Did Archaeological Support Services owe two $5 late-filing penalties when it mailed zero-liability CRS returns in envelopes shared with another business?

Plain-English summary

Archaeological Support Services proved that one zero-liability CRS return was timely mailed in a shared envelope, but admitted another return was late. The AHO abated the $5 September 2014 penalty and upheld the $5 December 2014 penalty.

The business was inactive and owed no gross receipts tax, but kept its CRS number and prepared quarterly zero returns. Owner Eric Blinman mailed each return in the same envelope as his wife's separate business return and noted that two CRS returns were enclosed.

Processing the other return corroborated timely mailing

The Department did not process Archaeological Support's September 2014 return. But it did timely receive and process the wife's return that Blinman testified was in the same envelope.

That fact corroborated his credible testimony that both returns were mailed together. Under Section 7-1-9 and Regulation 3.1.4.10(C), the AHO treated Archaeological Support's September return as timely and removed that penalty.

The admitted late return still carried the minimum penalty

Blinman acknowledged that the December 2014 return was not timely filed. Even though it reported zero tax, Section 7-1-69(A)(3) supported the $5 late-return penalty.

A March 2015 assessment was mentioned in the record but was not part of the protested assessments before the AHO, so the decision did not resolve it.

Result: protest PARTIALLY GRANTED AND PARTIALLY DENIED. One $5 penalty was abated and one $5 penalty remained.

The official post abbreviates the taxpayer as “Archaeological Support Svcs,” and the caption prints “ARCHAEOLOGICAL SUPPORT SRVCS.” The decision's appearance paragraph spells out Archaeological Support Services, which this page uses while preserving the source wording below.

What this means for you

Inactive businesses retaining a CRS number

Continue filing required zero returns until the registration is formally closed or the Department confirms otherwise. Zero liability does not necessarily eliminate filing penalties.

Taxpayers mailing multiple returns together

Identify every enclosed return and retain proof of the shared mailing. Processing one item from the envelope can corroborate that another was timely included.

Taxpayers with unprocessed mail

Specific credible testimony plus objective mailing circumstances can establish timely filing, but an admitted late return remains subject to the statutory minimum.

Common questions

Q: Did the business owe gross receipts tax?
A: No. It was inactive and filed zero-liability returns.

Q: Why was the September penalty abated?
A: The wife's return from the same envelope was timely processed, corroborating testimony that both were mailed together.

Q: Why was the December penalty upheld?
A: The taxpayer admitted that return was filed late.

Q: Does a zero return avoid all filing penalties?
A: No. The decision upheld a $5 minimum penalty for the admitted late zero return.

Q: What happened to the March 2015 period?
A: It was not a protested assessment before the AHO and was not decided.

Citations and references

Statutes and regulation:

• NMSA 1978, § 7-1-9 — filing treated as timely when properly mailed by the due date
• NMSA 1978, § 7-1-69(A)(3) — $5 minimum penalty for a late return
• Regulation 3.1.4.10(C) NMAC — postmark and unreceived-mail timing rules

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Archaeological Support Svcs
• Decision PDF: D&O 15-42

Original ruling text

STATE OF NEW MEXICO
ADMINISTRATIVE HEARINGS OFFICE
TAX ADMINISTRATION ACT

IN THE MATTER OF THE PROTEST OF
ARCHAEOLOGICAL SUPPORT SRVCS No. 15-42
TO ASSESSMENTS ISSUED UNDER LETTER
ID NO.’s L2045399088 and L0099242032

DECISION AND ORDER

A protest hearing occurred on the above captioned matter on November 23, 2015 before

Brian VanDenzen, Esq., Chief Hearing Officer, in Santa Fe. At the hearing, Dr. Eric Blinman

appeared pro se for Archaeological Support Services (“Taxpayer”). Staff Attorney Gabrielle

Dorian appeared representing the State of New Mexico Taxation and Revenue Department

(“Department”). Protest Auditor Veronica Galewaler appeared as a witness for the Department.

Based on the evidence and arguments presented, IT IS DECIDED AND ORDERED AS

FOLLOWS:

FINDINGS OF FACT

1. On August 3, 2015, through letter id. no. L2045399088, the Department assessed

Taxpayer for $5.00 in penalty for the CRS reporting period ending on September 30, 2014.

2. On August 3, 2015, through letter id. no. L0099242032, the Department assessed

Taxpayer for $5.00 in penalty for the CRS reporting period ending on December 31, 2014.

3. On August 8, 2015, Taxpayer protested the Department’s assessments.

4. On September 18, 2015, the Department’s protest office acknowledged receipt of

a valid protest.

5. On October 9, 2015, the Department filed a request for hearing in this matter with

the Administrative Hearings Office.

6. On October 13, 2015, the Administrative Hearings Office sent Notice of

Administrative Hearing, scheduling this matter for a merits hearing on November 23, 2015.

7. On November 23, 2015, within 90-days of the Department’s receipt and

acknowledgement of a valid protest, the Administrative Hearings Office conducted a hearing in

the above-captioned matter.

8. Dr. Blinman is the owner and operator of Taxpayer.

9. Taxpayer was not engaged in active business and thus had no gross receipts tax

liability during the relevant periods.

10. Rather than close his business, Taxpayer maintained his CRS number.

11. Dr. Blinman’s wife also operates a business subject to CRS reporting

requirements.

12. Taxpayer prepared CRS-1 returns showing zero liability on a quarterly basis.

13. Taxpayer submits his CRS-1 returns in an envelope along with his wife’s

business’ CRS-1 return, noting on the front of the envelope that two separate CRS-1 returns were

included.

14. The Department did not process Taxpayer’s CRS-1 returns for three reporting

periods: for the CRS reporting period ending on September 30, 2014, December 31, 2014, and

March 31, 2015 (a period not before the Administrative Hearings Office in this protest).

15. The Department timely received Dr. Blinman’s wife’s CRS-1 returns for the

periods ending on September 30, 2014 and March 31, 2015, which were contained in the same

envelope as Taxpayer’s unprocessed returns in those periods.

16. Taxpayer acknowledged that he did not timely file the CRS-1 return for one

period, the CRS reporting period ending on December 31, 2014.

In the Matter of the Protest of Archaeological Support Srvcs, page 2 of 4

17. In 2015, the year after the remaining relevant September 30, 2014 period, the

Department’s Revenue Processing Division did a series of batch testing to ensure that the mail

extraction processing equipment was functioning appropriately. These tests did not detect any

systematic errors that might explain why the Department did not process Taxpayer’s CRS-1

returns contained in the same envelope as the processed returns of Taxpayer’s wife.

CONCLUSIONS OF LAW

A. Taxpayer filed a timely, written protest to the Department’s assessments, and

jurisdiction lies over the parties and the subject matter of this protest.

B. The hearing was timely set within 90-days of protest under NMSA 1978, Section 7-

1B-8 (2015).

C. By acknowledging that the December 31, 2014 return was not timely filed, pursuant

to NMSA 1978, 7-1-69 (A)(3) (2007) Taxpayer is liable for assessed penalty under that assessment,

letter id. no. L0099242032.

D. Taxpayer’s credible testimony established that Taxpayer timely mailed his CRS-1

return for the CRS reporting period ending on September 30, 2014 in the same envelope with his

wife’s return, which the Department received and processed. See NMSA 1978, Section 7-1-9 (1997)

(returns timely if mailed before date due). See also Regulation 3.1.4.10 (C) (1 &2) NMAC (mailing

timely when postmarked unless not received). Thus, penalty is not due for the assessment under

letter id. L2045399088.

E. The assessment of the March 31, 2015 reporting period was not a protested

assessment before the Administrative Hearings Office.

For the foregoing reasons, the Taxpayers’ protest IS PARTIALLY GRANTED AND

PARTIALLY DENIED. Taxpayer is liable for the $5.00 penalty for the CRS reporting period

In the Matter of the Protest of Archaeological Support Srvcs, page 3 of 4
ending on December 31, 2014. The $5.00 penalty for the CRS reporting period ending on

September 30, 2014, is abated.

DATED: December 30, 2015.

Brian VanDenzen
Interim Chief Hearing Officer
Administrative Hearings Office
P.O. Box 6400
Santa Fe, NM 87502

In the Matter of the Protest of Archaeological Support Srvcs, page 4 of 4