Could for-profit hospital HealthSouth use New Mexico's managed-care health-service gross receipts deduction despite regulations excluding hospitals?

Plain-English summary

HealthSouth, a for-profit inpatient rehabilitation hospital, could use the Section 7-9-93 deduction for qualifying managed-care payments. The AHO held that Department regulations could not exclude hospitals when the statute itself imposed no taxpayer-type restriction.

HealthSouth operated an Albuquerque hospital staffed by physicians, therapists, social workers, and speech-language pathologists. It received payments under contracts for comprehensive and medically necessary health services delivered by participating health care providers.

The Department had already conceded Medicare-related refunds of $144,040 for 2011 and $448,693 for 2014 under a separate deduction. The remaining disputed gross receipts refunds were $118,350 for 2011 and $282,783 for 2014, totaling $401,133.

The statute focused on payments and services, not the claimant's identity

Section 7-9-93 allowed a deduction for receipts paid by a managed health care provider or health insurer for covered services supplied by health care practitioners within their scope of practice, when the receipts were not otherwise deductible and were separately stated.

The parties stipulated that HealthSouth separately stated the services. Reading the statute's plain language, the AHO found no restriction limiting the deduction to an individual practitioner or practitioner-owned entity. It regulated where the receipts came from and who performed the services, not which taxpayer received and reported them.

Regulations could not add a hospital exclusion

Regulations 3.2.241.13 and 3.2.241.17 allowed some entities to claim the deduction but excluded hospitals, HMOs, hospices, nursing homes, and certain facilities. A later Department publication reflected that limitation, even though an earlier 2004 publication had allowed a for-profit hospital example.

The AHO found no statutory authority for adding the hospital restriction. An agency may interpret and exemplify a statute, but it may not abridge a legislative deduction or add a requirement the Legislature did not enact. HealthSouth rebutted the presumption that the regulations validly implemented Section 7-9-93.

The compensating-tax claim was not decided

HealthSouth also sought a $27,436 compensating-tax refund for 2012-2014. That portion of the consolidated protest was stayed at HealthSouth's request with no Department objection, so this decision did not resolve it.

Result: protest GRANTED on summary judgment. The Department had to refund $118,350 for 2011 and $282,783 for 2014 with interest under Section 7-1-68. The compensating-tax matter remained stayed.

The caption and official post identify HealthSouth Rehabilitation. Several extracted page headers say “HealthcareSouth,” an apparent internal naming typo; this page follows the caption and preserves the original text below.

What this means for you

Hospitals and health care facilities

Read the deduction statute itself before accepting a narrower administrative publication or regulation. The claimant must still prove every express statutory condition.

Businesses challenging a regulation

An agency regulation is generally presumed valid, but it cannot narrow or nullify a deduction beyond the Legislature's language. Build the challenge around the statute's text and the agency's actual delegated authority.

Taxpayers with multiple refund issues

Track stayed claims separately. A favorable decision on one consolidated issue does not necessarily resolve another tax or period that the tribunal expressly stayed.

Common questions

Q: Did Section 7-9-93 expressly exclude hospitals?
A: No. The AHO found no statutory restriction on which type of taxpayer could claim qualifying receipts.

Q: Why did the regulations not control?
A: They added a hospital exclusion that limited the statutory deduction without legislative authority.

Q: How much disputed gross receipts tax was refunded?
A: $118,350 for 2011 and $282,783 for 2014, plus statutory refund interest.

Q: Were the Medicare refunds disputed?
A: No. The Department had conceded $144,040 for 2011 and $448,693 for 2014 under Section 7-9-77.1.

Q: What happened to the compensating-tax refund?
A: The $27,436 claim remained stayed and was not decided in this order.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-9-93 — managed-care and insurer payment deduction for qualifying practitioner services
• NMSA 1978, § 7-9-77.1 — federal payments for medical and health services
• NMSA 1978, § 7-1-68 — interest on refunds
• NMSA 1978, § 9-11-6.2 — authority to promulgate regulations that interpret and exemplify statutes
• Regulations 3.2.241.13 and 3.2.241.17 NMAC — entity eligibility and hospital exclusion rejected in this decision

Cases cited:

• Rainbo Baking Co. of El Paso, Texas v. Commissioner of Revenue, 1972-NMCA-139 — regulation may not nullify a statutory deduction or add a requirement
• Gonzales v. Educational Retirement Board, 1990-NMSC-024 — agency lacked power to impose an unauthorized application condition
• Hess Corp. v. New Mexico Taxation and Revenue Department, 2011-NMCA-043 — ambiguity in a tax statute construed against the taxing authority
• Romero v. Philip Morris, Inc., 2010-NMSC-035 — summary-judgment standard

Source

• Listing: New Mexico Decisions & Orders
• Decision post: HealthSouth Rehabilitation
• Decision PDF: D&O 16-16

Original ruling text

STATE OF NEW MEXICO
ADMINISTRATIVE HEARINGS OFFICE
TAX ADMINISTRATION ACT

IN THE MATTER OF THE PROTEST OF
HEALTHSOUTH REHABILITATION
TO THE DEPARTMENT’S DENIALS OF No. 16-16
REFUND ISSUED UNDER
LETTER ID NOs. L0659599312 and L0488685616 and
THE DEPARTMENT’S FAILURE TO GRANT OR
DENY REFUND CLAIM

DECISION AND ORDER
ON MOTION FOR SUMMARY JUDGMENT

A formal hearing on the above-referenced protest was scheduled to be held on April 12,

2016 at 9:00 a.m. before Monica Ontiveros, Hearing Officer. The Taxation and Revenue

Department ("Department") and HealthSouth Rehabilitation (Taxpayer) requested that the formal

hearing be converted into a hearing on the Motion for Summary Judgment filed by Taxpayer.

Attached to the Motion for Summary Judgment are: Affidavit of David Nevill, Chief Executive

Officer of HealthSouth Rehabilitation Hospital of New Mexico and Affidavit of Joshua Killian.

The Chief Hearing Officer, Brian Van Denzen, issued an Order on March 29, 2016 converting

the formal hearing into a hearing on the Motion for Summary Judgment. The Department was

represented by Julia Belles, Esq. and Taxpayer was represented by Timothy R. Van Valen, Esq.

Also appearing at the hearing for Taxpayer were Josh Cohen, Josh Killian and Brian Browdy,

Esq. from the Ryan, LLC professional tax consulting firm.

In addition to the pleadings and filings referred to in the Findings, the record contains the

Notice of Telephonic Scheduling Conference, Scheduling Order and Notice of Administrative
Hearing, Entry of Appearance, Consolidation Order, Scheduling Order and Notice of

Administrative Hearing, HealthSouth Rehabilitation Hospital of New Mexico’s Preliminary

Witness and Exhibit List, New Mexico Taxation and Revenue Department’s Preliminary Witness

and Preliminary Exhibit Lists, Second Notice of Telephonic Scheduling Conference, Amended

Scheduling Order and Notice of Administrative Hearing, two Certificates of Service (12/15),

Joint Stipulation Extending Deadline for Filing Stipulated Facts and Exhibits, Order Extending

Deadline, Certificate of Service (1/14/16), Stipulation, Taxpayer’s Motion for Summary

Judgment1 , Taxation and Revenue Department’s Response to HealthSouth Rehabilitation

Hospital of New Mexico’s Motion for Summary Judgment, Joint Motion to Convert Formal

Hearing Date on HealthSouth’s Motion for Summary Judgment and Vacate Other Deadlines

Subject to Being Reset at a Later Date, Order Converting Merits Hearing to Summary Judgment

Hearing and Vacating Other Scheduling Order Deadlines, Notice of Reassignment of Hearing

Officer for Administrative Hearing, Order Amending the Caption, Order Staying the

Department’s Failure to Grant or Deny Refund Claim, Order Requesting Additional Briefing and

Taxpayer’s Memorandum on Order Requesting Additional Briefing Dated May 4, 2016. The

Hearing Officer took judicial notice of FYI-202 Gross Receipts Tax and Health Care Services,

NEW (8/04) and FYI-202 Gross Receipts Tax and Health Care Services, (7/2014). The

Department did not object to the Hearing Officer taking judicial notice of the Department’s FYIs.

Based on the evidence in the record, IT IS DECIDED AND ORDERED AS FOLLOWS:

1 With regard to the exhibits attached to the Motion for Summary Judgment, there was no “exhibit to

Stipulation 13b” attached to the Motion. Instead there are attached two exhibits to Stipulation 12b. The
correct exhibit to Stipulation 13b should be Letter Id No. L0488685616 which is part of the record.

In the Matter of the Protest of HealthcareSouth Rehabilitation
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FINDINGS OF FACT

Gross Receipts Refunds

Tax Period ending December 31, 2011

1. On December 30, 2014, Taxpayer applied for a refund of gross receipts tax in the

amount of $262,391.13 for tax period ending December 31, 2011.

2. On March 17, 2015, the Department denied the refund in the amount of

$262,391.00. [Letter ID No. L06595599312].

3. The Department denied the refund because Taxpayer was a hospital and failed to

meet the definition of “health care provider.” [Letter ID No. L06595599312].

4. Taxpayer filed its protest on April 23, 2015.

5. On May 6, 2015, the Department acknowledged the protest. [Letter ID No.

L0145784784].

Tax Period ending December 31, 2014

6. On February 12, 2015, Taxpayer applied for a refund of gross receipts tax in the

amount of $731,768.24 for tax period ending December 31, 2014.

7. On June 4, 2015, the Department denied the refund in the amount of $731,768.00.

[Letter ID No. L0488685616].

8. The Department denied the refund because Taxpayer was a hospital and failed to

meet the definition of “health care provider.” [Letter ID No. L0488685616].

9. Taxpayer filed its protest on July 8, 2015.

10. On July 22, 2015, the Department acknowledged the protest. [Letter ID No.

L1180536880].

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Compensating Tax

Tax Period January 1, 2012 through December 31, 2014

11. On February 12, 2015, Taxpayer applied for a refund of compensating tax in the

amount of $27,436.00 for tax period January 1, 2012 through December 31, 2014.

12. The Department neither denied nor granted the refund.

13. Taxpayer filed its protest on July 8, 2015.

14. On July 22, 2015, the Department acknowledged the protest. [Letter ID No.

1072795696].

15. During the hearing, Taxpayer requested that the compensating tax portion of the

protest be stayed. The Department did not object and the stay was granted.

16. All three protests were consolidated on July 29, 2015.

Stipulations

17. The Department and Taxpayer entered into stipulations on February 2, 2016.

[Stipulation filed on 2/2/16].

18. Taxpayer operated an inpatient rehabilitation hospital in Albuquerque, New

Mexico (“hospital”) and still does today. [Stip. #3]. Taxpayer is referred to in the Stipulation as

both a hospital and a facility.

19. At this hospital, Taxpayer provides specialized rehabilitative care to patients

recovering from a wide variety of conditions, including strokes and other neurological disorders,

brain and spinal cord injuries, and burn and arthritis. [Stip. #4; Affidavit of Nevill #6].

20. The hospital is staffed by, among others, physicians, physical therapists,

occupational therapists, social workers, and speech-language pathologists. [Stip. #5].

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21. Taxpayer receives payment for services performed by the foregoing professionals.

[Affidavit of Nevill #8].

22. These payments are made to Taxpayer under contracts with persons that provide

for the delivery of comprehensive basic health care services and medically necessary ancillary

services by contracting with selected or participating health care providers. These persons

provide comprehensive basic health care services to enrollees on a contract basis. [Affidavit of

Nevill #9].

23. The Department has conceded the issue that Taxpayer is entitled to the deduction

for receipts from payments by federal Medicare administrators and therefore is entitled to a

refund of $144,040.00 for tax period ending December 31, 2011.2 [Stip. #9(a)].

24. The Department has conceded the issue that Taxpayer is entitled to the deduction

for receipts from payments by federal Medicare administrators and therefore is entitled to a

refund of $448,693.00 for tax period ending December 31, 2014. [Stip. #11(a); Affidavit of

Killian #4].

25. The amount of gross receipts tax at issue is $118,350.00 for tax period ending

December 31, 2011. [Stip. #9(b)].

26. The amount of gross receipts tax at issue is $282,783.00 for tax period ending

December 31, 2014. [Stip. #11(b)].

27. The parties stipulated at the hearing that the services for which Taxpayer wanted

to take the deduction were separately stated. [CD 2, 4-12-16, 12:16-13:50].

28. The Department’s failure to grant or deny the refund claim in the amount of

2 The Hearing Officer utilizes the tax period stated on the refund denial.

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$27,436.00 for tax period January 1, 2012 through December 31, 2014 is stayed.

DISCUSSION

The two issues presented are whether NMSA 1978, Section 7-9-93 (2007) prohibits

certain taxpayers from using the deduction and whether the Department may promulgate

regulations that restrict which taxpayers may use the deduction found in NMSA Section 7-9-93

(2007), even though the statutory deduction does not limit which taxpayers may use it.

Burden of Proof and Standard of Review

The courts have held that “where 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 Dep’t., 1991-NMCA-024,

¶16, 111 N.M. 735, 740, 809 P.2d 649, 654.

Summary Judgment is appropriate when there is no genuine dispute as to any material

fact and the moving party is entitled to prevail as a matter of law. See Romero v. Philip Morris,

Inc., 2010-NMSC-035, ¶7, 148 NM 713, 719, 242 P.3d 280, 286. If the movant for summary

judgment makes a prima facie showing that it is entitled to a judgment as a matter of law, the

burden shifts to the opposing party to show evidentiary facts that would require a trial on the

merits. See Roth v. Thompson, 1992- NMSC-011, ¶17, 113 N.M. 331, 334, 825 P.2d 1241, 1245.

Taxpayer’s main argument is that the plain language of the Section 7-9-93 allows for any

taxpayer to take the deduction. The Department argues that only “people” are entitled to take the

deduction and the word “people” means that only a health care practitioner may take the

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deduction. Further, the Department argues that regulations 3.2.241.13 (5/31/06) and 3.2.241.17

NMAC (5/31/06) exempt Taxpayer from using the deduction.

Section 7-9-93 Deduction

Section 7-9-93 provides that:

A. Receipts from payments by a managed health care provider or
health care insurer for commercial contract services or medicare
part C services provided by a health care practitioner that are not
otherwise deductible pursuant to another provision of the Gross
Receipts and Compensating Tax Act may be deducted from gross
receipts, provided that the services are within the scope of practice
of the person providing the service. Receipts from fee-for-service
payments by a health care insurer may not be deducted from gross
receipts. The deduction provided by this section shall be separately
stated by the taxpayer. (Emphasis added). NMSA 1978,
§7-9-93(A) (2007).

Questions of statutory construction begin with the plain meaning rule. See, Wood v. State Educ.

Ret. Bd., 2011-NMCA-20, ¶12. In Wood, ¶12 (internal quotations and citations omitted), the

Court of Appeals stated “that the guiding principle in statutory construction requires that we look

to the wording of the statute and attempt to apply the plain meaning rule, recognizing that when a

statute contains language which is clear and unambiguous, we must give effect to that language

and refrain from further statutory interpretation.” A statutory construction analysis begins by

examining the words chosen by the Legislature and the plain meaning of those words. State v.

Hubble, 2009-NMSC-014, ¶13, 206 P.3d 579, 584. Extra words should not be read into a statute

if the statute is plain on its face, especially if it makes sense as written. See, Johnson v. N.M. Oil

Conservation Comm'n, 1999-NMSC-21, ¶ 27, 127 N.M. 120, 126, 978 P.2d 327, 333.

In this case, in reading the plain meaning of Section 7-9-93, there is no restriction on

which group of taxpayers may take the deduction. In reading the plain meaning of Section

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7-9-93, it does not restrict who may take the deduction. It only imposes requirements as where

the receipts come from (managed health care provider or health care insurer) and if the services

were performed by a health care practitioner. The health care practitioner must provide the

services to a taxpayer “within the scope of practice of providing the service.” §7-9-93(A). It is

clear that the intended deduction is for receipts received from a managed health care provider for

services performed by a health care practitioner, but there is no statutory restriction as to which

taxpayer may use the deduction.

In deciding how the Department interprets its own statute, its publications are useful.

The Department has promulgated a publication, FYI-202 Gross Receipts Tax and Health Care

Services,which may be found on its website: http://www.tax.newmexico.gov/forms-

publications.aspx. The publication interprets Section 7-9-93 and the Department’s regulations

3.2.241.13 NMAC (5/31/06) and 3.2.241.17 NMAC (5/31/06) as permitting only health care

providers to take the deduction pursuant to Section 7-9-93. It provides that, “a corporation,

unincorporated business association, or other legal entity may take the deduction under Section

7-9-93 NMSA 1978 if it fulfills all the following conditions: “(4) (t)he corporation or

unincorporated business association is not: (b) an HMO, hospital, nursing home or hospice; or

(c) solely an outpatient facility licensed under the Public Health Act.” [FYI-202 Gross Receipts

Tax and Health Care Services, (7/2014) page 5]. Thus, hospitals are excluded from taking the

deduction.

However, after Section 7-9-3 was enacted by the Legislature in 2004, the Department

issued FYI-202 Gross Receipts Tax and Health Care Services, NEW (8/04). In its first

publication issued after Section 7-9-93 was enacted by the Legislature, the Department permitted

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for-profit hospitals to use the deduction. [FYI-202 Gross Receipts Tax and Health Care

Services, NEW (8/04), page 5, example 4]. The example clearly permits for-profit hospitals to

use the deduction.

It is unclear why the Department changed its interpretation regarding why hospitals could

not take the deduction pursuant to Section 7-9-93. It is clear that in changing its position, it did

not seek Legislative approval, but instead enacted regulations that conformed with its revised

position. At the hearing, the Department did not present any explanation as to what the purpose

was in limiting the deduction to taxpayers who are employed as health care providers or health

care providers who owned the corporation. While the Department did not make this argument,

the limitation on the deduction by the Department may be an attempt to limit the receipts that are

deductible by limiting which type of corporation may take the deduction.

The Department’s treatment of Taxpayer with respect to NMSA 1978, Section 7-9-77.1

(2007) which is a very similar deduction to Section 7-9-93 is an interesting contradiction.

Section 7-9-77.1 does not limit which taxpayer may take the deduction. It only identifies which

receipts may be deducted: payments made by the United States government for provision of

medical and other health services and any person, which is defined broadly under NMSA 1978,

Section 7-1-3(O) (2009). The Department has conceded that Taxpayer may use this deduction.

[Affidavit of Killian #4]. It is not clear why the Department conceded this issue if Section

7-9-77.1 does not specifically delineate which taxpayers may take the deduction.

The Department’s argument, in essence, is that Section 7-9-93 is at best ambiguous. The

Department argues that the deduction is only available between the health care provider

providing and billing the services and the managed health care provider or health care insurer

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remitting payment. The Department states in its Response that the legislative intent of Section

7-9-93 is to allow only “people” who are health care providers to use the deduction because the

Department’s own regulation restricts the use of the deduction to “people” (corporations may

take the deduction according to the Department’s regulation 3.2.241.13 NMAC). The

Department concedes that the definition of “people” is not found within Section 7-9-93, but only

within its own regulation. The court has held that “(w)here an ambiguity or doubt exists as to the

meaning or applicability of a tax statute, it should be construed most strongly against the taxing

authority and in favor of those taxed.” Hess Corp. v. N.M. Taxation, 2011-NMCA-43, ¶ 12, 252

P.3d 751, 755. In addition, Hess in quoting 3A Norman J. Singer, Sutherland Statutory

Construction, §66:2 at 19 (6th ed. 2003) states that “it is a well established rule not to extend

their (statutes) provisions by implication beyond the clear import of the language used or to

enlarge their operations so as to embrace matters not specifically pointed out and where there is

doubt they are construed most strongly against the government and in favor of the citizen.”

Thus, at best Section 7-9-93 is ambiguous and the Department should not extend by implication

a requirement not specifically found within Section 7-9-93.

Regulations and Presumption of Correctness

The Department’s argument, essentially, is that it has the authority to promulgate

regulations that limit the deduction even though the statute does not place a limitation on which

taxpayers may use it. Regulation 3.2.241.17 NMAC (5/31/06) narrows the definition of who

may take the deduction because it states that even if the taxpayer is an organization owned

exclusively by health care practitioners, but is licensed as a hospital, then it is not allowed to take

the deduction. Regulation 3.2.241.13 NMAC (5/31/06) provides that:

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(a) corporation, unincorporated business association, or other legal
entity may deduct, under Section 7-9-93 NMSA 1978, its receipts from
managed health care providers … provided on its behalf by health care
practitioners who own or are employed by the corporation,
unincorporated business association or other legal entity.

But in any event, exempted from the type of taxpayer that may use the deduction is “an HMO,

hospital, hospice, nursing home, an entity that is solely an outpatient facility or intermediate care

facility…”. 3.2.241.13(B) NMAC (5/31/06).

Regulation 3.2.214.133 allows some corporations to take the deduction so long as the

corporation is not an HMO or hospital. Thus, both of the regulations restrict the availability of

the deduction to small organizations, including corporations, who are owned by health care

practitioners or where health care practitioners are employed, but in no event may a hospital take

the deduction.

Generally speaking, a regulation is presumed to be a proper implementation of the

provisions of the laws that are charged to the Department. NMSA 1978, Section 9-11-6.2(G)

(2015). Thus, regulations 3.2.241.13 and 3.2.241.17 NMAC (5/31/06) are presumed to be

correct; however, the Department may only promulgate regulations that interpret and exemplify

the statutes to which they relate. NMSA 1978, Section 9-11-6.2(B)(1) (2015). The issue, then, is

whether regulations 3.2.241.13 NMAC (5/31/06) and 3.2.241.17 NMAC (5/31/06) interpret or

exemplify Section 7-9-93 or whether they place a limit outside of the plain meaning of Section

7-9-93.

3 It should be noted that regulation 3.2.241.10 NMAC (10/16/06) defines a term “independent practice
association” that is not found within Section 7-9-93. Section 7-9-93 refers to “individual practice
associations.”

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In deciding whether a regulation interprets or exemplifies a statute, a regulation may not

abridge or otherwise limit the scope of the related statutory enactment. See, Rainbo Baking Co.

of El Paso, Tex. v. Comm’r of Revenue, 1972-NMCA-139,¶¶ 10-12, 84 N.M. 303, 305-306. In

Rainbo Baking Co., the court held that the Commissioner of Revenue may not promulgate a

regulation that would nullify a deduction authorized by the Legislature. In Rainbo, the

Commissioner promulgated a regulation that required a nontaxable transaction certificate to be in

the possession of the buyer at the time of the audit, which contradicted the statute which only

required the buyer to have in its possession a nontaxable transaction certificate. A regulation

may not add a requirement that the Legislature has not granted it.

In Gonzales v. Educ. Retirement Bd., 1990-NMSC-024, 109 N.M. 592, 788 P.2d 348, the

Court held that the Educational Retirement Board could not enact a regulation that was

“unreasonable or irrelevant.” In Gonzales, the Board, by regulation, required a member who was

requesting an award of disability benefits to hold no property interest in a bus contract. The

Court said that there was nothing within the statutory grant of authority to award disability

benefits which authorized the Board to refuse to accept an application for disability if the

applicant continued to have a property interest in a bus contract. The Court held that the Board

did not have the “statutory power to create unreasonable or irrelevant requirements within the

application process before it considers the application.” Gonzales 109 N.M. at 594, 788 P.2d at

350. Thus, the Board’s regulation was held to create an unreasonable or irrelevant requirement.

In conclusion, the Hearing Officer could find no grant of authority allowing the

Department to limit the deduction found in Section 7-9-93 as set out in the Department’s

regulations. Taxpayer has rebutted the presumption that regulations 3.2.241.13 NMAC (5/31/06)

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and 3.2.241.17 NMAC (5/31/06) interpret or exemplify Section 7-9-93; but instead the

regulations nullify the deduction found within Section 7-9-93 available to Taxpayer. The

Hearing Officer concludes that there is no authority in Section 7-9-93 to prohibit Taxpayer from

using the deduction under Section 7-9-93. Taxpayer’s refund claims are GRANTED.

CONCLUSIONS OF LAW

A. Taxpayer filed timely written protests to the Department’s denial of claims for

refund issued under Letter Id No. L0659599312 and L0488685616 and jurisdiction lies over the

parties and the subject matter of this protest.

B. The hearing was timely set as required by NMSA 1978, Section 7-1-24.1(A)

(2013).

C. Holding the June 12, 2015 telephonic scheduling hearing satisfied the 90-day

hearing requirement found in NMSA 1978, Section 7-1B-8 (2015).

D. Pursuant to regulation 3.1.8.10(A) NMAC (8/30/01), it is Taxpayer’s burden to

come forward with evidence and legal argument to establish that it was entitled to a refund.

E. There is no genuine dispute as to any material fact.

F. Taxpayer met the requirements found within Section 7-9-93 and is entitled to use

the deduction.

G. Section 7-9-93 does not prohibit Taxpayer, a for-profit hospital or facility, from

taking the deduction against its gross receipts.

H. As a matter of law, regulations 3.2.241.13 NMAC (5/31/06) and 3.2.241.17

NMAC (5/31/06) limit the availability of the deduction found in Section 7-9-93 contrary to the

statutory language found in Section 7-9-93.

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I. The Department improperly denied Taxpayer’s claims for refund for gross

receipts tax in the amounts of $118,350.00 for tax period ending December 31, 2011 and

$282,783.00 for tax period ending December 31, 2014.

J. The Department shall pay interest on the refunded amount in accordance with

NMSA 1978, Section 7-1-68 (2011).

K. Because there is no genuine dispute as to any material fact and Taxpayer is

entitled to judgment as a matter of law, summary judgment is appropriate in this matter. See

Romero v. Philip Morris, Inc., Inc., 2010-NMSC-035, ¶7, 148 NM 713, 719, 242 P.3d 280, 286.

For the foregoing reasons, the Taxpayer's protest IS GRANTED.

DATED: May 11, 2016

Monica Ontiveros
Monica Ontiveros
Hearing Officer
Taxation & Revenue Department
Post Office Box 630
Santa Fe, NM 87504-0630

NOTICE OF RIGHT TO APPEAL

Pursuant to NMSA 1978, Section 7-1-25 (2015), the Taxpayer has the right to appeal this

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

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the date shown above. See NMRA, 12-601 of the Rules of Appellate Procedure. If an appeal is

not filed within 30 days, this Decision and Order will become final. A party filing an appeal

shall file a courtesy copy of the appeal with the Administrative Hearings Office

contemporaneously with the filing of the Notice with the Court of Appeals so that the

Administrative Hearings Office may prepare the record proper.

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