Were product-referral commissions, fiddle performances, and earthmoving jobs exempt from gross receipts tax as nonbusiness or isolated activities?

Plain-English summary

Russell Burris owed gross receipts tax on Noni product-referral commissions, paid fiddle performances, and earthmoving services, but he and Janice Silva won abatement of all civil penalties because they had specifically relied on CPAs about the Schedule C income. Tax and mandatory interest remained due.

The Department found federal Schedule C income that the couple had not reported on New Mexico CRS returns for 2007, 2010, and 2011. It assessed:

• 2007: $4,263.70 tax, $852.74 penalty, and $1,193.28 interest;
• 2010: $788.44 tax, $157.69 penalty, and $90.51 interest; and
• 2011: $616.26 tax, $123.26 penalty, and $48.48 interest.

The Department separately gave Burris the Section 7-9-66.1 exemption for his 2007 real-estate commissions and excluded those receipts from the assessment.

Noni commissions paid for taxable promotional services

Burris referred customers who ordered Tahitian Noni Juice, and Noni Corporation paid him bonus commissions based on the sales. He did not consider himself a salesperson and argued that he was not selling tangible property.

The AHO explained that New Mexico gross receipts tax covered services and commissions, not just retail sales. Burris's referrals and promotional activity generated direct monetary benefit and met the definition of engaging in business.

His lack of a current CRS number did not change the statutory taxability of the receipts. Nor did the fact that his old Zia Technical Services business had stopped operating in the 1990s; the assessments were issued directly to Burris and Silva, not to Zia.

Burris said many Noni sales went to customers outside New Mexico, but he supplied no evidence identifying which sales. The claim therefore did not reduce the assessment.

The performance and tractor work was not isolated

In 2010 and 2011, Burris played fiddle at weddings, funerals, and other occasions about 20 times per year, sometimes receiving Forms 1099 and sometimes cash. He also used his tractor for leveling, grading, and earthmoving about six times per year.

Section 7-9-28 excluded isolated or occasional services when the person was not regularly engaged or holding himself out as engaged in that activity. The decision found that the recurring work over multiple years had enough number, regularity, and duration that Burris did not prove the exemption.

Income tax and gross receipts tax could both apply

The couple repeatedly argued that they had already paid personal income tax on the earnings. The AHO rejected that as impermissible-double-taxation relief. Personal income tax applied to income, while gross receipts tax was a separate excise tax on receipts from business activity.

Specific CPA reliance removed the penalties

The taxpayers used one CPA for 2007 and another for 2010 and 2011. Burris discussed the Schedule C activities, how the income should be reported, whether it related to sales, and the amount to report. The couple relied on that advice.

Regulation 3.1.11.11(D) allowed penalty relief for reasonable reliance on a competent accountant after full disclosure. The AHO applied that rule and abated all civil penalties.

Interest remained mandatory until the tax principal was paid. Financial hardship did not authorize abatement, but the Department was ordered to provide an updated liability spreadsheet after removing penalty so the taxpayers could arrange the payment plan Burris requested.

Result: protest PARTIALLY GRANTED and PARTIALLY DENIED. Tax and interest remained; penalty was abated.

What this means for you

Referral and commission earners

You can be engaged in business even when you do not own the product or describe yourself as a salesperson. Payment tied to referred sales can be taxable compensation for promotion or marketing.

Musicians and equipment-service providers

Repeated paid work over several years may not qualify as isolated or occasional even when each activity happens only part time. The number, regularity, duration, market, and holding-out factors all matter.

Taxpayers relying on CPAs

Document specific discussions about the income and the tax treatment. Here, the penalty was abated because the taxpayers consulted CPAs about the Schedule C activities and how to report them—not merely because professionals prepared the returns.

Common questions

Q: Did not having a CRS number make the receipts exempt?
A: No. Registration status did not change whether Burris was engaging in business and receiving taxable commissions or service payments.

Q: Were the real-estate commissions taxed?
A: No. The Department applied the real-estate commission exemption and excluded them from the 2007 assessment.

Q: Why didn't the out-of-state Noni sales reduce the tax?
A: Burris did not document which sales were to people outside New Mexico.

Q: Why were the penalties abated?
A: The taxpayers specifically discussed the Schedule C income and its reporting with CPAs and reasonably relied on their advice.

Q: Did financial hardship remove tax or interest?
A: No. The decision said hardship was not a basis for abatement, although the Department was directed to provide a revised balance so a payment plan could be arranged.

Citations and references

Statutes and regulations:

• NMSA 1978, §§ 7-9-3.3, 7-9-3.5(A)(1)-(2), 7-9-4, and 7-9-5 — business, services, commissions, and gross receipts tax
• NMSA 1978, § 7-9-28 — isolated or occasional transactions
• NMSA 1978, § 7-9-66.1 — real-estate commission exemption
• NMSA 1978, §§ 7-1-67 and 7-1-69 — interest and civil-negligence penalty
• Regulation 3.2.116.8 NMAC — isolated-or-occasional factors
• Regulations 3.1.11.11(D) and 3.1.6.14 NMAC — CPA reliance and financial hardship

Cases cited:

• New Mexico State Board of Public Accountancy v. Grant, 1956-NMSC-068 — double taxation is not prohibited
• State ex rel. Attorney General v. Tittmann, 1938-NMSC-005 — excise and personal income taxes may both apply
• Wing Pawn Shop v. Taxation and Revenue Department, 1991-NMCA-024 — taxpayer's burden to prove an exemption

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Russell Burris & Janice Silva
• Decision PDF: D&O 14-47

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
RUSSELL BURRIS & JANICE SILVA No. 14-47
TO ASSESSMENT ISSUED UNDER LETTER
ID NO. L1086800848, L0013059024 and L0549929936

DECISION AND ORDER

A protest hearing occurred on the above captioned matter on November 13, 2014 before

Chief Hearing Officer Brian VanDenzen, Esq., in Santa Fe. Russell Burris appeared pro se,

representing Russell Burris & Janice Silva (“Taxpayers”). Staff Attorney Melinda Wolinsky

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

(“Department”). Protest Auditor Sonya Varela appeared as a witness for the Department.

Taxpayer Exhibits #1-15 and Department Exhibits A, B, D, E, F, J, and K were admitted into the

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

FOLLOWS:

FINDINGS OF FACT

1. On June 4, 2014, the Department assessed Taxpayers for $4,263.70 in gross

receipts tax, $852.74 in penalty, and $1,193.28 in interest for a total assessment of $6,309.72 for

the combined reporting period ending on December 31, 2007. [Letter id. no. L0013059024].

2. On June 4, 2014, the Department assessed Taxpayers for $788.44 in gross receipts

tax, $157.69 in penalty, and $90.51 in interest for a total assessment of $1,036.64 for the

combined reporting period ending on December 31, 2010. [Letter id. no. L1086800848].

3. On June 4, 2014, the Department assessed Taxpayers for $616.26 in gross receipts

tax, $123.26 in penalty, and $48.48 in interest for a total assessment of $788.00 for the combined

reporting period ending on December 31, 2011. [Letter id. no. L0549929936].

4. On June 9, 2014, Taxpayers protested the Department’s assessments, arguing that

Mr. Burris did not have a CRS number, was not in business, and had already paid personal

income taxes for the commissions he received from a real estate company and from the Noni

Corporation.

5. The Department received the protest on June 19, 2014.

6. The Hearings Bureau first learned of this matter when the Department requested a

hearing on August 21, 2014.

7. On August 22, 2014, the Hearings Bureau set this matter for a hearing on

September 11, 2014 and sent Notice of Administrative Hearing accordingly to Taxpayers and the

Department.

8. On September 2, 2014, Taxpayers moved for a continuance of the scheduled

protest hearing because of scheduled medical treatment and listed alternative dates for the

hearing. The Department did not oppose Taxpayers’ continuance request.

9. On September 3, 2014, the Hearings Bureau continued the September 11, 2014

hearing and sent Notice of Administrative Hearing setting the hearing for November 13, 2014.

10. Taxpayers Russell Burris and Janice Silva jointly filed taxes in the relevant years.

Only the portion of Taxpayers’ income directly attributable to Mr. Burris’ receipts during the

relevant period are at issue in this protest.

In the Matter of the Protest of Russell Burris & Janice Silva, page 2 of 12

11. The Department detected that Taxpayers had reported Schedule C income on their

federal returns but had not reported or paid corresponding gross receipts tax in 2007, 2010, and

2011.

12. Because of the Schedule C mismatch, on February 21, 2014 the Department

commenced a Limited Scope Audit on Taxpayers. [Taxpayer Ex. # 11].

13. In the Department’s February 21, 2014 Notice of Limited Scope Audit, the

Department informed Taxpayers that they had until April 22, 2014, 60-days later, to provide any

nontaxable transaction certificates (“NTTCs”) and other evidence to substantiate that that the

Schedule C amounts in 2007, 2010, and 2011 were not subject to gross receipts tax. [Department

Ex. A-1].

14. On April 1, 2014, the Department sent Taxpayers a reminder of the necessity of

producing NTTCs and other evidence to substantiate that no gross receipts tax was owed under

the limited scope audit for 2007, 2010, and 2011. [Department Ex. E].

15. On April 9, 2014, the Department provided Taxpayers an extension to provide

documentation related to the limited scope audit. [Department Ex. F].

16. In 2007, Taxpayers had $68,020.00 in Schedule C income reported on the federal

income tax returns that was not reported on New Mexico CRS returns in that year. [Department

Ex. A-3].

17. In 2010, Taxpayers had $12,469.00 in Schedule C income and $9,485.00 in 1099-

MISC income reported on the federal income tax returns that was not reported on New Mexico

CRS returns in that year. [Department Ex. A-3].

In the Matter of the Protest of Russell Burris & Janice Silva, page 3 of 12

18. In 2011, Taxpayers had $9,420.00 in Schedule C income and $8,700.00 in 1099-

MISC income reported on the federal income tax returns that was not reported on New Mexico

CRS returns in that year. [Department Ex. A-3].

19. In the 1990’s, Mr. Burris started a business named Zia Technical Services and

obtained a CRS number. That business did not succeed and stopped business activities shortly

after starting. However, that entity was not assessed in this matter.

20. Mr. Burris was a licensed real estate broker whom had commissions from the sale

of real estate in 2007 from Centerfire Real Estate. Taxpayers were given credit for that real estate

commission exemption under NMSA 1978, Section 7-9-66.1 (1990) and the receipts from the

commission were not included in the assessment of 2007 tax.

21. In 2007, 2010, and 2011, Mr. Burris received bonus commission checks for the

sales of Tahitian Noni Juice from the Noni Corporation1, a corporation headquartered in Utah.

22. Mr. Burris did not consider himself a sales person of Noni Corporation.

23. When Mr. Burris referred customers whom placed orders for Noni Juice, Noni

Corporation paid Mr. Burris commission checks on the sales amount.

24. Mr. Burris claimed that many of the Noni Juice sales were to people outside of

New Mexico. However, Mr. Burris did not present any evidence to document which of the Noni

sales were to people out of state.

25. In 2010 and 2011, Mr. Burris played the fiddle at weddings, funerals, and other

occasions approximately 20 times a year. Mr. Burris received 1099’s for some of this work.

Other times Mr. Burris would receive cash payments for these performances.

1
Mr. Burris called this company Noni Corporation most of the time, but occasionally referenced the same company
as the Mirinda Corporation.

In the Matter of the Protest of Russell Burris & Janice Silva, page 4 of 12

26. In 2010 and 2011, Mr. Burris used his tractor for leveling, grading services, and

general earthmoving services approximately 6 times a year.

27. Taxpayers used Ray Garcia, CPA, to prepare their personal income taxes in 2007.

28. Taxpayers discussed with Ray Garcia, CPA, Mr. Burris’ Schedule C income, the

method for reporting the Schedule C income, and the amount of the performance in 2007.

29. Taxpayers used Ronnie Hemphill, CPA, to prepare their personal incomes taxes

in 2010 and 2011.

30. Taxpayers discussed with Mr. Hemphill, CPA, Mr. Burris’ Schedule C income,

the method for reporting the Schedule C income, and the amount of the performance in 2007,

2010, and 2011. Taxpayers depended on the CPAs advice related to the Schedule C income.

31. The Department did not provide a spreadsheet of the remaining liabilities as of the

date of the hearing.

DISCUSSION

Taxpayers challenge the Department’s assessments, arguing that Mr. Burris was not

engaged in business, did not have a CRS number, that his former business Zia Technical

Services had been active since the 1990’s, that they had already paid income taxes on the income

in question, and that Mr. Burris’ services of fiddle playing and earth-working were incidental.

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

presumed correct. Consequently, Taxpayer has the burden to overcome the assessments. See

Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428. Unless otherwise specified, for the

purposes of the Tax Administration Act, “tax” is defined to include interest and civil penalty. See

NMSA 1978, §7-1-3 (X) (2013). Under Regulation 3.1.6.13 NMAC, the presumption of

In the Matter of the Protest of Russell Burris & Janice Silva, page 5 of 12
correctness under Section 7-1-17 (C) extends to the Department’s assessment of penalty and

interest.

Moreover, “[w]here an exemption or deduction from tax is claimed, the statute must be

construed strictly in favor of the taxing authority, the right to the exemption or deduction must be

clearly and unambiguously expressed in the statute, and the right must be clearly established by the

taxpayer.” Wing Pawn Shop v. Taxation and Revenue Department, 1991-NMCA-024, ¶16, 111

N.M. 735 (internal citation omitted); See also TPL, Inc. v. N.M. Taxation & Revenue Dep't, 2003-

NMSC-7, ¶9, 133 N.M. 447. Because Taxpayer is claiming a deduction from gross receipts tax,

Taxpayer must establish his right to claim the deduction.

For the privilege of engaging in business, New Mexico imposes a gross receipts tax on the

receipts of any person engaged in business. See NMSA 1978, § 7-9-4 (2002). “Engaging in

business” is defined as “carrying on or causing to be carried on any activity with the purpose of

direct or indirect benefit.” NMSA 1978, § 7-9-3.3 (2003). Gross receipts applies to the

performance of a service in New Mexico. See NMSA 1978, § 7-9-3.5 (A) (1) (2007). Gross

receipts includes commission from the sale or promotion of any property. See NMSA 1978, § 7-9-

3.5 (A) (2) (2007) (emphasis added). Under the Gross Receipts and Compensating Tax Act, there

is a statutory presumption that all receipts of a person engaged in business are taxable. See NMSA

1978, § 7-9-5 (2002).

While Taxpayers focused a great deal of the hearing disputing that he was selling any

tangible personal property, the Gross Receipts and Compensating Tax Act encompasses more than

just sales, but the performance of a service. Here, Mr. Burris was performing a service for Noni

Corporation: promotional activities for Noni Juice. Mr. Burris received direct benefit from this

promotional activity: payment of bonus commission checks for sales volumes. This constitutes the

In the Matter of the Protest of Russell Burris & Janice Silva, page 6 of 12
commissions articulated under Section 7-9-3.5 (A) (2). The taxable transaction here is Mr. Burris

promotional and marketing activities that lead to Noni sales. Mr. Burris received commission

checks for that promotion and marketing activities. Although Mr. Burris did not believe he was

engaged in business, his promotional activities for remuneration of bonus commission money from

the sales of Noni Juice was for direct benefit, satisfying the “engaging in business” definition found

under Section 7-9-3.3. A lack of a CRS number does not alter these statutory definitions subjecting

Mr. Burris’ receipts to gross receipts tax. For the purposes of the statute, Mr. Burris was a person

engaged in business and all of his receipts in 2007, 2010, and 2011 are presumed subject to gross

receipts tax. See § 7-9-3.3 and § 7-9-5.

While Taxpayers presented a great deal of evidence related to their correspondence with the

Department, Taxpayers did not present evidence to establish that any of Mr. Burris’ receipts in the

relevant years were exempt, deductable, or otherwise not subject to gross receipts tax. Generally, the

correspondence of Mr. Burris shows his belief that he should not subjected to a sales tax because he

was not selling any retail product. However, New Mexico’s gross receipts tax is not a sales tax.

Rather, as explained above, the gross receipts tax applies to the receipts of any person engaged in

business, including those performing services and promoting the sales of tangibles like a retail

product. Because Mr. Burris received commissions from Noni Corporation for his promotional

activities leading to the sale of Noni juice, he had receipts presumed subject to gross receipts tax.

Mr. Burris expressed concern as to how the Department could attribute income earned in

2007, 2010, and 2011 to his old business, Zia Technical Services, which had been defunct since the

1990’s. However, Zia Technical Services is not listed on any of these assessments, as all of the

assessments in this matter were addressed to Taxpayers, Russell Burris & Janice Silva. The Limited

Scope Audit in this case resulted from the Department detecting that Taxpayers Russell Burris &

In the Matter of the Protest of Russell Burris & Janice Silva, page 7 of 12
Janice Silva had reported Schedule C business income in their federal return that was not reported

as New Mexico gross receipts tax. Again, the fact that Taxpayers did not have a CRS number or that

Zia Technical Services was no longer in business does not alter the requirement that Mr. Burris was

required to pay gross receipts tax for the promotional sales activities he performed for commission

from the Noni Corporation. Section 7-9-5, the Department has authority to presume all receipts of a

person engaged in business are subject to gross receipts tax. When it became clear that Zia was

defunct, the Department still had the ability to presume Mr. Burris’ receipts were subject to gross

receipts tax.

In light of this presumption, when the Department detected that Taxpayers had reported

business income on their federal returns, the Department properly initiated a Limited Scope Audit

and asked Taxpayers to provide documentation and/or a requisite NTTC to establish that the

reported business income was not subject to gross receipts tax. Taxpayers did not produce that

information by the April 22, 2014 deadline. Although there was never identification of a possible

deduction that might require a NTTC, the Department cannot allow a deduction where Taxpayers

did not have a requisite NTTC by the expiration of the 60-day deadline. See NMSA 1978, Section

7-9-43 (2011); See also Regulation 3.2.201.12 (C) NMAC; See also Proficient Food Co. v. New

Mexico Taxation & Revenue Dep't, 1988-NMCA-042, ¶22, 107 N.M. 392 (“Where a party

claiming a right to an exemption or deduction fails to follow the method prescribed by statute or

regulation, he waives his right thereto.”).

Mr. Burris argued that his receipts from earthmoving and fiddling services were

isolated and occasional. Exempt from gross receipts tax under NMSA 1978, Section 7-9-28,

are

…the receipts from the isolated or occasional sale of or leasing of
property or a service by a person who is neither regularly engaged nor

In the Matter of the Protest of Russell Burris & Janice Silva, page 8 of 12
holding himself out as engaged in the business of selling or leasing the
same or similar property or service.

Under Regulation 3.2.116.8 NMAC,

The department will use the following criteria, but not exclusively, in determining
whether or not a transaction involves only an "isolated or occasional" sale or lease:
A. the nature of the service or property;
B. the nature of the market for the service or property sold or leased;
C. the number of sales or leases made within a given period;
D. the regularity of the sales;
E. the duration of the sales or leasing activity;
F. any promotional activity such as advertising or telephone yellow page listings;
and
G. any holding out as being in business by the seller or lessor.

In this case, Mr. Burris performed relatively consistent services for a period of three years,

establishing a lengthy duration of the activity. For the fiddling work, Mr. Burris indicated he

performed about 20-times a year, establishing the duration. Mr. Burris performed earthmoving

services approximately six times a year. Given these factors, Mr. Burris did not carry his burden of

establishing he was entitled to the incidental and occasional sale exemption under Section 7-9-28.

See Wing Pawn Shop, ¶16.

In the exhibits and protest letter, Taxpayers repeatedly referenced the fact that they had

already paid income taxes on Mr. Burris’ receipts as grounds why no gross receipts tax was

applicable. This argument essentially amounts to a claim of double taxation. Double taxation is not

prohibited. See New Mexico State Bd. of Pub. Accountancy v. Grant, 1956-NMSC-068, ¶11, 61

N.M. 287; see also New Mexico Sheriffs & Police Ass'n v. Bureau of Revenue, 1973-NMCA-130,

¶12, 85 N.M. 565. Gross receipts tax is an excise tax on all the receipts of a person engaged in

business. Gross receipts is a distinct tax from personal income tax and there is no double taxation in

having to pay both taxes. See State ex rel. AG v. Tittmann, 1938-NMSC-005, 42 N.M. 76. (State may

select subjects of taxation so long as equal and uniform; state may impose an excise tax and a

In the Matter of the Protest of Russell Burris & Janice Silva, page 9 of 12
personal income tax). Taxpayers received income from Mr. Burris’ business activities subject to

income tax. Mr. Burris also had business receipts subject to gross receipts tax. Collection of gross

receipts, in addition to other taxes, does not amount to impermissible double taxation.

When a taxpayer fails to make timely payment of taxes due to the state, “interest shall be

paid to the state on that amount from the first day following the day on which the tax becomes

due...until it is paid.” NMSA 1978, § 7-1-67 (2007) (italics for emphasis). Under the statute,

regardless of the reason for non-payment of the tax, the Department has no discretion in the

imposition of interest, as the statutory use of the word “shall” makes the imposition of interest

mandatory. See Marbob Energy Corp. v. N.M. Oil Conservation Comm'n, 2009-NMSC-013, ¶22,

146 N.M. 24 (use of the word “shall” in a statute indicates provision is mandatory absent clear

indication to the contrary). The language of Section 7-1-67 also makes it clear that interest begins to

run from the original due date of the tax until the tax principal is paid in full. The Department has no

discretion under Section 7-1-67 and must assess interest against Taxpayers from the time the 2007,

2010, and 2011 gross receipts tax was due but not paid until Taxpayers satisfies the gross receipts

tax principal.

Taxpayers did establish that they are entitled to abatement of penalty in this matter under

Regulation 3.1.11.11 (D) NMAC. Taxpayers used two CPAs in 2007, 2010, and 2011 to prepare

their taxes. Mr. Burris discussed his Schedule C activities with the CPAs. Mr. Burris and the CPAs

specifically discussed how that income should be reported, whether it related to sales activities, and

what amount was required to be reported. Having specifically discussed the implications of the

Schedule C income with two CPAs, Taxpayers reasonably relied to the CPAs. Under Regulation

3.1.11.11 (D) NMAC, civil penalty pursuant to NMSA 1978, Section 7-1-69 (2007) should be

abated.

In the Matter of the Protest of Russell Burris & Janice Silva, page 10 of 12
Taxpayers also indicated that they have limited income and are undergoing difficult

personal circumstances. Unfortunately, financial hardship is not grounds for the Department to

abate any portion of the assessment under Regulation 3.1.6.14 NMAC (01/15/01). Under Section 7-

1-17, the Department is required to assess any tax liability greater than $25.00.

Ultimately, Taxpayers had the burden to overcome the presumption of correctness of the

assessments, the presumption of taxability of any receipts of a person engaged in business, and the

burden of establishing entitlement to a deduction or exemption from taxation. Mr. Burris was a

genuine witness who tried honestly to explain his situation. However, Mr. Burris performed services

(promotional and marketing activities for Noni, fiddling services, and earthmoving services) for

direct benefit: commissions and payments. Taxpayers did not meet the burden to overcome the

presumption of correctness of the assessments and did not present evidence to establish that any

other deduction or exemption applied. With the exception of abatement of penalty pursuant to

Regulation 3.1.11.11 (D) NMAC, Taxpayers protest is denied and Taxpayers owe the remaining

assessed amounts.

CONCLUSIONS OF LAW

A. Taxpayers filed a timely, written protest to the assessments. Jurisdiction lies over the

parties and the subject matter of this protest.

B. Taxpayers did not overcome the presumption of correctness that attached to the

assessments under NMSA 1978, Section 7-1-17 (C) (2007) and Archuleta v. O'Cheskey, 1972-

NMCA-165, ¶11, 84 N.M. 428.

C. Mr. Burris performed marketing and promotional services in 2007, 2010, and 2011

for Noni Corporation for which he was compensated in the form of commissions for referred sales.

As such, Mr. Burris was a person engaged in business and subject to gross receipts tax in those

In the Matter of the Protest of Russell Burris & Janice Silva, page 11 of 12
years. See NMSA 1978, § 7-9-3.3 (2003); See also NMSA 1978, § 7-9-3.5 (A) (1) (2007); See

also NMSA 1978, § 7-9-3.5 (A) (2) (2007).

D. Because Mr. Burris’ was a person engaged in business under NMSA 1978, Section

7-9-4 (2002), all of Mr. Burris’ receipts in 2007, 2010, and 2011 are presumed subject to gross

receipts tax under NMSA 1978, Section 7-9-5 (2002).

E. Taxpayers did not carry their burden to establish that any deduction or exemption

applied to Mr. Burris’ receipts in 2007, 2010, and 2011.

F. Under NMSA 1978, Section 7-1-67 (2007), Taxpayers are liable for accrued

interest under the assessment. Interest continues to accrue until the tax principal is satisfied.

G. Under Regulation 3.1.11.11 (D) NMAC, civil penalty pursuant to NMSA 1978,

Section 7-1-69 (2007) is abated because of Taxpayers’ specific reliance on their CPAs regarding

how to treat and report the Schedule C income during the relevant years.

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

PARTIALLY DENIED. Penalty is ordered abated. IT IS ORDERED THAT the Department

prepare a spreadsheet of outstanding liabilities remaining after abatement of penalty and provide

that information to Taxpayers promptly so that a payment plan can be arranged as Mr. Burris

requested during the hearing.

DATED: December 31, 2014.

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

In the Matter of the Protest of Russell Burris & Janice Silva, page 12 of 12