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

• Taxpayer, an employment agency based in Texas with no physical office in New Mexico, entered into a professional service agreement with Chevron to provide payroll services for Area 52 members, all of whom worked in New Mexico for Chevron. These services were beyond the initial scope of the agreement. Chevron reimbursed Taxpayer for the compensation of Area 52 members and paid a markup fee for these services. The New Mexico Taxation and Revenue Department assessed Taxpayer for unpaid gross receipts tax (GRT) on these transactions, leading to a formal protest and an administrative hearing (paras 3-6).

Procedural History

• Administrative Hearings Office: The hearing officer affirmed in part and denied in part the Department's assessment of unpaid GRT against Taxpayer, finding Taxpayer failed to establish it was a disclosed agent for Chevron, thus not exempt from GRT on reimbursements received, but was exempt from GRT on the markup fee for out-of-state payroll services (para 1).

Parties' Submissions

• Department: Argued that the hearing officer erred by exempting the markup fee from GRT, asserting that the services were ancillary to Taxpayer’s employment of Area 52 members in New Mexico and thus subject to GRT (para 7).
• Taxpayer: Contended that the hearing officer used the incorrect definition of “agent” and erred in finding Taxpayer was not entitled to an exemption as a disclosed agent under Section 7-9-3.5(A)(3)(f). Taxpayer also argued that the markup fee for payroll services performed out of state should be exempt from GRT (paras 2, 7).

Legal Issues

• Whether the hearing officer erred in determining that Taxpayer was entitled to an exemption from GRT on the markup fee received for out-of-state services.
• Whether the hearing officer erred in using the incorrect definition of “agent” in finding that Taxpayer had failed to establish that it was entitled to an exemption as a disclosed agent under Section 7-9-3.5(A)(3)(f) (para 7).

Disposition

• The Court of Appeals reversed the hearing officer’s decision in part, holding that Taxpayer is responsible for the assessed GRT on the markup fee received for payroll services performed for Chevron.
• The Court affirmed the hearing officer’s determination that Taxpayer was not a disclosed agent under Section 7-9-3.5(A)(3)(f) and was responsible for the assessed GRT on that sum as well (para 18).

Reasons

• BOGARDUS, Judge, with MEDINA, Judge, and BACA, Judge, concurring: The Court found that the payroll services performed out of state by Taxpayer were incidental to Taxpayer’s employment of Area 52 members in New Mexico, thus subject to GRT. The Court agreed with the Department that these services were ancillary to the in-state services and rejected Taxpayer’s argument that the markup fee was exempt from GRT. Regarding the disclosed agent exemption, the Court concluded that Taxpayer failed to affirmatively disclose the agency relationship to Area 52 members, thus not meeting the statutory requirements for exemption from GRT. The Court applied statutory interpretation and dictionary definitions to determine the meaning of "disclose," finding no evidence of Taxpayer's affirmative action to inform Area 52 members of any agency relationship with Chevron (paras 10-17).