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 New Mexico Taxation and Revenue Department conducted an audit under the New Mexico Gross Receipts and Compensating Tax Act, resulting in an assessment of unpaid gross receipts tax against ATC Healthcare Services, Inc. (Taxpayer) for $344,672.51, including penalties and interest. The assessment was based on receipts from a franchise agreement with Care Connection, Inc. (CCI), licensing a trademark to CCI, and services performed outside New Mexico. The hearing officer abated taxes related to pre-June 27, 2007 franchise-related receipts and the assessed penalty but affirmed the post-June 27, 2007 assessments (paras 1, 3-5).

Procedural History

• [Not applicable or not found]

Parties' Submissions

• Taxpayer: Argued that the assessed gross receipts tax on receipts from CCI clients for personnel payroll and remitted profits, the grant of a trademark license, and services performed outside New Mexico should not be taxable. Taxpayer also contested the penalty assessment, claiming a mistake of law made in good faith (para 5).
• Department: Cross-appealed the abatement of the penalty, arguing that Taxpayer's failure to pay gross receipts taxes was due to negligence or disregard of department rules and regulations without intent to evade tax (para 28).

Legal Issues

• Whether the hearing officer erred in affirming the post-June 27, 2007 assessment of gross receipts tax on the total amount of money received from granting CCI a right to use a franchise employed in New Mexico, including trademarks associated with the franchise (para 6).
• Whether the hearing officer erred in concluding that Taxpayer was not acting in a disclosed agent capacity (para 9).
• Whether the hearing officer erred in concluding that the trademark licensing fees are consideration for granting a franchise and subject to gross receipts tax (para 17).
• Whether the hearing officer erred in affirming the assessment of gross receipts for the money Taxpayer received for services performed out-of-state (para 24).
• Whether the hearing officer erred in abating Taxpayer’s penalty (para 28).

Disposition

• The hearing officer's decision and order were affirmed, upholding the post-June 27, 2007 assessments and the abatement of the penalty (para 2).

Reasons

• The Court found that the hearing officer'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 agreed with the hearing officer that Taxpayer was not acting in a disclosed agent capacity, that the trademark licensing fees are subject to gross receipts tax as part of the franchise agreement, and that the services performed out-of-state were taxable as they were part of the operation of the franchised business. The Court also agreed that Taxpayer's mistake regarding the taxability of the receipts was a mistake of law made in good faith on reasonable grounds, justifying the abatement of the penalty (paras 7-31).