Can a company that employs nurses and contracts them out to government health clinics take New Mexico's health-practitioner gross receipts tax deduction, or is that only for individual practitioners?

Plain-English summary

Robison Medical Resource Group is an LLC that staffs its employed nurses into government-run health clinics — specifically Indian Health Service (IHS) and Department of Veterans Affairs (VA) facilities in New Mexico. The Department assessed it $252,192.08 in gross receipts tax, penalty, and interest for 2013–2019, taking the position that Robison owed tax on all of those receipts. Robison claimed the Section 7-9-93 deduction for a health care practitioner's commercial-contract services paid by a managed health care provider. On cross-motions for summary judgment with stipulated facts, the Administrative Hearings Office ruled for Robison and abated the entire assessment.

The central question was whether the 7-9-93 deduction is available only to individual doctors and nurses, or also to a business entity that employs them. The Department argued it was limited to individuals, leaning on an unpublished Court of Appeals decision, Golden Services. The hearing officer disagreed, for a few connected reasons:

• The Department's own regulation controls. Regulation 3.2.241.13 NMAC says a "corporation, unincorporated business association, or other legal entity may deduct" its 7-9-93 receipts for commercial contract services provided by health care practitioners who own or are employed by that entity. So a business entity can itself qualify as a "health care practitioner" for the deduction.
• There is an exclusion, and Robison isn't in it. The regulation (and 3.2.241.17) bars certain entities — 501(c)(3) organizations, HMOs, hospitals, hospices, nursing homes, and entities that are solely outpatient or intermediate-care facilities. Robison is none of these; it is "more akin to an employee staffing agency," so it stays eligible.
• Golden Services actually cuts the other way. That case involved excluded health care facilities and held they can't take the deduction — but in doing so it upheld regulations 3.2.241.13 and 3.2.241.17 as presumptively proper. The Department's argument that its own regulation is invalid was self-contradictory, since Golden Services relied on the regulation's validity. The "crucial distinction" is that Robison is not a facility.
• The government-sales rule didn't block it. The Department also leaned on Section 7-9-54 (sales to government agencies). But that section's limit on service receipts applies only to that section — it does not disallow deductions taken under other statutes like 7-9-93.

The hearing officer also noted that a 2021 amendment (H.B. 98) essentially codified the regulation, extending the deduction to an "association of health care practitioners." The protest was granted and the full $252,192.08 assessment abated.

What this means for you

Medical staffing and physician-group businesses

If your business is a legal entity (an LLC, corporation, or association) whose owner or employee health care practitioners perform the actual services, you may be able to take the Section 7-9-93 gross receipts deduction on receipts paid by a managed health care provider or health insurer — the deduction is not limited to solo practitioners. The key gate is what kind of entity you are: staffing agencies and practitioner-owned groups generally qualify, but the listed health care facilities do not (see below).

Businesses billing government health agencies (IHS, VA, tribal)

Selling your services to a government agency does not, by itself, strip away other gross receipts deductions. Section 7-9-54's rule that service receipts sold to a government agency aren't deductible applies only to Section 7-9-54; it does not override a deduction you separately qualify for under Section 7-9-93. Robison's receipts came entirely from IHS and VA contracts and still qualified.

Accountants and tax professionals

This is the AHO decision that draws the "crucial distinction" between an excluded health care facility and a practitioner-employing business entity under Regulations 3.2.241.13 and 3.2.241.17 — later New Mexico decisions on the 7-9-93 deduction (including for dialysis providers) build on this reasoning. Note the doctrinal moves: an unpublished opinion (Golden Services) is persuasive but non-precedential (Rule 12-405), and it cannot resolve a fact pattern it did not contemplate; the Department cannot disown a presumptively-proper regulation (§9-11-6.2(G)) it has left unamended; and a section-specific exclusion (7-9-54) is not a general bar. Watch the entity-type checklist in 3.2.241.13/.17 — 501(c)(3), HMO, hospital, hospice, nursing home, or solely outpatient/intermediate-care facilities remain excluded.

Common questions

Q: Is the Section 7-9-93 deduction only for individual doctors and nurses?
A: No. Under Regulation 3.2.241.13, a business entity — a corporation, association, or other legal entity — can qualify as a health care practitioner for the deduction when the practitioners who perform the services own or are employed by it. Robison, a nurse-staffing LLC, qualified on that basis.

Q: Which businesses cannot take the deduction?
A: The regulation excludes 501(c)(3) organizations, HMOs, hospitals, hospices, nursing homes, and entities that are solely outpatient or intermediate-care facilities licensed under the Public Health Act. Those health care facilities are barred; a staffing agency or practitioner-employing entity that is none of them is not.

Q: Does selling services to a government agency like IHS or the VA block the deduction?
A: No. Section 7-9-54 limits its own government-sales deduction for service receipts, but that limit applies only to Section 7-9-54. It does not disallow a deduction validly taken under a different statute such as Section 7-9-93.

Q: The Department argued its own regulation was invalid. Why didn't that work?
A: Because the Department's regulations are presumed to be a proper implementation of the statute, and it had left 3.2.241.13 and 3.2.241.17 unamended for years. The unpublished Golden Services decision the Department relied on had itself upheld those very regulations, so the argument was self-contradictory.

Q: Does this decision apply to my business?
A: Not automatically. A Decision and Order resolves one taxpayer's protest on its specific facts and the law in effect at the time. It shows how the Administrative Hearings Office reasons, but it binds only the parties to that protest, and your facts may differ.

Citations and references

Statutes, rules, and legislation:

• NMSA 1978, § 7-9-93 (2007) and (2016) — health-practitioner commercial-contract-services deduction
• NMSA 1978, § 7-9-54 (2018) — deduction for sales to governmental agencies; limits apply only to that section
• NMSA 1978, § 7-9-4 (2010) — imposition of gross receipts tax
• NMSA 1978, § 7-9-3.5(A)(1) (2019) — gross receipts from performing services
• NMSA 1978, § 7-9-5(A) (2019) — presumption that receipts are taxable
• NMSA 1978, § 7-1-17 (2007) — assessment presumed correct
• NMSA 1978, § 9-11-6.2(B), (G) (2015) — Department's regulations presumed a proper implementation
• NMSA 1978, § 7-1B-8 (2019) — 90-day hearing requirement
• Regulations 3.2.241.13 and 3.2.241.17 NMAC (2006) — business entity may qualify as a health care practitioner; excluded facilities may not
• Regulation 3.2.212.9(A) NMAC (2001) — sale of a service to a government agency not deductible under 7-9-54
• 2021 N.M. Laws, H.B. 98 — amendment codifying "association of health care practitioners"

Cases cited:

• Golden Services Home Health & Hospice v. Taxation & Revenue Dep't, No. A-1-CA-36987 (N.M. Ct. App. Apr. 20, 2020) (unpublished; upheld the regulations but barred health care facilities)
• TPL, Inc. v. N.M. Taxation & Revenue Dep't, 2003-NMSC-007 (deduction available for a service sold to a government agency)
• Sec. Escrow Corp. v. State Taxation & Revenue Dep't, 1988-NMCA-068 (deductions construed strictly, must be clearly established)
• El Centro Villa Nursing Ctr. v. Taxation & Revenue Dep't, 1989-NMCA-070 (assessment presumed correct)
• Marbob Energy Corp. v. N.M. Oil Conservation Comm'n, 2009-NMSC-013 (plain-language statutory interpretation)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Robison Medical Resource Group LLC
• Decision PDF: D&O 21-14

Original ruling text

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

4 IN THE MATTER OF THE PROTEST OF
5 ROBISON MEDICAL RESOURCE GROUP, LLC
6 TO THE ASSESSMENT
7 ISSUED UNDER LETTER ID NO. L0625306288

8 v. AHO No. 20.11-140A, D&O No. 21-14

9 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

10 DECISION AND ORDER
11 On April 15, 2021, Hearing Officer Dee Dee Hoxie, Esq. conducted a videoconference

12 hearing on the motions for summary judgment filed in the protest of Robison 1 Medical Resource

13 Group, LLC (Taxpayer) to the assessment. The Taxation and Revenue Department (Department)

14 was represented by Timothy Williams, Staff Attorney, who appeared by telephone. Alma Tapia,

15 Auditor, appeared by videoconference on behalf of the Department. The Taxpayer was

16 represented by its attorneys, Ian Bearden, Zachary McCormick, and Alicia Harvey, who

17 appeared by videoconference. David Dart, CFO for the Taxpayer, also appeared by

18 videoconference for the hearing. The Hearing Officer took notice of all documents in the

19 administrative file. Taxpayer’s Exhibit #3 was admitted without objection. The parties agreed

20 and stipulated to the facts as they were outlined in the Taxpayer’s prehearing statement (TPHS2).

21 The main issue to be decided is whether the Taxpayer is entitled to a deduction under

22 Section 7-9-93. The Hearing Officer considered all of the evidence and arguments presented by

1
Based on the request for hearing, the Taxpayer’s name has been captioned as “Robinson” by the Administrative
Hearings Office in prior orders. The parties have been captioning their pleadings as “Robison” since the request for
hearing. A review of the file and the information at the hearing indicate that the correct name is “Robison”, and the
change has been made in this order.
2
Citations to the TPHS will be numbered as TPHS #__ to correspond to the numbers given in the outline of
proposed stipulations contained therein, except for numbers after the first #9. The facts were numbered sequentially
until #9, at which point the numbers 6-9 are repeated with different facts. For those repeated numbers, they will be
referred to as #10-13, respectively.
Robison Medical Resource Group, LLC
Case No. 20.11-140A
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1 both parties. The Taxpayer is a legal entity with receipts from managed health care providers for

2 commercial contract services provided by health care practitioners who are employed by the

3 Taxpayer, but the Taxpayer is not a health care facility 3. See 3.2.241.13 NMAC. Consequently,

4 the Hearing Officer finds in favor of the Taxpayer. IT IS DECIDED AND ORDERED AS

5 FOLLOWS:

6 FINDINGS OF FACT

7 1. On February 6, 2020, under letter id. no. L0625306288, the Department issued an

8 assessment to the Taxpayer for the tax periods from January 31, 2013 to April 30, 2019. The

9 assessment was for gross receipts tax of $191,718.88, penalty of $38,242.97, and interest of

10 $22,230.23, for a total liability of $252,192.08. [Admin. file L0625306288; TPHS #1].

11 2. On May 6, 2020, the Taxpayer filed a timely written protest to the assessment.

12 [Admin. file protest].

13 3. On May 26, 2020, the Department acknowledged its receipt of the protest.

14 [Admin. file L1775769264].

15 4. On November 23, 2020, the Department filed a request for hearing with the

16 Administrative Hearings Office. [Admin. file request].

17 5. On December 16, 2020, a telephonic scheduling hearing was conducted, which

18 was within 90 days of the request as required by statute. [Admin. file].

19 6. On March 1, 2021, the Taxpayer filed a motion for summary judgment

20 (Taxpayer’s motion). [Admin. file].

3
Here and throughout the decision, “health care facility” means a 501 (c) (3) organization, a hospital, HMO,
hospice, nursing home, or an entity licensed under the Public Health Act as an outpatient facility or an intermediate
care facility. See 3.2.241.13 NMAC.
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Case No. 20.11-140A
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1 7. On March 16, 2021, the Department filed its response and a cross-motion for

2 summary judgment (Department’s motion). [Admin file].

3 8. On March 26, 2021, the Taxpayer filed its response (Taxpayer’s Response).

4 [Admin. file].

5 9. The Taxpayer is engaged in the business of providing the services of its nurse

6 employees on a temporary basis to clinics and other medical facilities operated by governmental

7 entities. [TPHS #2].

8 10. All of the Taxpayer’s gross receipts in New Mexico 4 were derived from the

9 Indian Health Service (IHS) and the Department of Veteran’s Affairs (VA), pursuant to contracts

10 between the Taxpayer and those agencies. [TPHS #3].

11 11. Under those contracts, the Taxpayer provided health care services 5 in IHS and

12 VA clinics and hospitals. [TPHS #4].

13 12. The IHS and the VA are managed health care providers. [TPHS #6-7].

14 13. The Taxpayer provided commercial contract services to the IHS and to the VA.

15 [TPHS #8].

16 14. The Taxpayer’s nurse employees are health care practitioners. [TPHS #9].

17 15. The Taxpayer claimed a deduction for its receipts derived from the sale of

18 services to the IHS and to the VA under Section 7-9-93. [TPHS #10].

19 16. The Taxpayer is not exempt from federal taxation under Section 501(c)(3) of the

20 Internal Revenue Code. [TPHS #12].

4
During the tax periods at issue in the assessment.
5
Through its nurse employees.
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1 17. The Taxpayer is not an HMO, hospital, hospice, nursing home, or an entity that is

2 solely an outpatient facility or intermediate care facility under the Public Health Act. [TPHS

3 #13].

4 DISCUSSION

5 Burden of proof.

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

7 (2007). Therefore, the assessment issued to the Taxpayer is presumed to be correct, and it is the

8 Taxpayer’s burden to present evidence and legal argument to show that it is entitled to an

9 abatement. See El Centro Villa Nursing Ctr. v. Taxation and Revenue Department, 1989-NMCA-

10 070, 108 N.M. 795. See also Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428. See

11 also N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-NMCA-099, ¶8. The presumption

12 extends to the assessment of penalty and interest. See 3.1.6.13 NMAC (2001).

13 The Taxpayer argues that it is entitled to take the deduction under Section 7-9-93 and

14 Regulation 3.2.241.13. The burden is on the Taxpayer to prove that it is entitled to an exemption

15 or deduction. See Public Services Co. v. N.M. Taxation and Revenue Dep’t., 2007-NMCA-050,

16 ¶ 32, 141 N.M. 520. See also Till v. Jones, 1972-NMCA-046, 83 N.M. 743. “Where an

17 exemption or deduction from tax is claimed, the statute must be construed strictly in favor of the

18 taxing authority, the right to the exemption or deduction must be clearly and unambiguously

19 expressed in the statute, and the right must be clearly established by the taxpayer.” Sec. Escrow

20 Corp. v. State Taxation and Revenue Dep’t., 1988-NMCA-068, ¶ 8, 107 N.M. 540. See also

21 Wing Pawn Shop v. Taxation and Revenue Dep’t., 1991-NMCA-024, ¶ 16, 111 N.M. 735. See

22 also Chavez v. Commissioner of Revenue, 1970-NMCA-116, ¶ 7, 82 N.M. 97. See also

23 Pittsburgh and Midway Coal Mining Co. v. Revenue Division, 1983-NMCA-019, 99 N.M. 545.

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

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

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

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

5 also Martinez v. Logsdon, 1986-NMSC-056, 104 N.M. 479. The parties agreed that there were

6 no disputes as to the material facts. The parties also agreed that the outcome of the summary

7 judgment motions would be dispositive to the issues of the hearing and that a final decision and

8 order either granting or denying the protest should be issued.

9 Gross receipts tax.

10 Anyone engaging in business in New Mexico is subject to the gross receipts tax. See

11 NMSA 1978, § 7-9-4 (2010). To engage in business in New Mexico means “carrying on or causing

12 to be carried on any activity with the purpose of direct or indirect benefit.” NMSA 1978, § 7-9-3.3

13 (2019) 6. Gross receipts include the total amount received “from performing services in New

14 Mexico.” NMSA 1978, § 7-9-3.5 (A) (1) (2019). There is a statutory presumption that “all receipts

15 of a person engaging in business are subject to the gross receipts tax.” NMSA 1978, § 7-9-5 (A)

16 (2019). The parties stipulated that the Taxpayer’s employees were providing services at the IHS

17 and the VA in New Mexico. [TPHS]. Presumptively, the Taxpayer’s receipts for providing those

18 services are subject to the gross receipts tax. See NMSA 1978, § 7-9-4, §7-9-5.

19 Section 7-9-54.

20 The Taxpayer’s motion focuses on Section 7-9-54. [Taxpayer’s motion]. “Receipts from

21 selling tangible personal property to” a government agency may be deducted from gross receipts,

22 but the portion of those receipts attributable to the performance of a service for a government

6
The most current version of statutes and regulations will be referenced unless there is a relevant substantive change
between it and the version in effect at the time that the Taxpayer’s services were rendered.
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Case No. 20.11-140A
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1 agency are not deductible. NMSA 1978, § 7-9-54 (A) (2018). See also 3.2.212.9 NMAC (A)

2 (2001). The Department’s response did not address the issue on Section 7-9-54. [Department’s

3 motion]. Rather, it focused on the deduction under Section 7-9-93 and recent unpublished caselaw.

4 [Department’s motion]. At the hearing, the Department acknowledged that the auditor relied, in

5 part, on Section 7-9-54 when the assessment was made, and perfunctorily asserted it in addition to

6 the main arguments on Section 7-9-93. [Exhibit #3].

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

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

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

10 applied as written unless a literal use of the words would lead to an absurd result. See N.M. Real

11 Estate Comm’n. v. Barger, 2012-NMCA-081, ¶ 7.

12 If a statute is ambiguous or would lead to an absurd result, then it should be construed in

13 accordance with the legislative intent or spirit and reason for the statute, even though it may

14 require a substitution or addition of words. See id. See also State ex rel. Helman v. Gallegos,

15 1994-NMSC-023, 117 N.M. 346. See also Kewanee Indus., Inc., 1993-NMSC-006. When a

16 statute is ambiguous or would lead to an absurd result, it should be construed according to its

17 obvious purpose. See T-N-T Taxi Co. v. N.M. Pub. Regulation Comm’n, 2006-NMSC-016, ¶ 5,

18 139 N.M. 550. The heading of a statute may be considered in its interpretation, but the heading

19 does not limit or change the plain meaning of the text of the statute. See State v. Gutierrez,

20 2020-NMCA-045, ¶ 15.

21 Section 7-9-54 has the heading “[d]eduction; gross receipts tax; governmental gross

22 receipts tax; sales to governmental agencies.” NMSA 1978, § 7-9-54. Generally, the receipts

23 from selling tangible personal property to a governmental agency may be deducted from gross

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Case No. 20.11-140A
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1 receipts. See id. However, “the deduction provided by this subsection does not apply to: …that

2 portion of the receipts from performing a ‘service’ that reflects the value of tangible personal

3 property utilized or produced in performance of such service.” Id. (emphasis added).

4 The Legislature’s choice of words expresses a clear intent that the exclusions contained

5 in Section 7-9-54 only limit the availability of that section. There is no expression of an intent to

6 disallow all deductions for receipts derived from services sold to governmental agencies.

7 Otherwise, the Legislature would not have limited its scope with the use of a single determiner,

8 “this.”

9 The Department’s own regulation also provides that “[r]eceipts from the sale of a service

10 to a governmental agency are not deductible pursuant to Section 7-9-54 NMSA 1978.” 3.2.212.9

11 (A) NMAC (emphasis added). The regulation demonstrates an interpretation of the law

12 consistent with the enactment itself, that the exclusion contained in Section 7-9-54 only applied

13 to Section 7-9-54.

14 There is no indication in the regulation that the statute was interpreted to enact a wider or

15 broader general prohibition on all receipts derived from services sold to governmental agencies.

16 See 3.2.212.9 NMAC. Instead, the Department simply echoed the language that was already

17 contained in the statute, limiting the availability of that single deduction. See id.

18 Moreover, the Department’s argument is inconsistent with the caselaw. See TPL, Inc. v.

19 N.M. Taxation & Revenue Dep’t, 2003-NMSC-007, 133 N.M. 447 (holding that a different

20 section afforded a deduction for the sale of a service to a governmental agency). See also In re

21 the Protest of Sandia Corp., Decision & Order No. 19-11, p. 74-80 (Admin. Hearings Office,

22 April 19, 2019) (non-precedential) (rejecting the Department’s argument that Section 7-9-54

23 precluded deductions from being taken under a different section and finding that the

Robison Medical Resource Group, LLC
Case No. 20.11-140A
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1 Department’s position was inconsistent with caselaw and its own publications). Therefore, the

2 provisions of Section 7-9-54 do not preclude deductions taken under other statutes. See NMSA

3 1978, 7-9-54.

4 Deductions under Section 7-9-93.

5 The assessment spans the years from 2013 to 2019. [Admin. file]. Therefore, two

6 versions of the statute are applicable to the assessment, the statute in effect from 2013 to 2016,

7 and the amended statute in effect from 2016 through the end of the assessment period. See

8 NMSA 1978, § 7-9-93 (2007) and (2016). From 2013 to 2016, the statute provided that

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

17 The amended statute provides that

18 Receipts of a health care practitioner for commercial contract services or medicare part C
19 services paid by a managed health care provider or health care insurer may be deducted
20 from gross receipts if the services are within the scope of practice of the health care
21 practitioner providing the service. Receipts from fee-for-service payments by a health
22 care insurer may not deducted from gross receipts. NMSA 1978, § 7-9-93 (A) (2016).

23 Both versions of the statute share the same basic criteria, 1) the receipts must be paid by a

24 managed health care provider or health care insurer, 2) the receipts are payments for commercial

25 contract services or medicare part C services, 3) the services were performed by a health care

26 practitioner within the scope of their practice. See id. (2007 and 2016).

27 The parties stipulated to the facts. The Taxpayer’s receipts are derived from the services

28 of their nurse employees for providing commercial contract services to the IHS and to the VA.

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1 [TPHS]. The IHS and the VA are managed health care providers. [TPHS]. Therefore, the

2 Taxpayer’s receipts satisfy these basic statutory criteria. See NMSA 1978, § 7-9-93.

3 Under the regulations, a business entity7 can qualify as a health care practitioner.

4 The Department argues “that the deduction is not available to business entities similar to

5 that of the Taxpayer in this case, but limited to individual health care practitioners.”

6 [Department’s motion, p. 2]. The Department cites a recent unpublished case to support its

7 argument. See Golden Services Home Health and Hospice and Unnamed Nursing and

8 Rehabilitation Center v. Taxation and Revenue Dep’t, No. A-1-CA-36987, mem. op. (NMCA,

9 April 20, 2020) (non-precedential), cert. denied, No. S-1-SC-38341 (NMSC, November 17,

10 2020), 2020 WL 2045956. The Department argues that the statute only applies to individual

11 health care practitioners. [Department’s motion].

12 The decision in Golden Services provides some support for the Department’s argument.

13 In its reasoning, the court found that the statute “lends support to the conclusion that only health

14 care practitioners could hold qualifying ‘receipts from payments by a managed health care

15 provider or health care insurer.’” Golden Services, No. A-1-CA-36987, mem. op., ¶ 25. The

16 court also opined that the 2016 amendment “finalizes once and for all that the Legislature does

17 not intend to bestow a tax deduction to simply ‘any taxpayer’ and thus non-practitioner

18 transactions do not fall within the purview of” the statute. Id. at ¶ 26. Specifically, under the

19 facts of the decision, the court held that “health care facilities,…,are not entitled to claim the

20 deduction.” Id. at ¶ 24.

21 However, an unpublished decision is not controlling precedent. See Rule 12-405 NMRA

22 (2012) (stating that unpublished decisions are not precedent but may still be persuasive). See

7
Throughout the decision, “business entity” means a corporation, unincorporated business association, or other legal
entity. See 3.2.241.13 NMAC.
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1 also Hess Corp. v. N.M. Taxation & Revenue Dep’t, 2011-NMCA-043, ¶ 35, 149 N.M. 527

2 (indicating that unpublished opinions and orders are written solely for the benefit of the parties

3 and have no controlling precedential value). See also Inc. County of Los Alamos v. Montoya,

4 1989-NMCA-004, ¶ 6, 108 N.M. 361 (noting that unpublished caselaw is not binding precedent).

5 See State v. Granillo-Macias, 2008-NMCA-021, ¶ 11, 143 N.M. 455 (noting that unpublished

6 orders, decisions, and opinions are not controlling and are written solely for the benefit of the

7 parties). See State v. Gonzales, 1990-NMCA-040, ¶ 47-48, 110 N.M. 218 (noting that

8 unpublished orders, decisions, and opinions are not meant to be controlling authority and that

9 they rarely describe the context of the issue at length, which may be of controlling importance to

10 the decision).

11 The Taxpayer is claiming the deduction based on the Department’s own regulation. “A

12 corporation, unincorporated business association, or other legal entity may deduct under Section

13 7-9-93 NMSA 1978 its receipts from managed health care providers or health care insurers for

14 commercial contract services…provided on its behalf by health care practitioners who own or

15 are employed by the corporation, unincorporated business association or other legal entity”.

16 3.2.241.13 NMAC (2006) (emphasis added). The regulation implicitly expands the definition of

17 a health care practitioner by explicitly allowing business entities to claim the deduction under

18 Section 7-9-93. See id. 8 The regulation was in effect under both the 2007 and 2016 versions of

19 the statute. See id.

8
Prior to this decision, the statute was again amended during the 2021 Legislative session, under House Bill 98
(H.B. 98). This amendment provides a deduction on commercial contract services for receipts of a health care
practitioner or an association of health care practitioners, which is defined as a legal entity organized by, owned by,
or employing one or more health care practitioners, provided that the legal entity is not a listed type of health care
facility. See H.B. 98. Essentially, the newest version of the statute codifies the regulation. See id. See also
3.2.241.13 NMAC.
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1 Not every business entity qualifies as a health care practitioner under the regulation. See

2 id. In addition to the statutory criteria9, the health care practitioners who perform the services on

3 the business entity’s behalf must 1) own, or 2) be employed by the business entity. See id. In

4 addition, the business entity cannot be a 501 (C) (3) organization or “an HMO, hospital, hospice,

5 nursing home, an entity that is solely an outpatient facility or intermediate care facility licensed

6 under the Public Health Act.” Id.

7 These excepted entities may not take the deduction. See id. “An organization, whether

8 or not owned exclusively by health care practitioners, licensed as a hospital, hospice, nursing

9 home, an entity that is solely an outpatient facility or intermediate care facility under the Public

10 Health Act” may not take the deduction. 3.2.241.17 NMAC (2006). Such a facility “is not a

11 ‘health care practitioner’ as defined by Section 7-9-93”. Id.

12 The Department argues that its own regulation is invalid. The purpose of the

13 Department’s regulations is “to interpret, exemplify, implement and enforce the provisions of the

14 Gross Receipts and Compensating Tax Act.” 3.2.1.6 NMAC (2001). The Department has

15 authority to enact regulations that interpret and exemplify the statutes to which they relate. See

16 NMSA 1978, § 9-11-6.2 (B) (1) (2015). The Department’s regulations also carry a presumption

17 that they are a “proper implementation of the provisions of the laws”. NMSA 1978, § 9-11-6.2

18 (G).

19 The Department’s authority to enact regulations includes the power to amend or to repeal

20 a regulation when it becomes necessary to do so “by reason of any alteration of any such law.”

21 Id. Since 2006, the Department has not amended or repealed Regulation 3.2.241.13 or

22 Regulation 3.2.241.17 despite changes to the statute to which they relate. See 3.2.241.13 and

9
Again, payments from managed health care providers for commercial contract services performed by health care
practitioners within the scope of their practice. See NMSA 1978, § 7-9-93.
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1 3.2.241.17 NMAC. See also NMSA 1978, § 7-9-93 (2007) and (2016). Consequently, the

2 Department’s regulations remain a published and presumptively proper implementation of the

3 statute. See id. See also NMSA 1978, § 9-11-6.2. See also Golden Services, No. A-1-CA-

4 36987, mem. op. Therefore, it is reasonable for the Taxpayer to rely on the published and

5 presumptively proper regulations as a valid implementation of the statute, despite the

6 Department’s argument to the contrary at the hearing.

7 In Golden Services, the court also found that there was no “basis to conclude that the

8 Department’s new regulations were an improper interpretation of the statute” and that they were

9 presumptively proper. Golden Services, No. A-1-CA-36987, mem. op., ¶ 21. The regulations

10 that the court found were proper were 3.2.241.13 and 3.2.241.17, which are the very regulations

11 at issue in this protest. See id. The Department’s argument contains an inherent contradiction,

12 that the court’s decision in Golden Services, which relied upon the validity of the regulations, has

13 simultaneously rendered those regulations invalid. See id.

14 In Golden Services, the taxpayers were the types of health care facilities that the

15 regulation prohibits from claiming the deduction under Section 7-9-93. See id. See also

16 3.2.241.13 and 3.2.241.17. In the underlying protests that led to the Golden Services appeal, the

17 regulations were found to be improper because they placed additional limitations on the

18 deduction, which were not found in the statute 10. See Golden Services, No. A-1-CA-36987,

19 mem. op. The court reversed the decisions of the protests and found that the regulations were

20 proper. See id., at ¶ 20-21. The Hearing Officer will follow the court’s guidance and finds that

21 the regulations are not improper or invalid. See id.

10
The 2007 version of the statute, which allowed deductions of receipts of payments that met the statutory criteria.
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1 The taxpayers in Golden Services were health care facilities and were claiming the

2 deduction under the statute, even though the regulation prohibited it. See id. Conversely, the

3 Taxpayer in this protest is not a health care facility and is claiming the deduction under the

4 statute based on the language in the regulation that allows a business entity to claim the

5 deduction for the health care practitioners that it employs. See 3.2.241.13 NMAC. This is a

6 crucial distinction, and Golden Services cannot resolve issues that it did not contemplate, which

7 is part of the reason why unpublished decisions are non-precedential. See Golden Services, No.

8 A-1-CA-36987, mem. op. See also Hess Corp., 2011-NMCA-043, ¶ 35. See also Inc. County of

9 Los Alamos, 1989-NMCA-004, ¶ 6. See Granillo-Macias, 2008-NMCA-021, ¶ 11. See

10 Gonzales, 1990-NMCA-040, ¶ 47-48.

11 As the regulation contemplates that a business entity who satisfies its criteria is a health

12 care practitioner for purposes of claiming the deduction under the statute, the Taxpayer’s

13 arguments are consistent with the holding in Golden Services that a health care practitioner, as

14 defined by the statute and valid regulations, is the taxpayer who may claim the deduction. See

15 Golden Services, No. A-1-CA-36987, mem. op. Consequently, the Department’s argument is not

16 persuasive.

17 The Taxpayer is not a health care facility. [TPHS]. It is not a 501 (c) (3) organization,

18 nor is it a hospital, HMO, hospice, nursing home, or an entity licensed under the Public Health

19 Act as an outpatient facility or an intermediate care facility. [TPHS]. See also 3.2.241.13 and

20 3.2.241.17 NMAC. The Taxpayer is more akin to an employee staffing agency. The Taxpayer

21 has nurses who are its employees. [TPHS]. Its employees provided commercial contract

22 services within the scope of their health care practice for managed health care providers, the IHS

23 and the VA, pursuant to contracts that it had with those managed health care providers. [TPHS].

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1 The Taxpayer is a legal entity 11 with receipts from managed health care providers for

2 commercial contract services provided on its behalf by health care practitioners who are its

3 employees; therefore, the Taxpayer falls within the purview of the regulation. See 3.2.241.13

4 NMAC.

5 The Department’s regulations are presumptively proper. See NMSA 1978, § 9-11-6.2

6 (G). Regulation 3.2.241.13 and Regulation 3.2.241.17 both interpret Section 7-9-93 as allowing

7 a business entity to claim the deduction, but only if the business entity is not one of the listed

8 health care facilities. See 3.2.241.13 and 3.2.241.17 NMAC. Both regulations apply to both

9 versions of the statute in effect during the tax periods at issue. See id. The decision in Golden

10 Services found that Regulation 3.2.241.13 and Regulation 3.2.241.17, specifically, were

11 presumptively proper. See Golden Services, No. A-1-CA-36987, mem. op. ¶ 20-21.

12 Regulation 3.2.241.13 essentially expands the definition of a health care practitioner and

13 allows business entities to claim the deduction under Section 7-9-93. See 3.2.241.13 NMAC. 12

14 Certain types of business entities that are health care facilities are prohibited from claiming the

15 deduction under Section 7-9-93. See id. See also 3.2.241.17 NMAC. The Taxpayer’s business

16 entity is not one of the health care facilities that is prohibited from claiming the deduction. See

17 3.2.241.13 NMAC. If it were, then the regulation in conjunction with the decision in Golden

18 Services would compel a different result. See id. See also Golden Services, No. A-1-CA-36987,

19 mem. op. The Taxpayer’s receipts meet the statutory and regulatory criteria13 for the deduction.

20 See id. See also NMSA 1978, § 7-9-93. The Taxpayer meets the expanded definition of a health

21 care practitioner under the regulation. See 3.2.241.13 NMAC. Therefore, the Taxpayer may

11
An LLC.
12
Again, the most current version of the statute has essentially codified the regulation. See H.B. 98.
13
Receipts from managed health care providers for commercial contract services performed by health care
practitioners within the scope of their practice, who are employees of the Taxpayer.
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1 claim the deduction under Section 7-9-93. See NMSA 1978, § 7-9-93. See also 3.2.241.13

2 NMAC. See also Golden Services, No. A-1-CA-36987, mem. op. (allowing health care

3 practitioners to take the deduction and upholding the regulation that expands health care

4 practitioners to include business entities).

5 CONCLUSIONS OF LAW

6 A. The Taxpayer filed a timely, written protest of the Department’s assessment and

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

8 B. The first hearing was timely set and held within 90 days of the request for hearing.

9 See NMSA 1978, § 7-1B-8 (2019).

10 C. From 2013 to 2016, receipts from payments by a managed health care provider for

11 commercial contract services provided by a health care practitioner within the scope of their practice

12 may be deducted. See NMSA 1978, § 7-9-93 (2007).

13 D. From 2016 to 2019, receipts of a health care practitioner for commercial contract

14 services paid by a managed health care provider may be deducted. See NMSA 1978, § 7-9-93

15 (2016).

16 E. Under both versions of the statute, the regulations have interpreted the statute to

17 allow for legal entities to claim the deduction, if they are not certain types of health care facilities.

18 See 3.2.241.13 and 3.2.241.17 NMAC (2006).

19 F. The regulations are presumptively a proper interpretation of the statute. See NMSA

20 1978, § 9-11-6.2. See also Golden Services, No. A-1-CA-36987, mem. op.

21 G. The Taxpayer’s receipts were from managed health care providers for commercial

22 contract services provided by health care practitioners within the scope of their practice, and the

23 health care practitioners were employed by the Taxpayer. Therefore, the Taxpayer met the

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1 statutory and regulatory criteria for claiming the deduction. See NMSA 1978, § 7-9-93. See also

2 3.2.241.13 NMAC.

3 H. The Taxpayer is not a 501 (C) (3) organization, an HMO, a hospital, a hospice, a

4 nursing home, or an outpatient facility or intermediate care facility licensed under the Public

5 Health Act. Therefore, the Taxpayer is not prohibited from claiming the deduction. See NMSA

6 1978, § 7-9-93. See also 3.2.241.13 and 3.2.241.17 NMAC. See also Golden Services, No. A-1-

7 CA-36987, mem. op.

8 For the foregoing reasons, the Taxpayer’s protest IS GRANTED. IT IS ORDERED that

9 the assessment be abated.

10 DATED: May 27, 2021.

11 Dee Dee Hoxie
12 Dee Dee Hoxie
13 Hearing Officer
14 Administrative Hearings Office
15 P.O. Box 6400
16 Santa Fe, NM 87502

17 NOTICE OF RIGHT TO APPEAL

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

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

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

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

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

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

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

25 Hearings Office may begin preparing the record proper. The parties will each be provided with a
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1 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

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

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

4 CERTIFICATE OF SERVICE

5 On May 27, 2021, a copy of the foregoing Decision and Order was submitted to the parties

6 listed below in the following manner:

7 Email Email

8 INTENTIONALLY BLANK
9
10 John Griego
11 Legal Assistant
12 Administrative Hearings Office
13 P.O. Box 6400
14 Santa Fe, NM 87502

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