • James C. Ellis
  • Taxpayer had timely mailed CRS return and payment, but the Department never received them.  Taxpayer protested imposition of interest based upon his history of timely payment, the fact that he discovered the fact that his check had never cleared his bank and took it upon himself to send in a new report and payment without notice or demand from the Department, and the Taxpayer argued that Section 7-1-67(A)(3) requires that the Department make a demand for payment before interest can accrue for nonpayment of taxes.  Protest denied.  
  • 98-43
  • 1998
  • 8/14
  • Joseph R. Ruiz
  • Taxpayer protested a denial of his claim for refund of interest paid on a 1990 PIT liability. Taxpayer claimed the Department misapplied a payment he made for his 1990 PIT liability to his 1991 PIT liability. Taxpayer also argued that he would have paid the 1990 liability if the Department had sent him billing notices. The Department has no obligation to remind the taxpayer of an existing liability, protest denied on this issue. Protest granted on the misapplication of payment issue. The amount of interest assessed on the payment that was misapplied to the 1991 liability should be refunded to the taxpayer.
  • 98-44
  • 1998
  • 8/17
  • Javier Padial
  • Taxpayer was assessed interest on gross receipts tax assessed after a Schedule C tapematch. Taxpayer argued that his failure to pay the gross receipts tax was unintentional, therefore interest should be abated. The Department does not have the authority to abate interest. Protest denied.
  • 98-45
  • 1998
  • 9/1
  • Berryman Ranch
  • Taxpayer granted to three hunters a non-exclusive right to go onto its ranch to hunt during the hunting periods designated by the state. Taxpayer did not pay gross receipts tax on the receipts from selling hunting access to its land. Taxpayer protested an assessment by the Department for gross receipts tax, penalty and interest from these receipts. Taxpayer argued that the receipts from the granting of hunting rights is deductible under Section 7-9-53 as the receipts from the sale or lease of real property. Taxpayer was actually granting a license to use its property which is subject to the gross receipts tax. Protest denied.
  • 98-46
  • 1998
  • 8/31
  • Dain Rauscher, Inc. (Formerly Known as Rauscher Pierce Refsnes, Inc.)
  • Taxpayer protested the Department's determination that the Department's discretion to grant extensions of time to file a protest under Section 7-1-24(B) is limited to protests of assessments of tax or of other peremptory notices and demands.  Held that the Secretary's discretion to grant extensions of time to file protests pursuant to Section 7-1-24(B) does not apply to protests to denials of or failure to act upon claims for refund under Section 7-1-26.  Since that was the nature of the Taxpayer protest, the protest was denied.  
  • 98-47
  • 1998
  • 9/3
  • Michael & Michele Beglau
  • Taxpayer was denied a portion of a claim for refund attributable to a child day care credit. The Department determined that the Taxpayer was not gainfully employed or disabled during the months for which the credit was claimed as required in Section 7-2-18. Taxpayer argued that he was entitled to the credit because he was disabled and unable to perform the heavy physical labor required by his previous jobs. Protest granted, Taxpayer was disabled for the period in question and entitled to the credit.
  • 98-48
  • 1998
  • 9/4
  • Jeffery A. Williams
  • Taxpayer was notified of a limited scope audit (C-SPAN) based on a discrepancy between the business income reported on his federal income tax return and the receipts reported to New Mexico. Taxpayer was notified that he had a 60-day period to provide evidence (NTTCs) to support any deductions. Taxpayer made the following arguments against the assessment resulting from the limited scope audit: 1) his contract labor did not constitute “engaging in business”; 2) his possession of a Type 7 NTTC would make his receipts deductible; and 3) to deny the deduction under Section 7-9-52 would be double taxation. Taxpayer was engaging in business and the taxpayer did not submit the NTTC to the Department within the 60-day period provided by statute nor was it the appropriate NTTC for the transaction. Protest denied.
  • 98-49
  • 1998
  • 9/15
  • CRST, Inc.
  • TP protested the manner in which the Department calculated interest on an assessment of corporation income tax. TP's original income tax returns showed overpayments of tax for the three tax years for which deficiencies were later assessed. TP's original returns had requested that the overpayments be credited to the next year's liability and TP applied the overpayments to its estimated quarterly tax payments for the following tax year. TP requested that the overpayments be applied to offset its assessed underpayments for calculation of interest without regard to the fact that the overpayments had already been applied in accordance with TP's instructions. Protest denied.  
  • 98-50
  • 1998
  • 9/23
  • Lauren Constructors, Inc.
  • TP protested the assessment of interest on late gross receipts tax payments. TP claimed that the Department should be estopped from assessing interest since the TP received erroneous advice from a Department employee as to when the payment of tax was due. TP did not meet its burden of showing that the Department’s assessment was incorrect. Protest denied.  
  • 98-51
  • 1998
  • 9/25
  • Antoine Khoury
  • Taxpayer was notified of discrepancies between his federal Schedule C and NM gross receipts tax filing during a limited scope audit. Taxpayer was notified that he had 60 days to provide any NTTC’s or other documentation that would  support any deductions taken. The Department assessed the taxpayer because he did not provide the NTTC until after the deadline had expired. Taxpayer protested the assessment claiming that his services were for resale and therefore should be deductible under Section 7-9-48. Receipts from sales for resale are not deductible unless the taxpayer is in possession of an NTTC within the 60-day period provided in Section 7-9-43. Protest denied.
  • 98-52
  • 1998
  • 9/28
  • Louis & Carolyn Bortot
  • Taxpayers were shareholders of two small, closely held family corporations. The Taxpayers performed all of the management functions for the corporations. The corporations had no other employees. The corporations reported the compensation to the Taxpayers as non-employee compensation on a federal form 1099 and the Taxpayers reported their income on their federal income tax return on Schedule C as income from a business or profession. The Department assessed gross receipts tax upon this compensation. The Taxpayers argue that they are employees of the corporations and that their compensation was exempt as wages or salary pursuant to Section 7-9-17. The Taxpayers were unwilling to amend their federal returns to reflect the compensation as wages. Because of the requirement that taxpayers file their state and federal returns consistently, they will not be considered employees in the absence of amending their federal corporate and personal returns to reflect the compensation as wages. Protest denied.  
  • 98-53
  • 1998
  • 10/1
  • Harrington Industrial Plastics
  • Taxpayer purchased a division of another New Mexico business without following the procedures outlined in the successor in business statutes, Sections 7-1-61 to 7-1-64 that require a purchaser to escrow a portion of the purchase proceeds for taxes and to seek a determination of taxes due from the business being purchased or obtain a tax clearance. Subsequent to the purchase, the Department audited the predecessor business and assessed a liability for periods occurring before Taxpayer's purchase of the business. The Taxpayer was not notified of the assessment or the basis for the assessment until almost six years after the assessment, when the Department made a demand for payment of the Taxpayer as a successor in business. The Taxpayer protested the demand on the basis that its failure to escrow a portion of the purchase price was not wrongful as required by the statute. The Taxpayer also argued that the Department's test month's audit procedure was improper but that Section 7-1-24, which prohibits the Taxpayer from contesting the underlying basis of the assessment because it did not protest the assessment within thirty days of its issuance, unconstitutionally deprived the Taxpayer of the opportunity to dispute the assessment in violation of procedural due process. Held that because the Taxpayer did not follow the statutory procedures requiring the escrow of a portion of the purchase price, this amounted to a wrongful failure to withhold under Section 7-1-64(A) and the Taxpayer was liable for the tax as a successor in business.  Also held that the Department improperly applied its test months audit procedure resulting in an incorrect assessment of taxes and in the circumstance of this case where the Taxpayer was not given notice of the assessment of tax or the basis for the assessment until after the time for protest had expired, that Section 7-1-24, to the extent it denies the Taxpayer an opportunity to contest the basis for the assessment, denies the Taxpayer due process of law. The Department was ordered to adjust the assessment underlying the demand for payment.
  • 98-54
  • 1998
  • 10/15
  • Actionside Lath & Plaster
  • The Taxpayer protested the Department's denial of a deduction claimed for receipts from a customer which had given the Taxpayer a nontaxable transaction certificate but the Taxpayer could not produce a copy of the certificate. The Taxpayer also contested the amount of interest assessed based upon its attempt to pay taxes before the commencement of the audit, but the payment was not accompanied by returns providing the Department information as to what tax programs, what tax amounts and what tax periods the tax payment should be applied to.  Held that the Department properly denied the deduction for failure to possess a nontaxable transaction certificate within 60 days of notice to produce such certificates. Also held that tender of a payment does not amount to a payment of tax without concurrent tender of a return or returns showing how the payment is to be applied. Thus, the calculation of interest was correct. Protest denied.
  • 98-55
  • 1998
  • 10/22
  • Professional Land Surveying
  • The Taxpayer primarily engages in surveying for road construction contractors. The Taxpayer failed to keep up with the changes to Section 7-9-43, which was amended in 1992 to require that sellers claiming deductions which require nontaxable transaction certificates obtain the new 1992 series nttcs and have them in their possession at the time they file returns claiming deductions based upon the nttcs. Upon audit, the Department denied claimed deductions for failure to have the new nttcs in its possession at the time the deductions were claimed. The Taxpayer claimed that it was impossible for small taxpayers to keep up with the statutory changes and that it should be allowed the deductions claimed even though it did not have the required nttcs because the transactions otherwise met the statutory criteria for deduction. Held: statutory requirements cannot be waived by the Department or its Hearing Officer. Protest denied.   
  • 98-56
  • 1998
  • 12/4
  • Joe Anaya, d/b/a Anaya’s Carpet Service
  • Taxpayer filed a $833.68 claim for refund in April 1998 for the period of Jan. - June 1994. This claim was filed after the three-year limitations period set out in Section 7-1-26(C). The taxpayer acknowledged that the claim was not made timely, however, he maintained that he is still entitled to the refund ($833.68) because he submitted amended reports for this amount with a different claim for refund filed in Sept. 1997. The taxpayer is not entitled to the refund claimed in April 1998 because the claim was not filed within the limitations period set out in Section 7-1-26(C). The taxpayer is not entitled to the $833.68 claimed in Sept. 1997 because he did not exercise either of the remedies available to him when the Department failed to act on the refund request within 120 days. Protest denied.  
  • 98-57
  • 1998
  • 12/9
  • Bill and Sherri McConnel
  • Taxpayers (husband and wife) were assessed gross receipts tax on business income reported on their 1994 federal income tax return. Taxpayers argued they were employees entitled to the deduction from gross receipts provided in Section 7-9-17. The Department agreed to abate tax on wife’s income if the Taxpayers amended their 1994 income tax return to reflect wife’s income as wages rather than as business income. The Taxpayers declined to file amended returns. Held: Taxpayers could not deduct husband’s income because he was an independent contractor, not an employee; Taxpayers could not deduct wife’s income because they were required to report their income consistently for both federal and state tax purposes. Taxpayers could not claim wife’s compensation as business income for federal income tax purposes and as employee wages for state gross receipts tax purposes. Taxpayers were also liable for penalty and interest assessed for late payment of gross receipts tax. Protest denied.
  • 98-58
  • 1998
  • 12/17
  • Production Credit Association of Eastern New Mexico
  • The Taxpayer, a production credit association created under federal law,  protested the Department's denial of its claims for refund of corporate income tax for tax years 1992-1996.  The Taxpayer claimed it was exempt from state income taxes because Congress has designated production credit associations  as  federal instrumentalities.  Under the Supremacy Clause of the U.S. Constitution, federal instrumentalities are immune from state taxation in the absence of congressional authorization to tax.  In the case of production credit associations, since their creation in 1933, Congress had provided that once they were no longer owned in whole or in part by the United States, that they would be subject to state income taxes.  In 1985, however, as part of some technical amendments to the Farm Credit Act, the language giving congressional permission to impose income taxes was removed from 12 U.S.C. Section 2077.  The issue was whether the general rule of immunity from state taxation for federal instrumentalities applied or whether we should determine the congressional intent behind the 1985 amendments.  Because the doctrine of immunity for federal instrumentalities is based upon an implied immunity in the absence of direction from Congress, it is appropriate to determine the congressional intent behind the 1985 amendments.  When that is done, it is clear that Congress did not understand that these amendments would create immunity from state income taxation for production credit associations.  Protest denied.  
  • 98-59
  • 1998
  • 12/30
  • M. Kory & Lucia Rowberry
  • Taxpayer provided dental services to patients from the dental office of another dentist. Taxpayer claimed that there was a TS-22 agreement between him and the other dentist, but could not provide evidence of agreement’s existence or payment of tax. The Taxpayer is liable for the gross receipts tax on the non-employee compensation he received from the other dentist. Protest denied.