Did listing a New Mexico home address on Schedule C make an Ohio tea shop's sales subject to New Mexico gross receipts tax?

Plain-English summary

A New Mexico address mistakenly entered on federal Schedule C did not make an Ohio tea shop's sales subject to New Mexico gross receipts tax. Bruce Winchell proved where the business actually operated, but he still owed a small amount on separate teaching income earned in New Mexico.

The Department compared Schedule C income with New Mexico gross receipts filings and assessed Winchell as a nonfiler for 2012 through 2014. The June 2019 assessment totaled $203.00: $141.92 of tax, $33.14 of penalty, and $27.94 of interest.

Three income sources had been examined:

• 2014 sales from At Portage Lakes, LLC, a tea shop in Akron, Ohio;
• teaching at the University of New Mexico in 2012; and
• honoraria for presentations at out-of-state American Chemical Society gatherings.

The Department had already removed the out-of-state presentation income by the hearing. The disputed issues were the Ohio shop and UNM teaching.

Evidence overcame the New Mexico address error

Winchell and his spouse reported $10,754 of 2014 tea-shop gross receipts or sales on Schedule C, but mistakenly entered their Albuquerque home address as the business address. That mismatch reasonably led the Department to investigate.

At the hearing, Winchell produced the Ohio business registration, Ohio sales-tax returns, a photograph of the Akron location, and other supporting documents. His testimony was highly credible. The evidence showed that the shop's entire operation and all sales income were in Ohio and that it did no business in New Mexico.

Ohio returns reported $8,984.69 of taxable sales. The $1,769.31 difference from Schedule C was food sold for off-premises consumption that Ohio excluded from its sales-tax base. The difference did not indicate New Mexico receipts.

The hearing officer treated the Albuquerque Schedule C address as a clerical error. Once Winchell supplied substantial evidence of Ohio activity, the assessment presumption was rebutted, and the Department offered no evidence sourcing the tea-shop income to New Mexico.

The UNM teaching amount remained taxable

Winchell taught at the University of New Mexico in 2012. UNM issued him a W-2, but he reported the income on Schedule C and claimed business deductions. He did not file a New Mexico gross receipts tax return and supplied no evidence that he amended the federal filing.

Winchell acknowledged the reporting error, and the parties agreed at the hearing that tax, penalty, and interest on that New Mexico teaching amount remained due.

Result: protest GRANTED IN PART and DENIED IN PART. The 2014 assessment was fully abated. For 2012, Winchell owed $26.18 of gross receipts tax, $10.00 of penalty, and $7.26 of interest, totaling $43.44, with interest continuing until paid.

What this means for you

A form address is evidence, not necessarily the final answer

An incorrect business address can trigger an assessment, but reliable records showing where operations and sales occurred can overcome it.

Reconcile federal and state filings

Schedule C amounts that do not appear on New Mexico gross receipts returns invite matching questions. Keep documentation explaining every difference.

Correct federal classification errors

If wage income was mistakenly reported as Schedule C business income, amend the federal return and preserve proof. Winchell supplied no amendment evidence for the UNM income.

Out-of-state business receipts need concrete sourcing proof

Registration records, state sales-tax filings, location photographs, and credible testimony together established that the tea shop was entirely outside New Mexico.

Common questions

Q: Why did the Department initially assess the Ohio sales?
A: Schedule C listed Winchell's Albuquerque home as the business address, and the federal and state records did not initially reconcile.

Q: What proved the tea shop was outside New Mexico?
A: Ohio registration and sales-tax records, evidence of the physical Akron shop, supporting documents, and credible testimony.

Q: Why did the Ohio sales return show less than Schedule C?
A: Ohio excluded $1,769.31 of food sold for off-premises consumption from taxable sales.

Q: Why was the UNM teaching income upheld?
A: It was earned in New Mexico, reported on Schedule C, and not reported on a gross receipts return; Winchell did not prove a federal amendment correcting the classification.

Q: What was the final liability?
A: $43.44 for 2012, plus interest accruing after the stated amount.

Citations and references

Statutes and regulations:

• NMSA 1978, §§ 7-9-1 through 7-9-115 — Gross Receipts and Compensating Tax Act
• NMSA 1978, §§ 7-9-3.5(A)(1), 7-9-4, and 7-9-5 — gross receipts, tax imposition, and presumption of taxability
• NMSA 1978, §§ 7-1-17(C) and 7-1-3(Y) — assessment presumption and inclusion of interest and penalty
• Regulations 3.1.6.12(A), 3.1.6.13, and 3.2.1.14(A) NMAC — rebutting an assessment and out-of-state receipts

Cases:

• New Mexico Taxation and Revenue Department v. Casias Trucking, 2014-NMCA-099 — credibility and countervailing evidence
• MPC Ltd. v. New Mexico Taxation and Revenue Department, 2003-NMCA-021 — burden shifting after rebuttal
• Floyd & Berry Davis Co. v. Bureau of Revenue, 1975-NMCA-143 — overcoming an assessment lacking substantial support
• Buchine v. Commissioner, 20 F.3d 173 (5th Cir. 1994) — correcting a clerical error

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Bruce Winchell
• Decision PDF: D&O 20-05

Original ruling text

1 STATE OF NEW MEXICO
2 ADMINISTRATIVE HEARINGS OFFICE
3 TAX ADMINISTRATION ACT

4 IN THE MATTER OF THE PROTEST OF
5 BRUCE WINCHELL
6 TO ASSESSMENT ISSUED UNDER
7 LETTER ID NO. L1688016048

8 v. AHO Case Number 19.12-169A, Decision and Order No. 20-05

9 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

10 DECISION AND ORDER

11 On January 23, 2020, Hearing Officer Ignacio V. Gallegos, Esq., conducted a merits

12 administrative hearing in the matter of the tax protest of Bruce Winchell (Taxpayer) pursuant to

13 the Tax Administration Act and the Administrative Hearings Office Act. At the hearing, Mr.

14 Bruce Winchell (Taxpayer) appeared representing himself, accompanied by his spouse Mrs.

15 Neenah Winchell. Mr. Winchell was the Taxpayer’s sole witness. Staff Attorney Peter Breen

16 appeared, representing the opposing party in the protest, the Taxation and Revenue Department

17 (Department). Department protest auditor Alma Lucero appeared as a witness for the

18 Department. Department observer Sherilynn Gonzales was also present. Mr. Winchell’s

19 testimony was highly credible. Taxpayer offered Exhibits 1 through 9 and Department offered

20 Exhibits A and B. All exhibits were admitted into the record. The administrative file is

21 considered part of the record.

22 In quick summary, this protest involves an assessment of gross receipts tax for a gross

23 receipts tax non-filer with reported Schedule C income from three sources, sales from a tea shop in

24 Ohio, teaching at the University of New Mexico, and teaching out of state. Ultimately, after making

25 findings of fact and discussing the issue in more detail throughout this decision, the hearing officer

26 finds that the tea shop is located outside of New Mexico and is not subject to New Mexico gross

In the Matter of the Bruce Winchell, page 1 of 12.
1 receipts tax. The Department has abated out of state income from teaching out of state, but

2 correctly stands by the assessment arising from in-state receipts from teaching. After making

3 findings of fact and discussing the issues in more detail throughout this decision, the hearing officer

4 finds that Taxpayer’s protest must be granted in part and denied in part. IT IS DECIDED AND

5 ORDERED AS FOLLOWS:

6 FINDINGS OF FACT

7 Procedural Findings

8 1. On June 14, 2019, under Letter Id. No. L1688016048, the Department issued a

9 Notice of Assessment of Taxes and Demand for Payment to Taxpayer, indicating that Taxpayer

10 owed tax of $141.92, penalty of $33.14, and interest of $27.94, for a total assessment of $203.00

11 for tax reporting periods from January 1, 2012 to December 31, 2014. [Administrative File].

12 2. On June 28, 2019, Taxpayer submitted a Formal Protest letter, challenging the

13 assessment, alleging that the Schedule C income reported was not subject to New Mexico gross

14 receipts tax, because it was from Ohio. [Administrative File].

15 3. On July 2, 2019, under Letter Id. No. L0675351728 the Department issued a letter

16 acknowledging receipt of Taxpayer’s protest. [Administrative File].

17 4. On December 17, 2019, the Department, through Attorney Peter Breen, submitted

18 a Request for Hearing to the Administrative Hearings Office, requesting a hearing on the merits

19 of Taxpayer’s protest. [Administrative File].

20 5. On December 17, 2019, the Department, through Attorney Peter Breen, timely

21 submitted the Department’s Answer to Protest to the Administrative Hearings Office.

22 [Administrative File].

In the Matter of the Bruce Winchell, page 2 of 12.
1 6. On December 18, 2019, the Administrative Hearings Office sent a Notice of

2 Administrative Hearing to the parties, informing them of the scheduled merits hearing to take

3 place on January 23, 2020 at the Administrative Hearings Office in Santa Fe, New Mexico.

4 [Administrative File].

5 7. The undersigned Administrative Hearing Officer Ignacio V. Gallegos conducted

6 the merits hearing on January 23, 2020 with the parties present at the Administrative Hearings

7 Office in the Wendell Chino Building in Santa Fe, New Mexico. Neither the Department nor the

8 Taxpayer objected that conducting the hearing satisfied the 90-day hearing requirements of

9 Section 7-1B-8 (F) (2019). The Administrative Hearings Officer preserved a recording of the

10 hearing (“Hearing Record” or “H.R.”). [Administrative File].

11 8. At the conclusion of the hearing, the Administrative Hearing Officer allowed the

12 parties an additional two calendar months to conduct post-hearing discovery, which was

13 calculated to settle the matter. However, over the next few days, the post-hearing discovery

14 discussions dissolved, and the parties requested that the Hearing Officer issue a decision based

15 on the evidence available at hearing. [Administrative File; Department’s closing argument,

16 Hearing Record 1:31:25-1:33:30; Post hearing colloquy H.R. 1:33:50-1:40:10].

17 Substantive Findings

18 9. Taxpayers Bruce Winchell and spouse Neenah Winchell are individuals residing

19 in Albuquerque, New Mexico. Mr. Winchell maintains professional licensing as a patent lawyer

20 in the United States of America and in Canada, and with the State of Ohio and Tennessee bar

21 associations. [Administrative File, Direct examination of Bruce Winchell, H.R. 53:00-53:25;

In the Matter of the Bruce Winchell, page 3 of 12.
1 Cross examination of Bruce Winchell, H.R. 1:00:25-1:01:00; Taxpayer Exhibit 1-1, 1-2, 1-4, 9-

2 1].

3 10. Neenah Winchell and her sister are co-owners of “At Portage Lakes, LLC” a

4 company registered in Ohio, whose tea shop and entire operations are situated in Akron, Ohio.

5 [Direct examination of Bruce Winchell, H.R. 18:30-21:50; Taxpayer exhibits 1-3, 2-1, 2-2, 3-1,

6 3-2, 4-1 through 4-4, 5-1 through 5-10].

7 11. Alma Lucero is the tax auditor currently assigned to the matter. Other auditors,

8 Nicholas Pacheco and Laura Gage initially followed the case. [Direct examination of Bruce

9 Winchell, H.R. 34:30-35:00, 35:30-38:05; Direct examination of Alma Lucero, H.R. 1:13:30-

10 1:15:30; Taxpayer exhibit 9-5].

11 12. The business “At Portage Lakes, LLC” is a registered Ohio limited liability

12 corporation, taxed as a sole proprietorship, and does no business in New Mexico. All sales

13 income was received in Ohio. [Direct examination of Bruce Winchell, H.R. 18:00-23:00, 38:05-

14 45:50; Taxpayer exhibit 2-1, 2-2, 3-1, 4-1 through 4-4, 5-1 through 5-10].

15 13. Mr. and Mrs. Winchell reported the income from “At Portage Lakes, LLC” on

16 IRS Form 1040, Schedule C for the year 2014, the only year at issue here. The 2014 Schedule C

17 incorrectly reported the business address in New Mexico (Section E). The Schedule C reported

18 business income of $10,754.00 in gross receipts or sales (Line 1). [Direct examination of Bruce

19 Winchell, H.R. 15:30-16:30, 49:55-51:30; Cross examination of Bruce Winchell, H.R. 56:10-

20 56:40; Direct examination of Alma Lucero, H.R. 1:13:30-1:16:25; Taxpayer Exhibit 7-1, 8-1, 8-

21 2].

22 14. Mrs. Winchell and her sister reported the sales from “At Portage Lakes, LLC” to

23 the State of Ohio. In 2014, the combined sales, excluding food for consumption off-site, totaled

In the Matter of the Bruce Winchell, page 4 of 12.
1 $8,984.69. [Direct examination of Bruce Winchell, H.R. 15:30-18:00; Taxpayer Exhibit 5-5, 5-

2 6].

3 15. The difference between the amounts reported in the 2014 Ohio state sales tax

4 returns ($8,984.69) and the IRS Schedule C ($10,754.00) is the difference between Ohio taxable

5 gross sales and IRS Schedule C gross income from whatever source derived. The difference is

6 the amount excluded from Ohio state sales tax reports by virtue of the application of an exclusion

7 for sales of food for consumption off premises, which totaled $1,769.31. [Direct examination of

8 Bruce Winchell, H.R. 15:30-18:30; Direct examination of Alma Lucero, H.R.1:16:40-1:19:30;

9 Taxpayer exhibit 9-5].

10 16. The Department auditors determined that the documents (Ohio sales tax returns)

11 Taxpayer initially provided when audited were incomplete and at hearing expressed that specific

12 additional documents (a year of sales summaries as well as a month of register tape) might clear

13 the discrepancy between the Schedule C income and the Ohio sales tax returns. Taxpayer was

14 reluctant to supply additional documents because the source documents requested were situated

15 in Ohio. [Direct examination of Bruce Winchell, H.R. 15:30-18:00, 18:25-18:45; Cross

16 examination of Bruce Winchell, H.R. 1:04:20-1:08:30; Opening statement of Peter Breen, HR

17 28:30-29:55; AHO examination of Bruce Winchell, H.R. 1:10:00-1:11:25; Direct examination of

18 Alma Lucero, H.R. 1:19:30-1:20:45].

19 17. In 2014, 2015, and 2016, Mr. Winchell gave presentations to out-of-state

20 gatherings of the American Chemical Society, pursuant to his expertise in intellectual property

21 law. As compensation, the American Chemical Society provided Mr. Winchell a stipend or

22 honorarium. The Department conceded that these were no longer at issue during the hearing.

23 [Direct examination of Bruce Winchell, H.R. 35:00-36:30, 46:20-48:20; Cross examination of

In the Matter of the Bruce Winchell, page 5 of 12.
1 Bruce Winchell, H.R. 1:00:45-1:01:40; Taxpayer Exhibits 6-2, 6-3, 6-4, 7-1; Direct examination

2 of Alma Lucero, H.R. 1:16:05-1:17:10; Department Exhibit B].

3 18. In 2012 and 2013, Mr. Winchell received income from the University of New

4 Mexico. He considered this contract work in 2012, which he acknowledged he did report on a

5 Schedule C but did not report as New Mexico gross receipts in 2012. [Direct examination of

6 Bruce Winchell, H.R. 45:55-46:20; Cross examination of Bruce Winchell, H.R. 1:00:45-1:03:25;

7 Taxpayer Exhibit 6-1, 7-1].

8 19. Mr. Winchell received a W-2 from the University of New Mexico for wage

9 income. Department presented evidence that Mr. Winchell filed a Schedule C for this income,

10 and Mr. Winchell provided no evidence concerning whether he amended his 2012 federal tax

11 return to correct the error. [Direct examination of Bruce Winchell, H.R. 45:55-46:20; Cross

12 examination of Bruce Winchell, H.R. 1:00:45-1:01:40; Taxpayer Exhibit 6-1, 7-1].

13 DISCUSSION

14 Taxpayers’ protest involves an assessment of gross receipts tax. At issue are 2012 income

15 Taxpayer received from teaching at the University of New Mexico, and 2014 income Taxpayer

16 received from a tea shop located in Akron, Ohio. The tea shop is located outside of New Mexico

17 and the income received therefrom is not subject to New Mexico gross receipts tax, therefore that

18 portion of the assessment is wholly abated. The assessment arising from in-state receipts from

19 teaching at the University of New Mexico were incorrectly reported as Schedule C income rather

20 than wage income, and without an amendment, that Schedule C income must also be reported as

21 gross receipts.

In the Matter of the Bruce Winchell, page 6 of 12.
1 Receipts under the Gross Receipts and Compensating Tax Act.

2 The assessment in this protest arises from an application of the Gross Receipts and

3 Compensating Tax Act, NMSA 1978, Sections 7-9-1 through 7-9-115, which imposes a tax for the

4 privilege of engaging in business, on the receipts of any person engaged in business in New Mexico.

5 See NMSA 1978, Section 7-9-4 (2002). There is a statutory presumption that all receipts of a person

6 engaged in business activities in New Mexico are taxable. See NMSA 1978, Section 7-9-5 (2002).

7 The pertinent part of the statutory definition of “gross receipts” under Section 7-9-3.5 (A)(1) (2007),

8 includes “the total amount of money or the value of other consideration received from selling

9 property in New Mexico, from leasing or licensing property employed in New Mexico, from

10 granting a right to use a franchise employed in New Mexico, from selling services performed

11 outside New Mexico, the product of which is initially used in New Mexico, or from performing

12 services in New Mexico.” The Department compared various years of the Taxpayer’s IRS Schedule

13 Cs to its own records of gross receipts returns and found Taxpayer filed no gross receipts returns in

14 2012 and 2014. The address listed for the business on the 2014 Schedule C is in Albuquerque, New

15 Mexico, so the Department inquired further, ultimately issuing an assessment because records

16 provided did not account for a mismatch between Taxpayer’s Federal and Ohio returns.

17 Under NMSA 1978, Section 7-1-17 (C) (2007), the assessment issued in this case is

18 presumed correct. Consequently, Taxpayers have the burden to overcome the assessment. See

19 Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428, 504 P.2d 638. Unless otherwise

20 specified, for the purposes of the Tax Administration Act, “tax” is defined to include interest and

21 civil penalty. See NMSA 1978, §7-1-3 (Z) (2019). Under Regulation 3.1.6.13 NMAC, the

22 presumption of correctness under Section 7-1-17 (C) extends to the Department’s assessment of

23 penalty and interest. See Chevron U.S.A., Inc. v. State ex rel. Dep't of Taxation & Revenue, 2006-

In the Matter of the Bruce Winchell, page 7 of 12.
1 NMCA-050, ¶16, 139 N.M. 498, 134 P.3d 785 (agency regulations interpreting a statute are

2 presumed proper and are to be given substantial weight). Accordingly, it is Taxpayers’ burden to

3 present some countervailing evidence or legal argument to show that they are entitled to an

4 abatement, in full or in part, of the assessment issued in the protest. See N.M. Taxation &

5 Revenue Dep't v. Casias Trucking, 2014-NMCA-099, ¶8, 336 P.3d 436. When a taxpayer

6 presents sufficient evidence to rebut the presumption, the burden shifts to the Department to

7 show that the assessment is correct. See MPC Ltd. v. N.M. Taxation & Revenue Dep't, 2003-

8 NMCA-021, ¶13, 133 N.M. 217, 62 P.3d 308.

9 While there is no doubt that Taxpayer engaged in the business of selling tea and related

10 products, there is ample evidence that all monetary gain from this enterprise in 2014 is from the tea

11 shop physically situated in Ohio, not in New Mexico. Taxpayer provided Ohio sales tax returns, an

12 Ohio business registration certificate, a photograph of the location, and other documents in support

13 of the fact that the business is in Akron, Ohio. The placement of the Taxpayer’s home address

14 rather than the business’s Ohio address on the Schedule C is a simple scrivener’s error and ought

15 not determine the outcome of this case. See Buchine v. Comm’r, 20 F.3d 173, 1994 U.S. App.

16 LEXIS 10242 (a scrivener’s error concerning a tax year, i.e., 1984, on a waiver letter can be

17 overlooked when the parties’ intent was to apply the waiver to a different year, i.e., 1981); see also

18 Luker v. Eubanks (in re Eubanks), 444 B.R. 415, FN5, 2010 Bankr. LEXIS 4873 (a scrivener’s error

19 does not affect credibility). A review of the IRS 2014 Schedule C instructions1 shows that the

20 address line should have been the Ohio business address rather than the Taxpayer’s home address.

1
Internal Revenue Service publications are available online at:
https://apps.irs.gov/app/picklist/list/priorFormPublication.html. The 2014 Schedule C instructions can be found at:
https://www.irs.gov/pub/irs-prior/i1040sc--2014.pdf (last accessed 02/25/2020).

In the Matter of the Bruce Winchell, page 8 of 12.
1 The responsibility rests on the Hearing Officer to make the legal determination as to the

2 location of the business. “It is the sole responsibility of the trier of fact to weigh the testimony,

3 determine the credibility of the witnesses, reconcile inconsistencies, and determine where the truth

4 lies.” N.M. Taxation & Revenue Dep’t v. Casias Trucking, 2014-NMCA-099, ¶ 23. As noted

5 above, Mr. Winchell provided ample evidence supporting the fact that the business “At Portage

6 Lakes, LLC,” for which he filed a Schedule C, was conducted entirely outside of New Mexico. The

7 fact that Mr. Winchell keeps no business records for “At Portage Lakes, LLC” in New Mexico

8 underscores the fact that the entire business was conducted out of state. Mr. Winchell was very

9 credible, cordial and composed. Some scrivener’s errors are not immediately apparent. A tax

10 protestant can rebut the presumption of correctness by showing that the decision of the

11 Department is not supported by substantial evidence or the Department failed to follow relevant

12 statutory provisions. See Floyd & Berry Davis Co. v. Bureau of Revenue, 1975-NMCA-143, ¶8,

13 88 N.M. 576, 544 P.2d 291; see also McConnell v. State ex rel. Bureau of Revenue, 1071-

14 NMCA-181, ¶7, 83 N.M. 386, 492 P.2d 1003. The Taxpayer overcame the presumption of

15 correctness that attached to the assessment by showing the business was located outside of New

16 Mexico and did not fall within the territorial scope of the Gross Receipts and Compensating Tax

17 Act. See MPC Ltd. v. N.M. Taxation & Revenue Dep’t, 2003-NMCA-021, ¶13, 133 N.M. 217, 62

18 P.3d 308; see also Regulation 3.1.6.12 (A) NMAC (1/15/01); see also NMSA 1978, §§ 7-9-1

19 through 7-9-115. After the Taxpayer presented his evidence that all income from the company was

20 derived from Ohio, the Department provided no evidence to support a finding that the 2014

21 Schedule C income was sourced in New Mexico and was unable to rebut the Taxpayer’s evidence

22 of out-of-state business activity. While the initial assessment was justified because of the

23 Taxpayer’s initial addressing error, the evidence presented corrected the addressing error.

In the Matter of the Bruce Winchell, page 9 of 12.
1 Receipts from teaching at the University of New Mexico.

2 Evidence presented at the hearing showed that Mr. Winchell taught at the University of New

3 Mexico in 2012. This was income earned in New Mexico. He considered this income as income

4 from providing a service. The University issued a W-2 for wages, not a 1099-Misc for services.

5 Mr. Winchell filed an IRS Schedule C claiming the income and business deductions thereon. He

6 acknowledged he did not file gross receipts tax returns in 2012. Again, the Department determined

7 that a mismatch existed between 2012 Schedule C and 2012 gross receipts reporting and included

8 the calculation of tax, penalty and interest in the assessment. Mr. Winchell is liable for the gross

9 receipts tax, penalty and interest on the unreported gross receipts income from 2012. Parties at the

10 hearing agreed on this point, and therefore further discussion is not necessary. Taxpayer has the

11 burden to overcome the assessment and did not present evidence other than his

12 acknowledgement of error. See Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428, 504

13 P.2d 638.

14 CONCLUSIONS OF LAW

15 A. Taxpayer filed a timely, written protest of the Department’s Assessment letter and

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

17 B. The hearing was timely set and held within 90-days of the Department’s request for

18 hearing pursuant to NMSA 1978, Section 7-1B-8 (2019).

19 C. Any assessment made by the Department is presumed to be correct, therefore it is

20 the taxpayer’s burden to come forward with evidence and legal argument to establish that the

21 Department’s assessment should be abated, in full or in part. See NMSA 1978, Section 7-1-17 (C)

22 (2007).

In the Matter of the Bruce Winchell, page 10 of 12.
1 D. “Tax” is defined to include not only the tax program’s principal, but also interest and

2 penalty. See NMSA 1978, Section 7-1-3 (Y) (2017). Assessments of penalties and interest therefore

3 also receive the benefit of a presumption of correctness. See Regulation 3.1.6.13 NMAC (1/15/01).

4 E. Taxpayer presented substantial evidence to overcome the presumption of correctness

5 that attached to the Department’s assessment of 2014 business income, showing the business

6 income of “At Portage Lakes, LLC” was derived entirely from out-of-state activity. See NMSA

7 1978, Section 7-9-3.5 (A)(1) (2007); see also Regulation 3.2.1.14 (A) (12/30/03).

8 F. Taxpayer failed to meet his burden to overcome the presumption of correctness in

9 the Department’s assessment of 2012 business income derived from teaching in New Mexico.

10 See NMSA 1978 Section 7-1-17 (C) (2007); see also MPC Ltd. v. N.M. Taxation & Revenue

11 Dep’t, 2003-NMCA-021, ¶13, 133 N.M. 217, 62 P.3d 308; see also Regulation 3.1.6.12 (A)

12 NMAC (1/15/01).

13 For the foregoing reasons, the Taxpayer’s protest IS GRANTED IN PART AND

14 DENIED IN PART. IT IS ORDERED that the Department’s assessment of tax, penalty and

15 interest for 2014 is abated in its entirety; the Department’s assessment of tax, penalty and interest

16 for 2012 was proper, hence, gross receipts tax in the amount of $26.18, penalty in the amount of

17 $10.00, and interest in the amount of $7.26, for a total 2012 assessment of $43.44 is due. Interest

18 accrues until paid.

19 DATED: February 25, 2020.

20
21 Ignacio V. Gallegos
22 Hearing Officer
23 Administrative Hearings Office
24 P.O. Box 6400
25 Santa Fe, NM 87502

In the Matter of the Bruce Winchell, page 11 of 12.
1 NOTICE OF RIGHT TO APPEAL

2 Pursuant to NMSA 1978, Section 7-1-25 (2015), the parties have the right to appeal this

3 decision by filing a notice of appeal with the New Mexico Court of Appeals within 30 days of the

4 date shown above. If an appeal is not timely filed with the Court of Appeals within 30 days, this

5 Decision and Order will become final. Rule of Appellate Procedure 12-601 NMRA articulates

6 the requirements of perfecting an appeal of an administrative decision with the Court of Appeals.

7 Either party filing an appeal shall file a courtesy copy of the appeal with the Administrative

8 Hearings Office contemporaneous with the Court of Appeals filing so that the Administrative

9 Hearings Office may begin preparing the record proper. The parties will each be provided with a

10 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

11 which occurs within 14 days of the Administrative Hearings Office receipt of the docketing

12 statement from the appealing party. See Rule 12-209 NMRA.

13 CERTIFICATE OF SERVICE

14 On February 25, 2020, a copy of the foregoing Decision and Order was submitted to the

15 parties listed below in the following manner:

16 First Class Mail Interdepartmental Mail

17 INTENTIONALLY BLANK
18
19 John Griego
20 Legal Assistant
21 Administrative Hearings Office
22 P.O. Box 6400
23 Santa Fe, NM 87502

In the Matter of the Bruce Winchell, page 12 of 12.