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 1        IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

 2   IN THE MATTER OF THE PROTEST
 3   OF SAIZ TRUCKING AND EARTHMOVING,
 4   TO ASSESSMENT ISSUED UNDER LETTER
 5   ID. NO. L0680042816

 6 SAIZ TRUCKING AND
 7 EARTHMOVING,

 8          Protestant-Appellant/Cross-Appellee,

 9 v.                                                                    No. A-1-CA-35026

10 NEW MEXICO TAXATION
11 AND REVENUE DEPARTMENT,

12          Respondent-Appellee/Cross-Appellant.

13 APPEAL FROM THE TAXATION & REVENUE DEPARTMENT
14 Dee Dee Hoxie, Hearing Officer

15 Wayne G. Chew, P.C.
16 Wayne G. Chew
17 Albuquerque, NM

18 for Appellant/Cross-Appellee

19   Hector Balderas, Attorney General
20   Elena Morgan, Special Assistant Attorney General
21   New Mexico Taxation & Revenue Department
22   Santa Fe, NM
 1 for Appellee/Cross-Appellant

 2                              MEMORANDUM OPINION

 3 VIGIL, Judge.

 4   {1}   Saiz Trucking and Earthmoving (Taxpayer) appeals from the hearing officer’s

 5 decision and order partially granting and partially denying his protest of the New

 6 Mexico Taxation and Revenue Department’s (the Department) assessments for gross

 7 receipts taxes, penalty, and interest arising from its work for the City of Albuquerque

 8 (City) between 2004 and 2010. Taxpayer makes two arguments on appeal: (1) the

 9 evidence was insufficient to support the Department’s assessments of gross receipts

10 taxes, penalty, and interest against it; and (2) if this Court finds that Taxpayer is

11 entitled to deduct the gross receipts, then there will not be a 25 percent understatement

12 of its tax liability and therefore the Department will not have a right to three additional

13 years of assessments pursuant to NMSA 1978, Section 7-1-18(A), (D) (1994,

14 amended 2013). We affirm the hearing officer’s decision and order. Because this is

15 a memorandum opinion and the parties are familiar with the facts and procedural

16 posture of the case, we set forth only such facts and law as are necessary to decide the

17 merits.

18 BACKGROUND




                                                2
 1   {2}   Taxpayer is a New Mexico corporation engaged primarily in the business of

 2 moving and hauling dirt, gravel, spoils, and performing grading at project sites. After

 3 an audit of Taxpayer’s tax returns, on February 9, 2012, the Department assessed

 4 Taxpayer $606,943.41 in unpaid gross receipts taxes, a $121,388.71 penalty, and

 5 $175,418.66 in interest for the tax periods from January 31, 2004 through March 31,

 6 2010. Taxpayer protested the Department’s assessment, arguing that most of its gross

 7 receipts were deductible as constituting the sale and installation of landscape

 8 materials, and that part of the Department’s assessments was barred by the statute of

 9 limitations. After a hearing on Taxpayer’s protest of the Department’s assessments

10 and entry of findings of fact and conclusions of law, the hearing officer determined

11 that Taxpayer was liable for the gross receipts taxes, penalty, and interest for the tax

12 periods between December, 2005 and March, 2010; however, because the assessments

13 from January, 2004 to November, 2005 did not occur until more than six years after

14 the tax was due, those assessments were untimely, barred by the statute of limitations

15 pursuant to NMSA 1978, Section 7-1-18(D), and therefore abated. Taxpayer appeals

16 the hearing officer’s decision and order to this Court pursuant to NMSA 1978, Section

17 7-1-25 (2015).

18 DISCUSSION




                                              3
 1   {3}   Taxpayer argues that the Department failed to present substantial evidence to

 2 support the assessments. Without citation to the record in support of its contention,

 3 Taxpayer asserts that the hearing officer erred in upholding the Department’s

 4 assessments because she “failed to recognize that . . . Taxpayer sold tangible items of

 5 property which were not part of a construction project to the City within the meaning

 6 of NMSA 1978, [Section] 7-9-54 [(2003, amended 2018)] and 3.2.212.14 NMAC, as

 7 supported by the substantial uncontradicted evidence.” Taxpayer likewise fails to

 8 specifically challenge the hearing officer’s findings of fact in accordance with our

 9 Rules of Appellate Procedure. We therefore deem the hearing officer’s findings of fact

10 conclusive. See Rule 12-318(A)(4) NMRA (stating that an appellant’s arguments

11 “shall set forth a specific attack on any finding, or the finding shall be deemed

12 conclusive”).

13   {4}   “Any assessment of taxes by the Department is presumed to be correct and, in

14 protesting the assessment of taxes, Taxpayer has the burden of proving the deductions

15 were proper.” Arco Materials, Inc. v. N.M. Taxation & Revenue Dep’t, 1994-NMCA-

16 062, ¶ 2, 118 N.M. 12, 878 P.2d 330, rev’d on other grounds by Blaze Constr. Co. v.

17 Taxation & Revenue Dep’t of State of N.M., 118 N.M. 647, 884 P.2d 803. If a

18 protestant of a tax assessment “is dissatisfied with the decision and order of the

19 hearing officer, the party may appeal to the court of appeals for further relief, but only



                                               4
 1 to the same extent and upon the same theory as was asserted in the hearing before the

 2 hearing officer.” Section 7-1-25(A). On appeal, this Court “shall set aside a decision

 3 and order of the hearing officer only if found to be: (1) arbitrary, capricious or an

 4 abuse of discretion; (2) not supported by substantial evidence in the record; or (3)

 5 otherwise not in accordance with the law.” Section 7-1-25(C). “When reviewing for

 6 sufficiency of the evidence, we look to the whole record and review the evidence in

 7 the light most favorable to the agency’s findings.” Arco Materials, Inc., 1994-NMCA-

 8 062, ¶ 2.

 9         Section 7-9-54(A)(3) (2003) provides:

10         A.    Receipts from selling tangible personal property to the United
11   States or New Mexico or any governmental unit or subdivision, agency,
12   department or instrumentality thereof may be deducted from gross receipts or
13   from governmental gross receipts. Unless contrary to federal law, the deduction
14   provided by this subsection does not apply to:

15         ....

16 (3) receipts from selling construction material[.]

17 The applicable regulation further provides that:

18         A.     Except when the landscape items are part of a construction project,
19         receipts from selling and installing landscape items such as plants,
20         shrubs, sod, seed, trees, rocks and ornaments are receipts from the sale
21         of tangible personal property. Therefore, the receipts from the sale and
22         installation of these landscape items pursuant to a contract with a
23         governmental agency may be deducted from gross receipts pursuant to
24         Section 7-9-54. . . . Receipts from selling these landscape items as part



                                               5
 1         of a construction project may not be deducted pursuant to Section 7-9-54.

 2 3.2.212.14(A) NMAC.

 3   {5}   The hearing officer found, in pertinent part, that Taxpayer’s primary client

 4 during the assessment period was the City’s Parks Department, which engages in the

 5 management, renovation, construction, and landscape of the City’s parks. Taxpayer’s

 6 work, the hearing officer found, consisted of the hauling and installation of dirt,

 7 gravel, and spoils, as well as performing grading at the City’s park construction

 8 project sites, which included “parks, ballfields, and other similar facilities.” These

 9 facts support the hearing officer’s conclusion that Taxpayer was providing landscape

10 items and services “to the City on various construction projects[.]” See NMSA 1978,

11 § 7-9-3.4(A) (2003) (defining “construction” as: (1) the building, altering, repairing

12 or demolishing in the ordinary course of business any: (a) road, highway, bridge,

13 parking area or related project; (b) building, stadium or other structure; (c) airport,

14 subway or similar facility; (d) park, trail, athletic field, golf course or similar facility;

15 . . . and (2) the leveling . . . of land”). Accordingly, because Taxpayer sold and

16 installed landscape items, e.g., dirt, gravel, and spoils, to and for the City as part of the

17 City Parks Department’s construction projects, as the hearing officer concluded, the

18 gross receipts for these transactions were not deductible under Section 7-9-54. See

19 3.2.212.14(A) NMAC.



                                                 6
1   {6}   Because we conclude that Taxpayer was not entitled to deduct the gross receipts

2 from its work for the City, we do not reach Taxpayer’s second argument that the

3 Department did not have the right to assess it for three additional years pursuant to

4 Section 7-1-18(A), (D).

5 CONCLUSION

6   {7}   The decision and order of the hearing officer is affirmed.

7   {8}   IT IS SO ORDERED.


8
9                                         MICHAEL E. VIGIL, Judge

10 WE CONCUR:


11
12 M. MONICA ZAMORA, Judge


13
14 HENRY M. BOHNHOFF, Judge




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