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

• Del Corazon Hospice, LLC (Taxpayer), a licensed provider of hospice care services, billed Medicaid for services including room and board provided by nursing homes to its patients. Taxpayer did not operate nursing home facilities but contracted with them to provide hospice services at the patients' residences. Taxpayer paid the nursing homes for room and board and then billed Medicaid, receiving a 95% reimbursement due to a discount arrangement. The New Mexico Taxation and Revenue Department assessed unpaid gross receipts tax on these Medicaid receipts for room and board, which Taxpayer protested (paras 2-6).

Procedural History

• Administrative Hearing Office: The administrative hearing officer (AHO) affirmed the Department's assessment of unpaid gross receipts tax against Taxpayer, including penalty and interest, totaling $290,967.68 (para 1).

Parties' Submissions

• Taxpayer: Argued that the receipts for room and board were not subject to tax, claiming to act as an agent for the nursing home facilities and that its agency relationship was disclosed to the medical organizations administering Medicaid (paras 6-7).
• Department: Maintained that Taxpayer's receipts from Medicaid for room and board services were taxable gross receipts, arguing that the contracts between Taxpayer and the nursing home facilities did not establish a disclosed agency relationship allowing Taxpayer to bind the nursing homes in contracts with third parties (para 7).

Legal Issues

• Whether the administrative hearing officer erred in applying 3.2.1.19(C) NMAC to the facts of this case or, if applicable, whether its requirement that an agent be able to bind a principal limits Section 7-9-3.5(A)(3)(f) improperly.
• Whether Taxpayer was acting as an agent of the nursing home facilities.
• Whether Taxpayer’s agency relationship with the nursing home facilities had been disclosed to the medical organizations that administer Medicaid (para 8).

Disposition

• The New Mexico Court of Appeals affirmed the AHO's decision and order, upholding the Department's assessment of unpaid gross receipts tax against Taxpayer (para 17).

Reasons

• The Court, per Judge Kristina Bogardus, with Chief Judge J. Miles Hanisee and Judge Jacqueline R. Medina concurring, held that Taxpayer failed to affirmatively disclose its agency capacity with the nursing home facilities to Medicaid. The Court assumed, without deciding, that Taxpayer was an agent for the nursing homes and that the amounts received from Medicaid were on behalf of another. However, it found no evidence of an affirmative act by Taxpayer to disclose its agency capacity to Medicaid. The Court concluded that the AHO's decision was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law and was supported by substantial evidence. The Court applied statutory interpretation principles and dictionary definitions to determine that "disclosure" required an affirmative act, which Taxpayer did not undertake (paras 9-16).