Are rocking chairs built in New Mexico subject to gross receipts tax when the maker transports them to Texas and completes every sale there?

Plain-English summary

Emmett McIntyre won full abatement of a $16,450.19 gross receipts tax assessment because all relevant furniture sales occurred in Texas. During 2013–2016 he operated as a sole proprietor; the High Rolls Home Furnishings name was not established until later. He built rocking chairs at his home and shop in High Rolls, New Mexico, then loaded them onto trailers and personally drove them to Texas to sell.

His Texas sales included:

• loads and partial loads to retailers such as Pecan Shed in Wichita Falls and The Look in San Antonio;
• sales at other Texas locations, including El Paso; and
• direct sales to individuals who saw the chairs on his trailer while he stopped to rest, sometimes sleeping in his truck during the trip.

McIntyre credibly explained that he made no New Mexico sales during the assessed period because he was trying to sell his business and copyrighted designs to a New Mexico buyer and did not want to compete with that buyer. He resumed New Mexico furniture sales only later, outside the periods at issue.

The Department assessed $11,869.29 tax, $2,373.85 penalty, and $2,339.78 interest, less a $132.73 credit, after a mismatch between federal Schedule C income and receipts reported to New Mexico.

The evidentiary problem was unusual: a February 2018 fire heavily damaged McIntyre's home and shop and destroyed his records. Even so, Hearing Officer Chris Romero found that McIntyre met his burden:

• his detailed testimony about making every sale in Texas was “extremely credible and persuasive”;
• uninterested Texas buyers provided statements corroborating purchases from him;
• the remaining documents confirmed Texas destinations and sales; and
• the record contained no evidence from which to infer that any assessed-period sale occurred in New Mexico.

The legal rule was straightforward. Section 7-9-3.5 defined gross receipts to include money from selling property in New Mexico. Under Kmart, property must be sold in New Mexico to fall within that language. Building the chairs in New Mexico did not make the receipts taxable when McIntyre transported them out of state and completed every sale there.

The decision also emphasized that credible witness testimony is evidence, not a merely conclusory denial. McIntyre's testimony plus third-party corroboration overcame the assessment presumption, shifting the burden back to the Department.

Result: protest GRANTED; assessment fully ABATED.

What this means for you

For tangible property, the location of the completed sale matters

Manufacturing or storing an item in New Mexico does not by itself make the later sales proceeds New Mexico gross receipts. The decision turned on credible proof that every transfer and sale occurred in Texas.

A federal Schedule C mismatch is a starting point, not conclusive taxability

The Department saw business income reported federally but not to New Mexico. The taxpayer could still show that the income fell outside New Mexico's statutory definition of gross receipts.

Testimony can overcome an assessment when it is detailed and corroborated

Missing records do not automatically end a case. Here, the records were destroyed by fire, the taxpayer explained the business process and destinations in detail, and independent buyers supported his account.

Reconstruct records from third parties after a disaster

Statements, purchase histories, correspondence, delivery evidence, and other documents held by customers can substitute for destroyed internal files. McIntyre's third-party evidence was central to the result.

Later in-state sales did not change the historical period

McIntyre later resumed selling furniture in New Mexico, but those sales were outside the 2013–2016 assessment and did not show that earlier transactions occurred in state.

Common questions

Q: Are goods built in New Mexico automatically subject to GRT when sold?
A: No. D&O 22-13 held that receipts from tangible property sold outside New Mexico were outside the statutory definition, even though the chairs were built in New Mexico.

Q: Where did McIntyre complete the sales?
A: In Texas — to retailers and individuals in places including Wichita Falls, San Antonio, and El Paso.

Q: How did he win after a fire destroyed his records?
A: The hearing officer found his testimony highly credible and supported by statements and documents from disinterested Texas purchasers. That was more than an unsupported assertion.

Q: What assessment was abated?
A: The entire $16,450.19 assessment, consisting of tax, penalty, and interest net of the stated credit.

Q: Did later New Mexico furniture sales matter?
A: No. They occurred after the assessed years and did not establish the location of the 2013–2016 sales.

Q: Can another seller rely on this decision?
A: No. The result depended on McIntyre's specific sales process, destinations, witnesses, evidence, and tax periods.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-9-3.5(A)(1) (2007, amended 2019) — gross receipts include money from selling property in New Mexico
• NMSA 1978, § 7-9-4 (2002) — gross receipts tax on persons engaging in business
• NMSA 1978, § 7-9-5 (2002) — presumption that business receipts are taxable
• NMSA 1978, §§ 7-1-17 and 7-1-3(X) — assessment presumed correct; “tax” includes penalty and interest
• NMSA 1978, § 7-1B-8 — hearing procedure and jurisdiction
• NMSA 1978, § 7-1-25 — right to appeal the decision
• Regulations 3.1.6.12 and 3.1.6.13 NMAC — evidence required to overcome an assessment; presumption extending to penalty and interest

Cases:

• Kmart Corp. v. New Mexico Taxation & Revenue Department, 2006-NMSC-006 — “selling property in New Mexico” requires that the property be sold in New Mexico
• New Mexico Taxation & Revenue Department v. Casias Trucking, 2014-NMCA-099 — taxpayer bears the initial burden to show entitlement to abatement
• MPC Ltd. v. New Mexico Taxation & Revenue Department, 2003-NMCA-021 — unsubstantiated assertions do not overcome an assessment, but sufficient evidence shifts the burden back to the Department
• Chevron U.S.A. v. State ex rel. Department of Taxation & Revenue, 2006-NMCA-050 — agency regulations interpreting a statute are presumed proper

Source

• Listing: New Mexico Decisions & Orders
• Decision post: High Roll Home Furnishings
• Decision PDF: D&O 22-13

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 EMMETT D MCINTYRE
6 HIGH ROLLS HOME FURNISHINGS
7 TO ASSESSMENT ISSUED UNDER
8 LETTER ID NO. L0221491888

9 v. Case Number 20.08-104A, D&O 22-13

10 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

11 DECISION AND ORDER

12 On December 13, 2021, Hearing Officer Chris Romero, Esq., conducted a telephonic

13 hearing on the merits in the matter of the protest of High Rolls Home Furnishings (“Taxpayer”).

14 Ms. Paula S. Gutierrez, CPA appeared representing Taxpayer accompanied by Mr. Emmett D.

15 McIntyre. Staff Attorney, Mr. Peter Breen, appeared on behalf of the Taxation and Revenue

16 Department (“Department”) accompanied by Ms. Angelica Rodriguez, protest auditor. All

17 hearing participants agreed to appear by telephone.

18 Department Exhibits A – D and Ms. Rodriguez’ pre-filed testimony and Taxpayer Exhibits

19 1 – 5 and Mr. McIntyre’s pre-filed testimony were admitted as evidentiary exhibits and

20 Administrative Notice was taken of the Administrative File.

21 The primary issue in dispute is factual and concentrates on the location where Taxpayer sold

22 tangible personal property. Because out-of-state sales of tangible personal property are not taxable

23 as gross receipts under NMSA 1978, Section 7-9-3.5 (2007, Amended 2019), determination of that

24 fact is dispositive. In this case, the Hearing Officer was persuaded by Taxpayer’s credible testimony

25 that all sales of tangible personal property occurred outside of New Mexico. Therefore, Taxpayer

26 established entitlement to a full abatement of the assessment underlying the protest. IT IS

27 DECIDED AND ORDERED AS FOLLOWS:

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
Page 1 of 15
1 FINDINGS OF FACT

2 Background

3 1. High Rolls Home Furnishings did not exist during the periods relevant to

4 the protest. Between 2013 and 2016, Mr. McIntyre engaged in business as a sole

5 proprietor. [Direct Examination of Mr. McIntyre; Cross Examination of Mr. McIntyre]

6 2. From 2013 to 2016, Mr. McIntyre built furniture, specifically rocking

7 chairs, which he then sold exclusively outside of New Mexico, in Texas. [Direct

8 Examination of Ms. Gutierrez; Direct Examination of Mr. McIntyre]

9 3. Mr. McIntyre constructed the furniture at his residence and shop in High

10 Rolls, New Mexico. [Direct Examination of Mr. McIntyre]

11 4. When construction was completed and the rocking chairs were ready for

12 market, Mr. McIntyre loaded his rocking chairs onto a trailer and personally drove them

13 to Texas where he would sell them. [Direct Examination of Mr. McIntyre; Cross

14 Examination of Mr. McIntyre]

15 5. Destinations in Texas included Wichita Falls, San Antonio, and El Paso.

16 [Taxpayer Ex. 4.1 – 4.3; Direct Examination of Mr. McIntyre; Direct Examination of Ms.

17 Gutierrez]

18 6. High Rolls, New Mexico is located in Otero County. It is approximately

19 101 highway miles northeast of El Paso, Texas. [Pre-Filed Testimony of Mr. McIntyre

20 (Pages 2 – 3, Response to Para. 3); Administrative Notice1]

21 7. In addition to traveling to El Paso, Mr. McIntyre also made sales to

1
https://www.google.com/maps/dir/El+Paso,+Texas/High+Rolls,+NM+88310/@32.3605831,-
106.7215122,9z/data=!3m1!4b1!4m14!4m13!1m5!1m1!1s0x86e73f8bc5fe3b69:0xe39184e3ab9d0222!2m2!1d-
106.4850217!2d31.7618778!1m5!1m1!1s0x86e0527948c76323:0x7312e022e4bda6e8!2m2!1d-
105.8355422!2d32.950923!3e0

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
Page 2 of 15
1 establishments in other parts of Texas. [Taxpayer Ex. 4.2 – 4.3]

2 8. Pecan Shed is a retail establishment situated in Wichita Falls, TX which is

3 approximately 141 highway miles northwest of Dallas, TX. [Taxpayer Ex. 4.2 – 4.3;

4 Administrative Notice2]

5 9. Pecan Shed’s corporate secretary and store manager estimated that from 2013 to

6 2016, it acquired approximately $50,000 in goods from Mr. McIntyre. [Direct Examination of

7 Ms. Gutierrez; Taxpayer Ex. 4.2 – 4.3]

8 10. The Look is a retail establishment situated in San Antonio, TX. By and through its

9 representative, it verified that it purchased tangible personal property from Taxpayer between

10 2012 and 2016, which it described as “[f]ull loads and partial loads on a regular basis for our

11 store company[,]” but could not specify any amounts paid because it no longer maintained

12 records of its purchases. [Direct Examination of Ms. Gutierrez; Taxpayer Ex. 4.1]

13 11. In addition to visiting retail establishments such as The Look and Pecan Shed, Mr.

14 McIntyre also succeeded in making roadside sales to individuals who would observe his rocking

15 chairs in his trailer when he would park to rest, often sleeping in his truck. [Pre-Filed Testimony

16 of Mr. McIntyre (Pages 1 – 2, Response to Para. 4)]

17 12. All merchandise was sold onsite in Texas. [Pre-Filed Testimony of Mr. McIntyre

18 (Pages 2, Response to Para. 6)

19 13. Mr. McIntyre did not utilize sales brochures or other types of advertising to

20 promote the sale of his rocking chairs. [Pre-Filed Testimony of Mr. McIntyre (Page 2, Response

21 to Para. 5)]

2
https://www.google.com/maps/place/Wichita+Falls,+TX/@33.9161526,-
98.5893987,12z/data=!3m1!4b1!4m5!3m4!1s0x865320927062daf5:0x1d06facbefea5200!8m2!3d33.9137085!4d-
98.4933873

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
Page 3 of 15
1 14. Mr. McIntyre did not make sales through a retail furniture store in New

2 Mexico. [Pre-Filed Testimony of Mr. McIntyre (Page 2, Response to Para. 2); Taxpayer

3 Ex. 5 (regarding 2013 and 2014)]

4 15. During the relevant periods of time, Mr. McIntyre “owned multiple trailers

5 and pickup [t]rucks that he would use to load and transport his manufactured rocking

6 chairs to sell at various locations in Texas. These vehicles were owned and registered to

7 Mr. McIntyre in New Mexico.” [Pre-Filed Testimony of Mr. McIntyre (Page 1, Response

8 to Para. 1); Taxpayer Ex. 1]

9 16. Mr. McIntyre limited his sales to out-of-state because he believed it would

10 be unethical to compete with a third party to whom Taxpayer hoped to sell his business,

11 including his designs, and who was, during the relevant periods of time, also selling

12 furniture in New Mexico. [Direct Examination of Ms. Gutierrez; Direct Examination of

13 Mr. McIntyre; Pre-Filed Testimony of Mr. McIntyre (Page 1, Response to Para. 2);

14 Taxpayer Ex. 2]

15 17. Taxpayer did not file CRS-1 returns reporting gross receipts derived from

16 the out-of-state sales of his rocking chairs under the belief that such reports were not

17 required. [Direct Examination of Ms. Gutierrez; Pre-Filed Testimony of Mr. McIntyre

18 (Page 2, Response to Para. 1)]

19 18. In approximately 2016, the sale of Mr. McIntyre’s business failed. Even

20 so, Mr. McIntyre did not immediately resume selling rocking chairs in New Mexico

21 because existing contacts he had developed in Texas continued to purchase his goods.

22 [Pre-Filed Testimony of Mr. McIntyre (Page 1, Response to Para. 2)]

23 19. High Rolls Home Furnishings was not established until a couple of years

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 after the sale Mr. McIntyre contemplated to the third party had failed, in or about 2016, meaning

2 that High Rolls Home Furnishing was established about 2018. [Cross Examination of Mr.

3 McIntyre]

4 20. Well after the events giving rise to the protest, Taxpayer resumed selling furniture

5 in New Mexico.3 [Direct Examination of Mr. McIntyre].

6 21. On November 20, 2019, the Department issued a Notice of Assessment of Taxes

7 and Demand for Payment under Letter ID No. L0221491888 in the amount of $16,450.19 for

8 the periods from January 1, 2013 to December 31, 2016 (“Assessment”). The total sum due

9 under the Assessment was comprised of $11,869.29 in gross receipts tax, penalty in the amount

10 of $2,373.85, interest in the amount of $2,339.78, and a credit in the amount of $132.73.

11 [Administrative File]

12 22. The Assessment underlying this protest arose from a mismatch of income

13 reported to the IRS on Mr. McIntyre’s Form Schedule C and income that was never reported to

14 the state. [Pre-Filed Testimony of Ms. Rodriguez (adopted under oath at hearing)]

15 23. On February 4, 2020, Mr. McIntyre filed a Formal Protest. [Administrative File]

16 24. On February 26, 2020, the Department acknowledged the Formal Protest under

17 Letter ID No. L0165616304. [Administrative File]

18 25. On March 2, 2020, the Department made a Request for Additional Information

19 under Letter ID No. L0092691120. [Administrative File]

20 26. On August 3, 2020, the Department filed a Request for Hearing in which the

21 Department requested that Taxpayer’s protest be set for a scheduling hearing. The Request for

22 Hearing was accompanied by New Mexico Taxation and Revenue Department’s Answer to

3
Those sales are not relevant to the protest.

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 Protest and a Notice of Filing of Department’s First Set of Discovery and Request for

2 Production and Interrogatories. [Administrative File]

3 27. On August 3, 2020, the Administrative Hearings Office entered a Notice

4 of Telephonic Scheduling Hearing which set an initial hearing on the protest for

5 September 4, 2020. [Administrative File]

6 28. An initial telephonic scheduling hearing occurred on September 4, 2020.

7 Neither party objected that the hearing would satisfy the 90-day hearing requirement of

8 NMSA 1978, Section 7-1B-8 (F). [Record of Hearing – 9/4/2020]

9 29. On September 10, 2020, the Administrative Hearings Office entered a

10 Scheduling Order and Notice of Telephonic Administrative Hearing. Among various

11 other deadlines, the notice set a hearing on the merits of the protest to occur on

12 November 18, 2020. [Administrative File]

13 30. Mr. McIntyre failed to appear for the scheduled hearing on November 18,

14 2020. Consequently, the Administrative Hearings Office entered a Decision and Order on

15 November 19, 2020 denying Taxpayer’s protest for the reason that he failed to appear.

16 [Administrative File]

17 31. On December 18, 2020, Ms. Gutierrez submitted correspondence to the

18 Administrative Hearings Office which notified it of her entry of appearance and

19 requested that the Decision and Order entered on November 19, 2020 be reconsidered.

20 The correspondence stated that Ms. Gutierrez “faxed a notice of appeal yesterday evening

21 to the New Mexico Court of Appeals[.]” [Administrative File]

22 32. On December 21, 2020, the Department filed a response to Taxpayer’s

23 request for reconsideration in a document it titled The Department Opposes the Motion

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 for Reconsideration. [Administrative File]

2 33. On January 7, 2021, the Administrative Hearings Office entered an Order

3 Reconsidering and Setting Aside Decision and Order. The Hearing Officer observed that despite

4 Ms. Gutierrez’ representation that a notice of appeal was faxed to the New Mexico Court of

5 Appeals on or about December 17, 2020, there was no indication that an appeal had actually

6 been filed as of January 7, 2021 because the Administrative Hearings Office had not received a

7 copy of a notice of appeal nor had a review of online court records on that date revealed the

8 pendency of any appeal under a name associated with the protest. [Administrative File]

9 34. On January 7, 2021, the Administrative Hearings Office entered a Notice of

10 Telephonic Scheduling Hearing which set a telephonic scheduling hearing on January 22, 2021.

11 [Administrative File]

12 35. On February 10, 2021, the Administrative Hearings Office entered an Order

13 Staying Proceedings Pending Determination of Appeal in Case No. A-1-CA-39442. The Hearing

14 Officer observed that after the date upon which the scheduling hearing was set, online court

15 records were updated to reflect an appeal was indeed pending in the above-captioned matter

16 contrary to previous observations made on January 7, 2021. [Administrative File]

17 36. On August 19, 2021, the New Mexico Court of Appeals entered an Order

18 Remanding to Administrative Hearings Office4 which remanded the case back to the Hearing

19 Officer for further proceedings. [Administrative File; NMCA No. A-1-CA-39442]

20 37. On September 2, 2021, the Administrative Hearings Office entered a Notice of

21 Telephonic Scheduling Hearing which set a scheduling hearing for September 17, 2021.

4
The procedural history summarized in these finding excludes all events in the New Mexico Court of Appeals after
Taxpayer filed his Notice of Appeal until the protest was remanded to the Administrative Hearings Office for further
proceedings. More detailed information regarding the proceedings in the Court of Appeals may be obtained from
NMCA No. A-1-CA-39442.

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 [Administrative File]

2 38. On September 17, 2021, the Administrative Hearings Office entered a Scheduling

3 Order and Notice of Administrative Hearing which among other deadlines, set a hearing on the

4 merits of Taxpayer’s protest to occur on December 13, 2021. [Administrative File]

5 39. Documentary evidence of out-of-state sales of tangible personal property

6 has been nearly impossible to provide due to a fire which destroyed Taxpayer’s shop and

7 caused significant damage to his home on February 9, 2018. [Direct Examination of Ms.

8 Gutierrez; Pre-Filed Testimony of Mr. McIntyre (Pages 1 – 2, Response to Para. 4);

9 Taxpayer Ex. 3]

10 40. Given the destruction of Taxpayer’s records, in addition to his home, the

11 Department suggested that Taxpayer may be able to reconstruct his gross receipts from

12 selling rocking chairs from other sources. However, “[Mr. McIntyre] seemed to be at a loss

13 as to how to reconstruct his records under the circumstances[,]” and Ms. Rodriguez

14 acknowledged that she “did not have any useful suggestions[.]”[Pre-Filed Testimony of Ms.

15 Rodriguez (adopted under oath at hearing)]

16 DISCUSSION

17 The law is not in dispute. “Gross receipts” do not include money derived from selling

18 property outside of New Mexico. See NMSA 1978, Section 7-9-3.5 (A) (1) (2007, Amended

19 2019); Kmart Corp. v. Taxation & Revenue Dept., 2006-NMSC-006, ¶18, 139 N.M. 172, 176, 131

20 P.3d 22, 26 (“The language ‘selling property in New Mexico’ means that the property as defined

21 in the tax code must be sold in New Mexico for it to be taxed[.]”

22 Therefore, the critical issue in dispute centers on a question of fact - that is, determination

23 of the location where Taxpayer sold his tangible personal property. If the evidence establishes that

24 the sales were made outside of New Mexico, then the receipts derived from those sales are not

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 “gross receipts” under the Gross Receipts and Compensating Tax Act and Taxpayer is entitled to a

2 full abatement of the Assessment. On the other hand, if the sales were made inside of New Mexico,

3 then the receipts derived from those sales are “gross receipts” and taxable.

4 Burden of Proof

5 Under NMSA 1978, Section 7-1-17 (C) (2007), the Assessment issued in this case is

6 presumed correct. Unless otherwise specified, for the purposes of the Tax Administration Act,

7 “tax” includes interest and civil penalty. See NMSA 1978, Section 7-1-3 (X) (2013). Therefore,

8 under Regulation 3.1.6.13 NMAC, the presumption of correctness under Section 7-1-17 (C) also

9 extends to the Department’s assessment of penalty and interest. See Chevron U.S.A., Inc. v. State

10 ex rel. Dep’t of Taxation & Revenue, 2006-NMCA-050, ¶16, 139 N.M. 498, 134 P.3d 785 (agency

11 regulations interpreting a statute are presumed proper and are to be given substantial weight).

12 For that reason, the presumption in favor of the Department requires that Taxpayer carry

13 the burden to present countervailing evidence or legal argument to show that he is entitled to an

14 abatement of the Assessment. See N.M. Taxation & Revenue Dep’t v. Casias Trucking, 2014-

15 NMCA-099, ¶8, 336 P.3d 436. “Unsubstantiated statements that the assessment is incorrect

16 cannot overcome the presumption of correctness.” See MPC Ltd. v. N.M. Taxation & Revenue

17 Dep’t, 2003-NMCA-021, ¶13, 133 N.M. 217, 62 P.3d 308; See also Regulation 3.1.6.12 NMAC.

18 If a taxpayer presents sufficient evidence to rebut the presumption, then the burden shifts to the

19 Department to re-establish the correctness of the assessment. See MPC Ltd., 2003-NMCA-021,

20 ¶13.

21 Gross Receipts Tax

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

23 receipts of any person engaged in business. See NMSA 1978, Section 7-9-4 (2002). Under

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
Page 9 of 15
1 NMSA 1978, Section 7-9-3.5 (A) (1) (2007, Amended 2019), “gross receipts” is defined to mean:

2 the total amount of money or the value of other consideration
3 received from selling property in New Mexico, from leasing or
4 licensing property employed in New Mexico, from granting a right to
5 use a franchise employed in New Mexico, from selling services
6 performed outside New Mexico, the product of which is initially
7 used in New Mexico, or from performing services in New Mexico.

8 (Emphases Added)

9 Under the Gross Receipts and Compensating Tax Act, all gross receipts of a person engaged

10 in business are presumed taxable. See NMSA 1978, Section 7-9-5 (2002). Despite the general

11 presumption of taxability, taxpayers may also avail themselves of the benefits of various deductions

12 or exemptions, if applicable, or even assert that its receipts are entirely excludable from taxation

13 under NMSA 1978, Section 7-9-3.5, because they do not come within the definition of “gross

14 receipts,” as Taxpayer claims in the present matter.

15 Location of Sales

16 The facts are simple and although documentary evidence was minimal, Taxpayer’s

17 testimony was extremely credible and persuasive when corroborated with what documentary

18 evidence he could provide. In the years relevant to the Assessment, Taxpayer constructed rocking

19 chairs at his home and shop in High Rolls, New Mexico. He would then load them onto a trailer and

20 drive them to Texas where he would sell them to merchants for resale, or to individuals who

21 happened to come across this trailer and admire his work, sometimes as he slept in his vehicle along

22 side a road during breaks from the drive.

23 Taxpayer credibly testified that he made no sales in New Mexico during this period of time.

24 He explained that he was in the process of selling his business, along with his copyrighted designs

25 to a buyer in New Mexico. For that reason, Taxpayer explained it would have been improper and

26 unethical for him to compete with the buyer who was selling furniture in New Mexico based on

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
Page 10 of 15
1 Taxpayer’s designs. Instead, Taxpayer drove his rocking chairs to El Paso, San Antonio, and

2 Wichita Falls, Texas, among other locations in Texas, where he sold them from his trailer,

3 sometimes individually (in the case of a roadside or rest-stop transaction) and sometimes by the load

4 (See Taxpayer Ex. 4 in reference to transactions with The Look and Pecan Shed).

5 Taxpayer’s documentary records were minimal, at best, for unfortunate circumstances

6 beyond his control. His workshop and home sustained heavy damage in a fire on February 9, 2018

7 in which all of his records were destroyed. The events were documented in Taxpayer Ex. 3. This

8 event, however, did not leave Taxpayer without any evidence at all. The Hearing Officer found

9 Taxpayer’s testimony to be beyond reproach.

10 Credible witness testimony can have as much weight as documentary exhibits. In fact, it is

11 not unusual in cases having even higher stakes and steeper burdens of proof, such as in criminal

12 cases, that pivotal facts are established solely by testimonial evidence. See e.g. State v. Singleton,

13 2001-NMCA-054, 130 N.M. 583, 28 P.3d 1124; State v. Nichols, 2006-NMCA-017, 139 N.M. 72,

14 128 P.3d 500; State v. Tapia, 2015-NMCA-048, 347 P.3d 738; State v. Landlee, 1973-NMCA-143,

15 85 N.M. 726, 516 P.2d 697; State v. Phillips, 1971-NMCA-114, 83 N.M. 5, 487 P.2d 915; State v.

16 Estrada, 2001-NMCA-034, 130 N.M. 358, 24 P.3d 793; State v. Coffin, 1999-NMSC-038, 128

17 N.M. 192, 991 P.2d 477; State v. Granillo-Macias, 2008-NMCA-021, 143 N.M. 455, 176 P.3d

18 1187.

19 In this case, Taxpayer: (1) credibly testified why he refused to sell rocking chairs in New

20 Mexico; (2) credibly testified that all of his sales were made in Texas; (3) presented documentary

21 evidence corroborating his already credible testimony regarding sales in Texas. The Hearing Officer

22 also observed from a review of the entire record of the hearing that there was no evidence upon

23 which to even infer sales occurring in New Mexico.

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 While MPC Ltd., ¶13, and Regulation 3.1.6.12 (A) NMAC do not allow a taxpayer to

2 overcome the presumption of correctness with mere conclusory statements that the assessment is

3 not correct, that is not what Taxpayer did in this protest. He proffered admissible and credible

4 testimony that all of his sales were made outside of New Mexico as well as statements from

5 uninterested third parties that were consistent with his testimony. In other words, Taxpayer did

6 not rely merely on conclusory statements that the assessment was wrong, but provided credible,

7 trustworthy, and reliable evidence showing why the Assessment was factually and legally

8 incorrect.

9 For these reasons, the Hearing Officer was persuaded that Taxpayer’s receipts from selling

10 rocking chairs during the relevant periods of time derived from sales outside of New Mexico and

11 are not “gross receipts” as the term is defined by the New Mexico Gross Receipts and

12 Compensating Tax Act. Taxpayer’s protest should be granted in full and the Assessment should be

13 abated in its entirety because out-of-state sales of property are not “gross receipts.”

14 CONCLUSIONS OF LAW

15 A. Taxpayer filed a timely, written protest to the Assessment. Jurisdiction lies over the

16 parties and the subject matter of this protest.

17 B. The Department made a timely request for hearing and the Administrative Hearings

18 Office conducted a hearing within 90 days of Taxpayer’s protest under NMSA 1978, Section 7-1B-

19 8 (2019).

20 C. Taxpayer carries the burden to present countervailing evidence or legal argument

21 to show entitlement to an abatement of an assessment. See Casias Trucking, 2014-NMCA-099,

22 ¶8.

23 D. If a taxpayer presents sufficient evidence to rebut the presumption, then the

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 burden shifts to the Department to re-establish the correctness of the assessment. See MPC Ltd.,

2 2003-NMCA-021, ¶13.

3 E. “Gross receipts” do not include money derived from selling property outside of

4 New Mexico. See NMSA 1978, Section 7-9-3.5 (A) (1) (2007, Amended 2019); Kmart Corp. v.

5 Taxation & Revenue Dept., 2006-NMSC-006, ¶18, 139 N.M. 172, 176, 131 P.3d 22, 26 (“The

6 language ‘selling property in New Mexico’ means that the property as defined in the tax code

7 must be sold in New Mexico for it to be taxed[.]”

8 F. Taxpayer overcame the presumption of correctness by establishing that all relevant

9 receipts derived from the out-of-state sale of tangible personal property. See Section 7-1-17(C).

10 For the reasons stated, Taxpayer’s protest is GRANTED. Taxpayer is entitled to a full

11 abatement of the Assessment.

12 DATED: April 29, 2022

13
14 Chris Romero
15 Hearing Officer
16 Administrative Hearings Office
17 P.O. Box 6400
18 Santa Fe, NM 87502

19 NOTICE OF RIGHT TO APPEAL

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

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

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

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

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

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

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 Hearings Office contemporaneous with the Court of Appeals filing so that the Administrative

2 Hearings Office may begin preparing the record proper. The parties will each be provided with a

3 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

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

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

6

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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1 CERTIFICATE OF SERVICE

2 I hereby certify that I served the foregoing on the parties listed below this 29th day of April,

3 2022 in the following manner:

4 First Class Mail E- Mail
5
6 INTENTIONALLY BLANK

In the Matter of the Protest of Emmett D. McIntyre - High Rolls Home Furnishings
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