Was a former wife personally liable for gross receipts tax assessed against her ex-husband's D & M Recovery sole proprietorship when she never worked in or controlled it?

Plain-English summary

Mariah Affentranger was not personally liable for gross receipts tax assessed against D & M Recovery, her former husband's sole proprietorship. She did not engage in or control the business, and the divorce settlement made its unallocated debt her ex-husband's separate obligation.

D & M Recovery repossessed automobiles as a sole proprietorship of Dennis Fluitt. Affentranger and Fluitt were married from 1997 until November 2007.

During the assessed period, Affentranger worked only as a high-school teacher and counselor. She was never an officer, employee, agent, or participant in D & M Recovery. She did not perform services, direct activity, review finances, prepare gross receipts returns, or possess the business records.

The Department found unreported business income through Fluitt's Schedule C on the couple's joint federal return and assessed D & M Recovery for 2005 and 2006. For an unexplained reason, it mailed the assessments to Affentranger. She timely protested and supplied Fluitt's contact information, but the record showed no Department attempt to contact him.

Joint income reporting did not create gross receipts liability

New Mexico gross receipts tax applied to the person engaging in business. Section 7-1-3(Y) defined a taxpayer through liability, withholding or collection responsibility, or an outstanding assessment against that person.

Affentranger fit none of those routes:

• she did not engage in D & M Recovery's business;
• she was not responsible for its tax collection or payment; and
• the assessments were issued against D & M Recovery, not against her.

The decision applied Breen, which treated a spouse who played no role in the other spouse's business as not being that business's gross receipts taxpayer. Filing joint personal income-tax returns—and benefiting from community income—could create joint income-tax consequences, but gross receipts tax was a separate tax on the business actor.

The divorce decree assigned the business debt to Fluitt

The marital settlement addressed prior joint income-tax returns, requiring each spouse to pay half of later income-tax adjustments. It did not divide D & M Recovery's gross receipts tax debt.

The agreement made Fluitt responsible for all unspecified debts. Once incorporated into the divorce decree, that provision made the unallocated D & M Recovery liability his separate debt under the decision's analysis.

Whether the business itself had originally been separate or community property did not change the result. Even assuming a community ownership interest, Affentranger's lack of business participation meant she was not the gross receipts taxpayer.

Result: protest granted. The decision did not invalidate the assessments against D & M Recovery or prevent the Department from pursuing the correct taxpayer. It held only that Affentranger was not personally liable. Because that issue resolved the case, the hearing officer reserved the separate innocent-spouse question.

What this means for you

Spouses of sole proprietors

Joint income-tax filing does not automatically make both spouses the gross receipts taxpayers for a business operated solely by one spouse.

Divorcing business owners

Address business tax debts expressly. The settlement's allocation of unspecified debt was important here, while its tax-sharing clause covered only joint income returns.

People receiving an assessment for someone else's business

Protest promptly and document the lack of ownership, work, agency, tax responsibility, and assessment identity. Merely receiving the Department's mailing did not create taxpayer status.

Common questions

Q: Did Affentranger help operate D & M Recovery?
A: No. The decision found no employment, agency, services, financial role, or tax-filing role.

Q: Did filing joint income-tax returns make her liable?
A: No. Joint income-tax reporting was distinct from liability for the business's gross receipts.

Q: Was the business community property?
A: The record did not establish when it was formed, so the decision could not determine that. It held the answer would not change Affentranger's taxpayer status.

Q: What did the divorce settlement do?
A: It assigned unspecified debts to Fluitt and shared only later liabilities from prior joint income-tax returns.

Q: Were the D & M Recovery assessments erased?
A: No. The Department could pursue the correct taxpayer; it could not hold Affentranger liable on this record.

Citations and references

Statutes and regulation:

• NMSA 1978, § 7-1-3(O) and (Y) — definitions of person and taxpayer
• NMSA 1978, §§ 7-9-3.3 and 7-9-4 and Regulation 3.2.4.8 NMAC — person engaged in business
• NMSA 1978, §§ 40-3-9 and 40-3-12 — separate and community property or debt
• NMSA 1978, § 7-1-17.1 — innocent-spouse relief, issue reserved

Cases cited:

• Breen v. State Taxation & Revenue Department, 2012-NMCA-101
• Comer v. State Tax Commission, 41 N.M. 403 (1937)
• MPC Ltd. v. New Mexico Taxation & Revenue Department, 2003-NMCA-021
• Lucas v. Lucas, 95 N.M. 283 (1980)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Mariah Affentranger
• Decision PDF: D&O 13-07

Original ruling text

BEFORE THE HEARING OFFICER
OF THE TAXATION AND REVENUE DEPARTMENT
OF THE STATE OF NEW MEXICO

IN THE MATTER OF THE PROTEST OF
MARIAH AFFENTRANGER No. 13-7
TO ASSESSMENT ISSUED AGAINST
D & M RECOVERY UNDER LETTER
ID NO.’s L1459749184 & L0049066048

DECISION AND ORDER

A protest hearing occurred on the above captioned matter on January 8, 2013 before

Brian VanDenzen, Esq., Tax Hearing Officer, in Santa Fe. Staff attorney Peter Breen represented

the Taxation and Revenue Department of the State of New Mexico (“Department”). Protest

Auditor Milagros Bernardo appeared as a witness for the Department. Ms. Mariah Affentranger

appeared protesting the assessments issued by the Department against D & M Recovery. Mr.

Scott Affentranger appeared as witness on behalf of Ms. Affentranger. Protestant-Ms.

Affentranger’s Exhibits 1-7 and Department Exhibit A were admitted into the record. As the

Department proposed and stipulated, Protestant’s Exhibit 7, was received on January 9, 2013 and

admitted into the record. That exhibit is 89-pages and has been sequentially numbered for ease of

citing particular pages throughout the findings of fact. All other exhibits are more thoroughly

described in the Administrative Exhibit Coversheet. Based on the evidence and arguments

presented, IT IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. Ms. Affentranger was married to Dennis Fluitt from 1997 until their divorce on

November 27, 2007. [Protestant Exhibit #7.87].

2. D&M Recovery, a sole proprietorship of Dennis Fluitt, repossesses automobiles.

In the Matter of the Protest of Miriah Affentranger, page 1 of 14

3. D&M Recovery’s business registration form was not introduced into the record.

There is no evidence on the record of when D&M Recovery was formed. There is no evidence

on the record of D&M Recovery’s business address, or whether the business address was the

same residential address where Ms. Affentranger and Mr. Fluitt resided during the marriage.

4. There is insufficient evidence to make a finding whether D&M Recovery was Mr.

Fluitt’s separate property obtained before marriage or community property formed during Mr.

Fluitt’s marriage with Ms. Affentranger.

5. Ms. Affentranger did not advise, encourage, or direct Mr. Fluitt to form D&M

Recovery.

6. No evidence was presented that Ms. Affentranger has ever been an officer,

employee, or agent of D&M Recovery.

7. Ms. Affentranger did not perform any activity or service on behalf of D&M

Recovery or cause D&M Recovery to perform any activity, service, or sale.

8. Ms. Affentranger did not see, review, or otherwise play any role in the finances of

D&M Recovery.

9. Ms. Affentranger did not assist Mr. Fluitt in preparing, reviewing, or submitting

D&M Recovery’s gross receipts taxes.

10. Ms. Affentranger is unfamiliar with gross receipts tax or the combined reporting

system.

11. During the relevant period, Ms. Affentranger was employed only as a high school

teacher/counselor.

12. Ms. Affentranger was not engaged in business in any capacity during the relevant

period.

In the Matter of the Protest of Miriah Affentranger, page 2 of 14

13. During the relevant period, Mr. Fluitt performed work for Bradford Industries,

Inc. and received weekly paychecks. The evidence is unclear whether Mr. Fluitt worked directly

as an employee of Bradford Industries, or whether Mr. Fluitt, in his capacity as sole proprietor of

D&M Recovery, served as an independent contractor to Bradford Industries.

14. Mr. Fluitt’s work for Bradford Industries, whether as an employee or an

independent contractor through D&M Recovery, was his primary source of income during the

relevant period.

15. D&M Recovery was a non-filer of gross receipts taxes during the relevant period.

16. Mr. Fluitt possesses all the tax records for D&M Recovery for the relevant period.

17. Ms. Affentranger does not have access to any tax records or nontaxable

transaction certificates regarding D&M Recovery. Therefore, Ms. Affentranger did not present

any such information during the protest hearing.

18. During the marriage, Ms. Affentranger was responsible for the couples’ personal

banking and the payment of the couples’ bills.

19. Ms. Affentranger deposited checks, including Mr. Fluitt’s paychecks from

Bradford Industries, into the couple’s joint bank account during the relevant period.

20. Ms. Affentranger and Mr. Fluitt used the services of H&R Block every relevant

year to prepare and file their joint Federal Income tax returns.

21. H&R Block assisted Ms. Affentranger and Mr. Fluitt in preparing their personal

incomes taxes only and did not prepare gross receipts tax/combined system returns for D&M

Recovery.

In the Matter of the Protest of Miriah Affentranger, page 3 of 14

22. At the Department’s request, Ms. Affentranger submitted a copy of the Marital

Settlement Agreement (“MSA”) between her and Mr. Fluitt after the conclusion of the protest

hearing, on January 9, 2013. [Protestant Exhibit #7.76-86].

23. The MSA was fully adopted on November 27, 2007 by the Final Decree of

Dissolution of Marriage. [Protestant Exhibit #7.87-89].

24. The MSA only addressed Income Taxes liabilities. [Protestant Exhibit #7.82].

25. Under the MSA, “[i]n the event any prior joint return is audited or contested, any

additional tax, interest or penalties are found due, each party will pay one-half of such additional

tax, interest or penalties…” (italics for emphasis). [Protestant Exhibit #7.82].

26. The evidence established that the only prior joint returns that Ms. Affentranger

and Mr. Fluitt filed were income tax returns.

27. D&M Recovery’s gross receipts tax liability was not expressly divided in the

MSA. Therefore, D&M Recovery’s gross receipts tax liability is the separate debt of Mr. Fluitt

under the terms of the MSA, which required him to be liable for all unspecified debt. [Protestant

Exhibit #7.81, paragraph 4(B)(11)].

28. Through the Department’s CSPAN program with the IRS, the Department

detected that Mr. Fluitt had unreported New Mexico business income from the D&M Recovery

on his Schedule C Federal Income tax filings during the relevant period.

29. On May 20, 2010, under letter identification number L1559015488, the

Department assessed D&M Recovery for $2,406.92 in gross receipts tax, $431.38 in penalty, and

$1,068.33 in interest, for the Combined Reporting System period ending on December 31, 2005.

In the Matter of the Protest of Miriah Affentranger, page 4 of 14

30. On May 20, 2010, under letter identification number L0049066048, the

Department assessed D&M Recovery for $1,620.64 in gross receipts tax, $324.13 in penalty, and

$476.28 in interest, for the Combined Reporting System period ending on December 31, 2006.

31. In Protest Auditor Bernardo’s seven-years experience with the Department, as a

matter of practice, the Department sends assessments to a taxpayer based on the best-known

address entered into the system.

32. In this specific case, Protest Auditor Bernardo did not know, and there is no other

evidence on the record, as to why D&M Recovery’s assessments were specifically mailed to Ms.

Affentranger’s address.

33. On May 21, 2010, Ms. Affentranger protested both assessments made against

D&M Recovery. As part of her protest, Ms. Affentranger requested the dismissal of the

assessments because she was never involved with D&M Recovery’s business.

34. After the assessments were issued, Ms. Affentranger provided the Department

with Mr. Fluitt’s phone number and address.

35. Protest Auditor Bernardo did not attempt to contact Mr. Fluitt and there is no

evidence that anyone with the Department ever attempted to contact Mr. Fluitt about D&M

Recovery’s gross receipts liabilities.

36. The Department requested a hearing in this matter on October 18, 2012.

37. On October 19, 2012, the Hearing Bureau sent Notice of Hearing, scheduling this

matter for hearing on January 8, 2012.

38. On October 23, 2012, the Hearing Bureau sent Amended Notice of Hearing,

scheduling this matter for hearing on January 8, 2013.

In the Matter of the Protest of Miriah Affentranger, page 5 of 14

39. As of the date of hearing, D&M Recovery owed $2,406.92 in gross receipts tax,

$481.38 in penalty, and $1,287.33 in interest for a total of $4,175.63 for the gross receipts

reporting period ending on December 31, 2005. [Department Exhibit A].

40. As of the date of hearing, D&M Recovery owed $1,620.64 in gross receipts tax,

$324.13 in penalty, and $623.74 in interest for a total of $2,568.51 for the gross receipts

reporting period ending on December 31, 2006. [Department Exhibit A].

DISCUSSION

While much of the protest hearing focused on the question of whether Ms. Affentranger

might qualify for Innocent Spouse Relief under NMSA 1978, Section 7-1-17.1 (2003), a

predicate question controls the outcome of this protest: who is the taxpayer under the

assessments? In short answer, Ms. Affentranger overcame any presumption of correctness that

attached to the Department’s assessments by showing that she is not a taxpayer subject o D&M

Recovery’s gross receipt tax liabilities.

Presumption of Correctness and Burden of Proof.

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

presumed to be correct. Consequently, the taxpayer has the burden to overcome the assessments.

See Archuleta v. O'Cheskey, 84 N.M. 428, 431, 504 P.2d 638, 641 (NM Ct. App. 1972). However,

once a taxpayer rebuts the presumption of correctness, the burden shifts to the Department to show

the correctness of the assessed tax. See MPC Ltd. v. N.M. Taxation & Revenue Dep't, 133 N.M. 217,

220, 2003 NMCA 21, ¶13, 62 P.3d 308, 311 (N.M. Ct. App. 2002).

In this case, Ms. Affentranger presented sufficient facts that she was not the relevant

taxpayer to overcome the presumption of correctness, shifting the burden to the Department to

support the assessments against her.

In the Matter of the Protest of Miriah Affentranger, page 6 of 14
Who Constitutes a Taxpayer for Gross Receipts Tax purposes?

A “person” under the Tax Administration Act (“TAA”), NMSA 1978, Section 7-1-3(O)

(2009),

means any individual, estate, trust, receiver, cooperative association, club,
corporation, company, firm, partnership, limited liability company, limited
liability partnership, joint venture, syndicate, other association or gas, water
or electric utility owned or operated by a county or municipality; "person"
also means, to the extent permitted by law, a federal, state or other
governmental unit or subdivision, or an agency, department or instrumentality
thereof; and "person", as used in Sections 7-1-72 through 7-1-74 NMSA
1978, also includes an officer or employee of a corporation, a member or
employee of a partnership or any individual who, as such, is under a duty to
perform any act in respect of which a violation occurs[.]

NMSA 1978, Section 7-1-3(Y) (2009) provides three ways a “person” is a “taxpayer” under

the TAA: “a person liable for payment of any tax, a person responsible for withholding and

payment or for collection and payment of any tax or a person to whom an assessment has been

made, if the assessment remains unabated or the amount thereof has not been paid.” The facts of this

case quickly dispose of the second and third portions of the “taxpayer” definition under NMSA

1978, § 7-1-3(Y) (2009). The evidence established that Ms. Affentranger was not responsible for

withholding, payment or collection of any of D&M Recovery’s taxes. Therefore, Ms.

Affentranger was not a “taxpayer” under the second portion of the definition of “taxpayer.”

Since the assessments in this case were not made against Ms. Affentranger but against D&M

Recovery, Ms. Affentranger does not qualify as a “taxpayer” under the third portion of the

definition of NMSA 1978, § 7-1-3(Y) (2009).

The first portion of the definition is the only way Ms. Affentranger might qualify as a

“taxpayer” under NMSA 1978, § 7-1-3(Y) (2009) if she is a person liable for the payment of tax.

Since this case involves two assessments of gross receipts tax against D&M Recovery, the question

In the Matter of the Protest of Miriah Affentranger, page 7 of 14
under the first definition of “taxpayer” under NMSA 1978, § 7-1-3(Y) (2009) becomes whether Ms.

Affentranger is a person liable for D&M Recovery’s gross receipts taxes.

New Mexico imposes a gross receipts tax on the receipts of any person engaged in

business. See NMSA 1978, Section 7-9-4 (2002) (italics for emphasis); See also Comer v. State

Tax Comm'n, 41 N.M. 403, 406, 69 P.2d 936, 938 (N.M. 1937). “Engaging in business” is

defined under the TAA as “carrying on or causing to be carried on any activity with the purpose

of direct or indirect benefit.” NMSA 1978, Section 7-9-3.3 (2003). Under Regulation 3.2.4.8

NMAC (04/30/01), “the gross receipts tax is imposed on persons engaging in business in New

Mexico. Such persons are solely liable for payment of the tax[.]”

As the New Mexico Court of Appeals recently concluded, “only those persons who

engage in business can be held liable for the gross receipts tax.” Breen v. State Taxation &

Revenue Dep't, 2012 NMCA 101, 31, 287 P.3d 379, 389 (N.M. Ct. App. 2012). Breen has some

significant factual and legal differences from this protest, and as such, the most relevant portion

of that decision is arguably dicta. However, in order to ultimately resolve the issue in Breen, the

Court of Appeals had to consider the question of who was a taxpayer for gross receipts purposes

of a business owned and operated solely by one of the spouses in a marriage. That analysis in

Breen, even if dicta, is insightful to the resolution of this protest.

Breen involved a question of whether tax records could be subpoenaed as part of

discovery in an employment discrimination action in the district court. As part of discovery, the

defendant in Breen attempted to subpoena the gross receipts tax records of the plaintiff’s

spouse’s business. The spouse asserted an evidentiary privilege against the disclosure of her

business’ tax records under NMRA 11-502, the New Mexico Taxpayer Bill of Rights, and

various other confidentiality statutes under the Tax Administration Act. The defendant in Breen

In the Matter of the Protest of Miriah Affentranger, page 8 of 14
argued that the records were discoverable because the plaintiff and spouse filed income taxes

jointly and because the plaintiff owned a community property interest in his spouse’s business

income. See id. at 30-31, 389.

In addressing the question of whether the spouse’s business gross receipts records were

protected by a statutory privilege or whether they were discoverable, the Breen Court of Appeals

asked the basic question of whether plaintiff was considered a taxpayer of his spouse’s business

gross receipts tax. See id. 31, 389. The Court of Appeals concluded that only a person engaged in

business is liable for gross receipts tax. See id. Since the plaintiff played no role in his spouse’s

business, the Breen Court of Appeals found that that plaintiff was not a taxpayer regarding his

spouse’s business receipts. See id. 32, 389. The fact that a spouse filed taxes jointly with a person

in engaged in business, or that a spouse had a community interest in the income of the business,

did not alter the Court of Appeals analysis of who constituted a taxpayer for gross receipts

purposes. See id. at 31-32, 389.

Applying the statutory definitions and Breen to the facts of this protest, Ms. Affentranger

was not a person engaged in business subject to gross receipts tax during the relevant period. During

the relevant period, Ms. Affentranger only worked as a high school teacher and guidance counselor.

Ms. Affentranger was not involved in any manner with D&M Recovery during the relevant period.

Ms. Affentranger did not prepare, consult, or review any of D&M Recovery’s taxes during the

relevant period. Ms. Affentranger did not carry on any activity or cause any activity to be carried on

as it relates to D&M Recovery. D&M Recovery is the sole proprietorship of Dennis Fluitt, and he

appears to be the only person engaged in the auto repossession business.

Like in Breen, the fact that Ms. Affentranger jointly filed personal income taxes with Mr.

Fluitt, which would have included income Mr. Fluitt derived from D&M Recovery, does not

In the Matter of the Protest of Miriah Affentranger, page 9 of 14
subject her to gross receipts tax for D&M Recovery. New Mexico personal income tax is a

separate, distinct tax from gross receipts tax. Compare NMSA 1978, Section 7-2-1 et seq. to

NMSA 1978, Section 7-9-1 et seq. There is no doubt that the income Mr. Fluitt derived from his

receipts with D&M Recovery during the marriage was community property subject to income tax.

See Katson v. Katson, 43 N.M. 214, 217, 89 P.2d 524, 526 (1939) (income earned from a husband’s

separate business is community property). There is no allegation in this case that Ms. Affentranger

and Mr. Fluitt, as joint filers, failed to pay appropriate New Mexico income tax on all

community income, including the income Mr. Fluitt received from D&M Recovery. Indeed, the

fact that the Department detected D&M Recovery’s gross receipts tax non-filing based on the

Mr. Fluitt’s Schedule C on the couple’s joint federal income tax return suggests that the couple

reported and paid income tax on the portion of the income attributable to Mr. Fluitt’s D&M

Recovery receipts. But liability for D&M Recovery’s gross receipts tax obligations is a separate

question from the couple’s joint income tax liabilities.

Because Ms. Affentranger benefited from the community income that included Mr. Fluitt’s

D&M Recovery income, she remains potentially liable for any adjustments to income tax made

against the couple’s joint income tax returns. Under the terms of the MSA, Ms. Affentranger

continues to be equally liable for any additional tax, penalty, and interest arising out of any prior

joint income tax return. Since the tax provisions of the MSA only applies to personal income tax,

under the MSA Ms. Affentranger only assumes potential liability for previously filed joint income

tax returns.

To the extent that the Department argues that that D&M Recovery represents community

property, it must be noted that it is not clear on this record when D&M Recovery was actually

formed. Whether property is considered community property or separate property depends on the

In the Matter of the Protest of Miriah Affentranger, page 10 of 14
“time and manner of its acquisition.” Lucas v. Lucas, 95 N.M. 283, 284, 621 P.2d 500, 501 (N.M.

1980). Property acquired during a marriage is presumed to be community property until rebutted by

the preponderance. See NMSA 1978, Section 40-3-12; See also Stroshine v. Stroshine, 98 N.M.

742, 743, 652 P.2d 1193, 1194 (N.M. 1982). Without knowing whether D&M Recovery was

formed before or during the marriage, there is no presumption that it was community property and

no definitive findings can be made whether D&M Recovery was the separate property of Mr. Fluitt

or community property. Even assuming that D&M Recovery is community property, like the

defendant alleged in Breen, that does not make Ms. Affentranger a “taxpayer” for the purposes of

D&M Recovery’s gross receipts1.

There remains the question whether D&M Recovery’s gross receipts tax liabilities are a

community or separate debt. In New Mexico any debt incurred by either spouse during a

marriage that is not separate debt is considered community debt. See NMSA 1978, Section 40-3-

9(B). Under NMSA 1978, § 40-3-9 (A)(3), a separate debt is one so declared by a judgment or

decree of any court having jurisdiction. As the finding of fact #27 indicates, D&M Recovery’s

gross receipts tax obligations are in fact a separate debt. The MSA, which was adopted by decree

of a court having jurisdiction over the dissolution of marriage, clearly states that Mr. Fluitt has

assumed full liability for any debt not previously divided under the MSA. Since D&M

Recovery’s gross receipts tax liability was not previously divided in the MSA, Mr. Fluitt is fully

liable for that debt, making it a separate debt under NMSA 1978, § 40-3-9 (A)(3). By the terms

of the MSA, Ms. Affentranger is not liable for Mr. Fluitt’s separate D&M Recovery gross

1
It is worth briefly mentioning that the Department at one time had a regulation establishing that a spouse can be
“secondarily liable” to the tax liability of the other spouse’s sole proprietorship. See Regulation 3.1.6.16 NMAC
(10/31/96). However, that regulation was repealed without replacement on January 15, 2001, suggesting that the
Department has changed its previous position on a spouse’s secondary liability for a sole proprietorship.

In the Matter of the Protest of Miriah Affentranger, page 11 of 14
receipts tax liability, and thus does not meet the first possible basis of a “taxpayer” under NMSA

1978, § 7-1-3(Y) (2009).

Ms. Affentranger is the only person that timely protested the assessments the Department

issued in this case (there is no evidence that the Department mailed the assessments to Mr. Fluitt).

In her protests, Ms. Affentranger specifically argued for the remedy of dismissal of the assessments

against her since she was not involved in the D&M Recovery business in any manner. The fact that

she alone protested the assessments does not make her a “taxpayer” for gross receipts tax purposes

under the TAA’s statutory definition or subject to gross receipts tax when she is not a person

engaged in business. Rather, it is only evidence that she is a reasonably cautious citizen

concerned about any possible liability upon receipt of an official Department mailing.

Nothing about this decision is meant to say that the Department’s assessments are

incorrect or inappropriate. The Department’s assessments against D&M Recovery are entitled to

the presumption of correctness against the correct taxpayer. Ms. Affentranger overcame the

presumption of correctness in this protest by showing she was not a “taxpayer” for gross receipts

purposes through her credible testimony that she played no role whatsoever with D&M Recovery’s

business and by showing through the divorce decree/MSA that Mr. Fluitt is solely liable for any

unspecified debts, including D&M Recovery gross receipts tax liabilities, under that agreement. In

this case, the correct taxpayer appears to be Mr. Fluitt. Ms. Affentranger has previously provided

the contact information for Mr. Fluitt to the Department. With that information, the Department can

proceed in whatever manner it deems appropriate to ensure that D&M Recovery is in compliance

with its gross receipts tax obligations. But since Ms. Affentranger has overcome the presumption at

it relates to her being liable for D&M Recovery’s assessed gross receipts, and she does not meet the

definition of “taxpayer” for gross receipts taxes purposes, her protest is granted.

In the Matter of the Protest of Miriah Affentranger, page 12 of 14
Although the issue was addressed both factually and legally during the hearing, in light of

the above discussion and the fact that the Secretary of the Department has not had an opportunity to

make a determination on the issue, the hearing officer reserves findings of fact, discussion, and

conclusions of law on the question of whether Ms. Affentranger was entitled to innocent spouse

relief under NMSA 1978, Section 7-1-17.1 (2003).

CONCLUSIONS OF LAW

A. Ms. Affentranger filed a timely, written protest to the Department’s assessments,

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

B. Ms. Affentranger was not an employee, agent, or principal of D&M Recovery, did

not carry out or cause to be carried out any of D&M Recovery’s activities/services/sales, and

therefore was not a person engaged in business under NMSA 1978, § 7-9-3.3 (2003).

C. Ms. Affentranger, as a person not engaged in business during the relevant time,

was not a taxpayer for purposes of gross receipts tax act. See NMSA 1978, Section 7-9-4 (2002);

See also Comer v. State Tax Comm'n, 41 N.M. 403, 406, 69 P.2d 936, 938 (N.M. 1937),

Regulation 3.2.4.8 NMAC (04/30/01), and See Breen v. State Taxation & Revenue Dep't, 2012

NMCA 101, 31, 287 P.3d 379, 389 (N.M. Ct. App. 2012).

D. Mr. Fluitt assumed all liability for any debts not divided under the MSA, making

D&M Recovery’s gross receipts tax liabilities (which were not divided under the MSA) his

separate debt under the terms of the MSA.

E. Ms. Affentranger is not “taxpayer” under the three possible definitions of that

word articulated by NMSA 1978, § 7-1-3(Y) (2009).

F. Ms. Affentranger overcame the presumption of correctness that attached to D&M

Recovery’s assessments, shifting the burden back to the Department to establish the assessments

In the Matter of the Protest of Miriah Affentranger, page 13 of 14
were appropriately issued against her. See MPC Ltd. v. N.M. Taxation & Revenue Dep't, 133 N.M.

217, 220, 2003 NMCA 21, ¶13, 62 P.3d 308, 311 (N.M. Ct. App. 2002).

For the foregoing reasons, Ms. Affentranger’s protest IS GRANTED.

DATED: March 11, 2013.

Brian VanDenzen, Esq.
Tax Hearing Officer
Taxation & Revenue Department
Post Office Box 630
Santa Fe, NM 87504-0630

In the Matter of the Protest of Miriah Affentranger, page 14 of 14