Could Golden Services, a hospice, deduct qualifying managed-care and Medicare Part C receipts under the 2007 version of Section 7-9-93 despite regulations excluding hospices?

Plain-English summary

Golden Services Home Health and Hospice could deduct its qualifying managed-care and Medicare Part C receipts under the 2007 version of Section 7-9-93. Department regulations excluding hospices could not impose a restriction that the statute itself did not contain.

The Department had assessed $140,786.55 gross receipts tax, $27,488.53 penalty, and $14,440.27 interest for periods from January 2009 through December 2014.

The Department also assessed withholding tax, penalty, and interest, but Golden Services withdrew that part of its protest. The decision therefore resolved the gross receipts tax deduction, not the withdrawn withholding issue.

The payments met every condition in the 2007 statute

Golden Services provided hospice services through health care practitioners acting within their scopes of practice.

The services were commercial contract services or Medicare Part C services paid by managed health care providers or health care insurers, and the payments were not otherwise deductible.

The parties agreed that the payments satisfied the substantive conditions stated in Section 7-9-93(A) (2007).

The statutory text described receipts from qualifying payments. It did not say that only an individual practitioner or a particular type of taxpayer could take the deduction.

Regulations improperly excluded hospices

Regulations 3.2.241.13 and 3.2.241.17 treated hospices, hospitals, nursing homes, and certain other facilities as ineligible for the deduction.

Following the statute would allow any taxpayer with qualifying receipts to claim it. Following the regulations would deny the deduction to the listed facilities.

The AHO held that this was a direct conflict. The Department could interpret and implement a statute, but it could not abridge, enlarge, extend, or modify the statutory right.

Because the Legislature had not prescribed the hospice limitation, the conflicting regulations were void to that extent and the statute controlled.

The 2016 amendment changed the law prospectively

The 2016 amendment rewrote the deduction to cover receipts “of a health care practitioner” for the qualifying services.

That language materially differed from the prior deduction for receipts from qualifying payments. Under the amended statute and regulations, Golden Services would not meet the health-care-practitioner definition.

The Department argued that the amendment merely clarified the earlier statute and should apply retroactively. The AHO disagreed.

The 2007 text was unambiguous, made sense as written, and did not produce an absurd result. Adding a restriction to a particular type of taxpayer was therefore a substantive change, not a clarification, and could apply only prospectively.

An earlier AHO decision was persuasive, not binding

Golden Services also relied on D&O 16-16, HealthSouth Rehabilitation, which had addressed the same issue.

The AHO held that administrative decisions do not carry binding precedential weight and that it lacked authority to grant equitable collateral estoppel. It nevertheless reached the same result by independently applying the statutory text.

Result: protest GRANTED. The gross receipts tax assessment was abated. The withholding-tax issue was not decided because Golden Services withdrew it.

What this means for you

Health care facilities reviewing historical periods

Use the statute in effect during the reporting period. The taxpayer limitation added in 2016 did not govern Golden Services' 2009–2014 receipts.

Hospices, hospitals, and nursing facilities

This ruling turned on the pre-amendment language. The AHO expressly said Golden Services would not qualify under the amended statute and regulations.

Businesses facing a restrictive regulation

A regulation cannot add a limitation absent from an unambiguous statute. When compliance with the regulation and statute produces different results, the statute controls.

Taxpayers relying on another administrative decision

A prior D&O may be persuasive, but it is not binding precedent. Build the argument from the governing statute and the facts of the current protest.

Common questions

Q: What services did Golden Services provide?
A: Hospice services performed by health care practitioners within their scopes of practice.

Q: What payments were deducted?
A: Payments for commercial contract services or Medicare Part C services from managed health care providers or health care insurers.

Q: Why did the 2007 statute allow the deduction?
A: The payments met all stated conditions, and the statute did not limit which taxpayer could claim qualifying receipts.

Q: Why were the hospice-exclusion regulations rejected?
A: They added a taxpayer restriction the Legislature had not included, producing a result contrary to the statute.

Q: Did the 2016 amendment apply retroactively?
A: No. It substantively changed the law by limiting the deduction to receipts of a health care practitioner.

Q: How much was the gross receipts tax assessment?
A: $140,786.55 tax, $27,488.53 penalty, and $14,440.27 interest.

Q: What happened to the withholding-tax assessment?
A: Golden Services withdrew that part of its protest, so this decision did not resolve it.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-9-93 (2007) — deduction for qualifying health-care payments
• NMSA 1978, § 7-9-93 (2016) — amended deduction for receipts of a health care practitioner
• NMSA 1978, §§ 7-1-3 and 7-1-17 — tax definition and assessment presumption
• NMSA 1978, § 9-11-6.2(B)(1) and (G) — regulatory authority and presumption
• Regulations 3.2.241.13 and 3.2.241.17 NMAC — entity and hospice exclusions
• Regulation 3.2.1.6 NMAC — purpose of the Gross Receipts and Compensating Tax Act regulations

Cases cited:

• Rainbo Baking Co. of El Paso, Texas v. Commissioner of Revenue, 1972-NMCA-139 — a regulation cannot add a statutory limitation
• State v. Bowden, 2010-NMCA-070 — statute controls when statute and regulation conflict
• Phelps Dodge Corp. v. Revenue Division, 1985-NMCA-055 — substantive amendment cannot be applied retroactively as a clarification
• Swink v. Fingado, 1993-NMSC-013 — presumption of prospective operation and treatment of clarifying amendments
• Hess Corp. v. New Mexico Taxation & Revenue Department, 2011-NMCA-043 — unpublished decisions are not controlling precedent

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Golden Services Home Health And Hospice
• Decision PDF: D&O 17-50

Original ruling text

STATE OF NEW MEXICO
ADMINISTRATIVE HEARINGS OFFICE
TAX ADMINISTRATION ACT

IN THE MATTER OF THE PROTEST OF
GOLDEN SERVICES HOME HEALTH AND HOSPICE, No. 17-50
TO THE ASSESSMENT ISSUED UNDER
LETTER ID NO. L1636159024

DECISION AND ORDER

A formal hearing on the above-referenced protest was held on October 20, 2017 before

Hearing Officer Dee Dee Hoxie. The Taxation and Revenue Department (Department) was

represented by Mr. David Mittle, Staff Attorney. Ms. Milagros Bernardo, Auditor, also appeared

on behalf of the Department. Mr. W.T. Martin, Jr., attorney for Golden Services Home Health

and Hospice (Taxpayer), appeared for the hearing. The Hearing Officer took notice of all

documents in the administrative file. Courtesy copies of law, articles, and cases were admitted

as exhibits at the parties’ request as Department’s “A”, “B”, “C” and “F”, and Taxpayer’s #1

through #8. Based on the evidence and arguments presented, IT IS DECIDED AND ORDERED

AS FOLLOWS:

FINDINGS OF FACT

1. On August 12, 2016, the Department assessed the Taxpayer for gross receipts tax,

penalty, and interest for the tax periods from January 31, 2009 through December 31,

2014. The assessment was for $140,786.55 tax, $27,488.53 penalty, and $14,440.27

interest. The Taxpayer was also assessed for withholding tax, penalty, and interest.

2. On November 9, 2016, the Taxpayer filed a formal protest letter.
3. On December 28, 2016, the Department filed a Request for Hearing asking that the

Taxpayer’s protest be scheduled for a formal administrative hearing.

4. On January 4, 2017, the Administrative Hearings Office issued a notice of telephonic

scheduling hearing.

5. The telephonic scheduling hearing was conducted on January 11, 2017. The hearing was

held within ninety days of the protest.

6. At the request of the parties, a second telephonic scheduling hearing was conducted on

May 15, 2017. On May 17, 2017, the scheduling order was issued.

7. The parties jointly requested a modification to the scheduling order. On June 29, 2017,

an amended scheduling order was issued.

8. On August 16, 2017, the Taxpayer filed a motion for summary judgment. On September

11, 2017, the Department filed its response.

9. On September 26, 2017, the Taxpayer requested leave to file a reply.

10. On September 29, 2017, the Administrative Hearings Office issued a notice of hearing on

the summary judgment motion.

11. On October 3, 2017, an order granting leave to reply was issued.

12. The Taxpayer’s reply was filed on October 17, 2017. Notwithstanding its filing date, the

Department filed its sur-response and motion to strike the reply on October 16, 2017.

13. On October 17, 2017, the Taxpayer filed its response to the motion to strike.

14. At the hearing on October 20, 2017, the Department’s motion to strike was denied, but its

sur-response was allowed.

15. At the hearing, the Taxpayer acknowledged that the summary judgment motion did not

address the issue of the withholding tax, penalty, and interest that were included in the

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 2 of 13
assessment. The Taxpayer requested time to ascertain whether it intended to pursue that

part of the protest. The Taxpayer was granted two weeks to file a withdrawal or notice of

intent to pursue.

16. The Taxpayer filed a withdrawal of protest on the withholding tax issue.

17. The parties agreed that, if the protest was withdrawn on the withholding tax issue, there

were no issues of material fact. The parties agreed that the outcome of the motion for

summary judgment was dispositive and that a final order either granting or denying the

protest could be issued.

18. The Taxpayer provides hospice services from health care practitioners. The services are

within the scopes of practice of the health care practitioners. The services provided are

commercial contract services or medicare part C services that are paid for by managed

health care providers or by health care insurers and are not otherwise deductible

(collectively, services).

19. During the tax years in question, the Taxpayer claimed a deduction from its gross receipts

taxes for the receipts of payments made for these services under Section 7-9-93.

20. The Department audited the Taxpayer and denied the deductions under Section 7-9-93,

which resulted in the assessment.

21. The Legislature recently amended Section 7-9-93, and the bill’s title indicated that it was

to clarify the type of health care provider that may take certain deductions.

DISCUSSION

The issue to be decided is whether the Taxpayer was entitled to take the deductions under

Section 7-9-93, and what effect the 2016 amendment to that statute would have on the

Taxpayer’s rights.

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 3 of 13
The Taxpayer argues that a decision and order issued in 2016 is dispositive, was rightly

decided, and should be followed under the principles of stare decisis and collateral estoppel. See

In the Matter of the Protest of HealthSouth Rehabilitation, Decision and Order No. 16-16. The

Taxpayer also argues that Section 7-9-93 did not contain a statutory restriction on which

taxpayer was allowed to take the deduction. The Taxpayer argues that the regulations that

purport to limit the deduction should be disregarded as they do not exemplify or interpret the

statute. The Taxpayer argues that the regulations place an impermissible limitation on the plain

language of the statute. The Taxpayer argues that the amendment to the statute still does not

limit who may take the deduction. The Taxpayer argues that if the amendment is found to create

such a limitation, then it is a change in the law, and should be applied prospectively.

The Department argues that the HealthSouth decision was wrongly decided and that the

regulations were a proper interpretation of the statute. The Department argues that stare decisis

and collateral estoppel do not apply. The Department argues that the amendment to the statute

enacted after the HealthSouth decision shows the legislative intent of the deduction. The

Department argues that the amendment should be treated as a clarification that applies

retroactively.

Burden of Proof.

Assessments by the Department are presumed to be correct. See NMSA 1978, § 7-1-17.

Tax includes, by definition, the amount of tax principal imposed and, unless the context

otherwise requires, “the amount of any interest or civil penalty relating thereto.” NMSA 1978, §

7-1-3. See also El Centro Villa Nursing Ctr. v. Taxation and Revenue Department, 1989-NMCA-

070, 108 N.M. 795. Therefore, the assessment issued to the Taxpayer is presumed to be correct,

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 4 of 13
and it is the Taxpayer’s burden to present evidence and legal argument to show that it is entitled

to an abatement.

The burden is on the taxpayer to prove that it is entitled to an exemption or deduction.

See Public Services Co. v. N.M. Taxation and Revenue Dep’t., 2007-NMCA-050, ¶ 32, 141 N.M.

520. See also Till v. Jones, 1972-NMCA-046, 83 N.M. 743. “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.” Sec. Escrow Corp. v. State Taxation

and Revenue Dep’t., 1988-NMCA-068, ¶ 8, 107 N.M. 540. See also Wing Pawn Shop v.

Taxation and Revenue Dep’t., 1991-NMCA-024, ¶ 16, 111 N.M. 735. See also Chavez v.

Commissioner of Revenue, 1970-NMCA-116, ¶ 7, 82 N.M. 97.

Motions for summary judgment are appropriate when there is no genuine issue of

material fact and the judgment is a matter of law. See Elane Photography, LLC v. Willock, 2013-

NMSC-040, ¶ 12. See also Roth v. Thompson, 1992-NMSC-011, 113 N.M. 331. See also Ute

Park Summer Homes Ass’n v. Maxwell Land Grant Co., 1967-NMSC-086, 77 N.M. 730. The

parties agreed that there were no disputes as to the material facts. The parties also agreed that

the outcome of the summary judgment motion would be dispositive to the issues of the hearing

and that a final decision and order either granting or denying the protest should be issued.

Stare decisis and Collateral Estoppel.

Administrative decisions are not given the weight of precedence. See Hess Corp. v. N.M.

Taxation and Revenue Dep’t, 2011-NMCA-043, ¶ 35, 149 N.M. 527 (noting that an unpublished

decision is written solely for the benefit of the parties and is not controlling precedent). See also

Rule 12-405 NMRA (2012) (stating that unpublished decisions are not precedent but may still be

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 5 of 13
persuasive). Therefore, stare decisis does not apply to the HealthSouth decision. See Padilla v.

State Farm Mut. Auto. Ins. Co., 2003-NMSC-011, ¶ 7, 133 N.M. 661 (noting that the doctrine of

stare decisis means an adherence to precedent).

Collateral estoppel is a judicially created doctrine to foster judicial economy by

preventing the re-litigation of issues previously decided. See Shovelin v. Cent. N.M. Elec. Coop.

Inc., 1993-NMSC-015, 115 N.M. 293. Several factors must be met before collateral estoppel

will apply. See id. Collateral estoppel against the state is very limited and only applies if right

and justice require it. See Johnson & Johnson v. Taxation and Revenue Dep’t, 1997-NMCA-

030, 123 N.M. 190. However, the issue of collateral estoppel is moot in the context of this

protest because the Administrative Hearings Office has not been granted statutory authority to

exercise an equitable judicial remedy. See AA Oilfield Serv. v. N.M. State Corp. Comm’n, 1994-

NMSC-085, ¶ 18, 118 N.M. 273 (holding that the quasi-judicial powers of an administrative

body did not empower it to grant equitable relief, such as estoppel, because the authority is

limited to making factual and legal determinations as authorized by the statute). See Gzaskow v.

Pub. Employees Ret. Bd., 2017-NMCA-064, ¶35 (recognizing AA Oilfield Serv. for the

proposition that an agency with quasi-judicial powers did not have authority to grant an equitable

remedy). See also NMSA 1978, § 7-1B-1, et seq.

Deduction under Section 7-9-93 pre-amendment.

The Taxpayer argues that the statute does not limit the entity that may take the deduction,

and that the regulations that attempt to create such a limitation are improper. The Department

argues that the deduction is limited to health care practitioners and that health care facilities, such

as the Taxpayer, cannot take the deduction. The Department relies on its regulations, one of

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 6 of 13
which modifies the definition of “health care practitioner”, and argues that the legislative intent

of the statute is consistent with the regulations.

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. NMSA 1978, § 7-9-93 (A)
(2007).

The deduction was based on receipts from payments by managed health care providers or

from health care insurers, if those payments met certain conditions. See id. The required

conditions were 1) the payments were for commercial contract services or medicare part C

services; 2) the payments were for services provided by a health care practitioner; 3) the

payments were not otherwise deductible; and 4) the payments were for services within the scope

of practice of the health care practitioner who provided the service. See id. The statute defined

many of the terms used. See NMSA 1978, § 7-9-93 (B) (2007).

The first step in statutory interpretation is to look at the plain language of the statute and

to refrain from further interpretation if the plain language is not ambiguous. See Marbob Energy

Corp. v. N.M. Oil Conservation Comm’n., 2009-NMSC-013, 146 N.M. 24. Statutes are to be

applied as written unless a literal use of the words would lead to an absurd result. See New

Mexico Real Estate Comm’n. v. Barger, 2012-NMCA-081, ¶ 7. The parties stipulated to the

facts in this case, and all of the payments at issue satisfied the statutory criteria. The Taxpayer

took deductions on its receipts from payments made by managed health care providers or health

care insurers. The payments were for commercial contract services or medicare part C services,

the payments were for services provided by health care practitioners, the payments were not

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 7 of 13
otherwise deductible, and the payments were for services within the scope of practice of the

health care practitioners who provided the services. The statute is not ambiguous. See NMSA

1978, § 7-9-93 (2007). The statute does not restrict who may or may not take the deduction. See

id. The statute provided for any taxpayer who had receipts of qualifying payments to take the

deduction. See id. Therefore, the Taxpayer was entitled to take the deduction under the statute.

The regulations.

A regulation prohibits “[a]n organization, whether or not owned exclusively by health

care practitioners, licensed as a hospital, hospice, nursing home, … an outpatient facility or

intermediate care facility” from taking the deduction. See 3.2.241.17 NMAC (2006). The

regulation indicates that such a facility “is not a ‘health care practitioner’ as defined by Section

7-9-93”. Id.

Another regulation actually allows for “[a] corporation, unincorporated business

association, or other legal entity” to take the deduction for payments on services performed “on

its behalf by health care practitioners who own or are employed by the corporation,

unincorporated business association or other legal entity”. 3.2.241.13 NMAC (2006). However,

the regulation creates an exception to that allowance when that entity is a 501 (C) (3)

organization or “an HMO, hospital, hospice, nursing home, an … outpatient facility or

intermediate care facility”. Id. These excepted entities may not take the deduction. See id.

The purpose of the Department’s regulations are “to interpret, exemplify, implement and

enforce the provisions of the Gross Receipts and Compensating Tax Act.” 3.2.1.6 NMAC 2001.

The Department has authority to enact regulations that interpret and exemplify the statutes to

which they relate. See NMSA 1978, § 9-11-6.2 (B) (1) (2015). The Department’s regulations

also carry a presumption that they are a “proper implementation of the provisions of the laws”.

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 8 of 13
NMSA 1978, § 9-11-6.2 (G). However, the Department cannot create a regulation in order “to

impose a limitation on the deduction which the Legislature did not prescribe.” Rainbo Baking

Co. of El Paso, Tex. v. Comm’r of Revenue, 1972-NMCA-139, ¶ 11, 84 N.M. 303. Regulations

cannot “abridge, enlarge, extend or modify the statute creating the right or imposing the duty.”

Id. at ¶ 10. Regulations that attempt to do so are void. See id. When a statute and a regulation

address the same issue, they are in conflict if following one would reach a different result than

following the other. See State v. Bowden, 2010-NMCA-070, ¶10, 148 N.M. 850.

Following the statute as it was written would allow any taxpayer with receipts from

qualifying payments to take the deduction. See NMSA 1978, § 7-9-93 (2007). Following the

regulations would restrict the deduction to taxpayers that are not hospitals, hospices, nursing

homes, and certain other types of entities. See 3.2.241.13 and 3.2.241.17 NMAC (2006).

Therefore, the statute is in conflict with the regulations since following one would lead to a

different result than following the other. See State v. Bowden, 2010-NMCA-070, ¶10. When

statutes and regulations are inconsistent, the statute prevails. See id. at ¶ 12. See also Picket

Ranch, LLC v. Curry, 2006-NMCA-082, ¶ 10, 140 N.M. 49. A regulation cannot overrule a

statute. See Jones v. Employment Servs. Div., 1980-NMSC-120, 95 N.M. 97. Therefore, the

regulations were void as they attempted to abridge or modify the statute as it was written. See

Rainbo Baking Co. of El Paso, Tex. v. Comm’r of Revenue, 1972-NMCA-139, ¶ 10.

Consequently, the Taxpayer was not prohibited by the regulations from taking the deductions.

Current version of Section 7-9-93.

The Taxpayer argues that even under the current statute, the deduction is not restricted to

health care practitioners. In 2016, the deduction provision was amended. Now the deduction is

for “[r]eceipts of a health care practitioner for commercial contract services or medicare part C

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 9 of 13
services paid by a managed health care provider or health care insurer”. NMSA 1978, § 7-9-93

(2016) (emphasis added). There is a substantial difference between a deduction for the receipts

of qualifying payments and a deduction for the “[r]eceipts of a health care practitioner”. See id.

Under the current statute and its regulations, the Taxpayer does not meet the definition of a

health care practitioner. See id. See 3.2.241.13 and 3.2.241.17 NMAC (2006). Therefore, under

the current statute and its regulations, the Taxpayer would not be entitled to take the deduction.

Legislative intent and retroactive application.

The Department argues that the current version of the statue should apply to the

Taxpayer. The Department argues that the amendment is functionally a codification of the

regulation that restricted which taxpayer may take the deduction. The Department argues that

the Legislature explicitly indicated in the bill that the amendment was to clarify the type of

health care practitioner who may take the deduction. The Department argues that clarifications

of ambiguous statutes should be given retroactive effect. The Department also argues that the

amendment should serve as evidence of the legislative intent of the previous version of the

statute. The Taxpayer argues that the amended statute constitutes a fundamental change that

should apply only prospectively.

A statute should be given the effect of the plain meaning of its words. See Wood v. State

Educ. Ret. Bd., 2011-NMCA-020, ¶ 12, 149 N.M. 455. All statutes, whether ambiguous or not,

should still be construed in accordance with the legislative intent behind the statute and should

not lead to an absurd result, even though it may require a substitution or addition of words. See

State ex rel. Helman v. Gallegos, 1994-NMSC-023, 117 N.M. 346. See also Kewanee Indus.,

Inc. v. Reese, 1993-NMSC-006, 114 N.M. 784. See also State v. Johnson, 2001-NMSC-001, ¶ 6,

130 N.M. 6. When a statute is ambiguous or leads to an absurd result, it should be construed

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 10 of 13
according to its obvious purpose. See T-N-T Taxi Co. v. N.M. Pub. Regulation Comm’n, 2006-

NMSC-016, ¶ 5, 139 N.M. 550. However, extra words should not be read into a statute, if its

plain meaning is unambiguous and it makes sense as written. See Johnson v. N.M. Oil

Conservation Comm’n, 1999-NMSC-021, ¶ 27, 127 N.M. 120. A statute is ambiguous if it is

susceptible to more than one interpretation. See United Nuclear Corp. v. Revenue Div., 1982-

NMCA-067, ¶ 7, 98 N.M. 296. When something is expressed or defined in the statute, then the

statute is not ambiguous. See id. at ¶ 19.

A statute is presumed to operate prospectively unless the Legislature expresses a clear

intent to give it retroactive effect. See Swink v. Fingado, 1993-NMSC-013, ¶ 28, 115 N.M. 275.

The purpose of a statute may be determined in part by the title of the act, including whether it

said it was meant to clarify. See id. at ¶ 31. When the purpose of an amendment is to clarify

existing law, the amendment may be deemed curative and given retroactive effect. See id. at ¶

35. However, an amendment may only be considered a clarification if it does not contravene a

previous construction of the law. See id. See also Phelps Dodge Corp. v. Revenue Div. of Dep’t

of Taxation, 1985-NMCA-055, ¶ 11, 103 N.M. 20. Moreover, an amendment may only be

considered a clarification if the original statute was unclear or ambiguous. See Wasko v. N.M.

DOL, Employment Sec. Div., 1994-NMSC-076, ¶ 9, 118 N.M. 82. See also N.M. Real Estate

Comm’n v. Barger, 2012-NMCA-081, ¶ 18. Substantive changes to a statute may only be

applied prospectively. See Phelps Dodge Corp., 1985-NMCA-055, ¶ 14-15. A clarification

occurs when, rather than changing an existing law, an amendment serves to make explicit what

was previously implicit in the law. See Wood, 2011-NMCA-020, ¶ 25.

Again, the statute was not ambiguous as it defined what types of payments could be

deducted from gross receipts. See NMSA 1978, § 7-9-93 (2007). The statute made sense as it

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 11 of 13
was written, and it did not lead to an absurd result. See id. Nothing in the statute as it was

written indicated that the intent of the statute was to limit the deduction to a certain type of

taxpayer. See id. The HealthSouth decision details how the Department originally treated the

deduction in the same way that the Taxpayer applied it, and only later restricted the type of

taxpayer by enacting its regulations. Since the statute was not ambiguous, made sense as it was

written, and did not lead to an absurd result, the subsequent amendment and the title of its bill are

not sufficient to overcome the plain meaning of the statute as it was written. See Phelps Dodge

Corp., 1985-NMCA-055 (holding that an amendment was not a clarification and could not apply

retroactively even when the language expressed a retroactive intent and indicated it was a

correction since the original intent had been misconstrued). The subsequent amendment is also

not a clarification as it effects a substantive change, and the amended statute applies

prospectively. See id.

CONCLUSIONS OF LAW

A. The Taxpayer filed a timely written protest to assessment issued under Letter ID

number L1636159024, and jurisdiction lies over the parties and the subject matter of this protest.

B. The Taxpayer was entitled to deduct its receipts from qualifying payments under the

statute, notwithstanding the regulatory restriction. See NMSA 1978, § 7-9-93 (2007). See

3.2.241.13 and 3.2.241.17 NMAC (2006). See Rainbo Baking Co., 1972-NMCA-139. See State

v. Bowden, 2010-NMCA-070.

C. The subsequent amendment of the statute was a substantive change in the law, and

the change does not apply retroactively. See NMSA 1978, § 7-9-93 (2007 and 2016). See

Phelps Dodge Corp., 1985-NMCA-055. See Wood, 2011-NMCA-020. See Swink, 1993-

NMSC-013.

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 12 of 13
D. The Taxpayer has overcome the presumption that the assessment of tax was

correct. See NMSA 1978, § 7-1-17. See Sec. Escrow Corp., 1988-NMCA-068. See Wing Pawn

Shop, 1991-NMCA-024. See Chavez, 1970-NMCA-116.

For the foregoing reasons, the Taxpayer's protest is GRANTED, and the assessment is

HEREBY ABATED.

DATED: December 20, 2017.

Dee Dee Hoxie
DEE DEE HOXIE
Hearing Officer
Administrative Hearings Office
Post Office Box 6400
Santa Fe, NM 87502

NOTICE OF RIGHT TO APPEAL

Pursuant to NMSA 1978, § 7-1-25, the parties have the right to appeal this decision by

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

shown above. See Rule 12-601 NMRA. If an appeal is not filed within 30 days, this Decision

and Order will become final. A copy of the Notice of Appeal should be mailed to John Griego,

P. O. Box 6400, Santa Fe, New Mexico 87502. Mr. Griego may be contacted at 505-827-0466.

Golden Services Home Health and Hospice
Letter ID No. L1636159024
page 13 of 13