AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• The State of New Mexico Taxation and Revenue Department (Department) audited Shamrock Foods Company (Taxpayer) for the tax years 2001 to 2007. The audit revealed that while Taxpayer correctly reported gross receipts, it failed to obtain the necessary nontaxable transaction certificates (NTTCs) for certain deductions, leading to an assessment of gross receipts tax, interest, and penalties against Taxpayer.

Procedural History

• Appeal from the Taxation and Revenue Department, Monica M. Ontiveros, Hearing Officer.

Parties' Submissions

• Plaintiff-Appellant (Department): Argued that the hearing officer erred in considering an issue not raised in Taxpayer’s formal protest, that the decision regarding SI Italian Bistro was not supported by substantial evidence, and that the maximum penalty for deficiencies before January 1, 2008, should be 20% not 10%.
• Defendant-Appellee (Taxpayer): Challenged the disallowed deductions for SI Italian Bistro, Abraham’s, and Matilda’s, asserting that these deductions should be allowable and the related penalty and interest should be abated.

Legal Issues

• Whether the hearing officer erred in considering an issue not raised in Taxpayer’s formal protest.
• Whether the hearing officer’s decision that Taxpayer properly claimed a deduction from SI Italian Bistro is supported by substantial evidence.
• Whether the maximum penalty for deficiencies incurred before January 1, 2008, is 20% not 10%.
• Whether the hearing officer erroneously considered the penalty amount because that issue was not raised by Taxpayer.

Disposition

• The decision of the hearing officer regarding the removal of the disallowed deduction for receipts from SI Italian Bistro was affirmed.
• The decision of the hearing officer regarding the assessments for the tax years 2001 to 2007 was reversed to the extent that the hearing officer imposed the 10% maximum penalty instead of the 20% maximum penalty.

Reasons

• Per LINDA M. VANZI, J. (JAMES J. WECHSLER, J., and MICHAEL D. BUSTAMANTE, J., concurring):
  The Court found that the Department did not adequately develop arguments regarding issues (2) and (4) and thus did not review these arguments.
  The Court concluded that Taxpayer properly specified the issues to be considered by the hearing officer and that the hearing officer properly considered only those issues raised in Taxpayer’s written protest, affirming the hearing officer’s decision with respect to SI Italian Bistro.
  The Court reversed the hearing officer’s decision regarding the penalty assessed under Section 7-1-69, determining that the 2007 amendment to Section 7-1-69 was in effect at the time the Department issued its assessments for the 2001-2007 tax years, allowing the Department to impose a 20% maximum penalty for these assessments.