New Mexico Enterprises, Inc. v. Bureau of Revenue

• Decision Date: 30 October 1974
• Docket Number: No. 1394,1394
• Citation: 1974 NMCA 125,86 N.M. 799,528 P.2d 212
• Parties: NEW MEXICO ENTERPRISES, INC., Appellant, v. BUREAU OF REVENUE, Appellee.
• Court: Court of Appeals of New Mexico

Page 212

528 P.2d 212

86 N.M. 799

NEW MEXICO ENTERPRISES, INC., Appellant, v. BUREAU OF REVENUE, Appellee.

No. 1394.

Court of Appeals of New Mexico.

Oct. 30, 1974.

Thomas B. Catron, III, Fletcher R. Catron, Catron, Catron & Sawtell, Santa Fe, for appellant.

David L. Norvell, Atty. Gen., Susan P. Graber, Keith A. Maxwell, Bureau of Revenue Asst. Attys. Gen., Santa Fe, for appellee.

OPINION

HENDLEY, Judge.

Taxpayer was assessed certain taxes under the Gross Receipts and Compensating Tax Act, § 72--16A--1 et seq. N.M.S.A.1953 (Repl. Vol. 10, pt. 2, 1961, Supp.1973), for the period of July 1, 1966 through June 30, 1971 and for the period of January 1, 1966 to July 1, 1966 under the Emergency School Tax Act, § 72--16--2 et seq. N.M.S.A.1953 (Repl. Vol. 10, pt. 2, 1961, Supp.1965). The assessment was upheld by Decision and Order of the Commissioner of Revenue on the basis of stipulated facts.

The material stipulated facts are as follows: Taxpayer '. . . was engaged in the business of management consultation, supervision, administration, accounting, financial, and related services for motels . . ..' Taxpayer's contracts with its motel clients also provided it would make 'wholesale purchases' for its clients. Taxpayer and its motel clients are separate legal entities. As a part of its management service:

'Taxpayer bought large quantities of tangible personal property, such as writing paper, soap, towels, matches, kleenex, toilet paper, and similar items. These items were ordered by taxpayer, which was then billed for the items; taxpayer was liable for and paid such bills for purchase of the property. At the time of the purchase, taxpayer did not know what specific items were destined for any particular client. Taxpayer then distributed the items to its motel clients, as required by them, in return for which it charged its own cost as a price to its clients when it billed then without addition or profit. Taxpayer did not deliver a nontaxable transaction certificate to those from whom it purchased the tangible personal property.'

Taxpayer contends it was acting as a 'factor, agent or broker, on a commission or fee basis' and could not be taxed on the cost of the merchandise. Taxpayer also contends that such transfers of merchandise are not included within the term 'gross receipts' as defined in § 72--16A--3(F), supra, and that the property was not transferred or sold to make a profit.

The Bureau contends that the taxpayer is not a factor, agent or broker and that the disputed amount is gross receipts within the meaning of § 72--16A--3(F), supra. We agree.

Taxpayer asserts that under the foregoing facts and the terms of its contract with the motel clients it was an agent. We do not dispute that taxpayer could have been an agent when it was agreed that the manager would make 'wholesale purchases.' Manager could have purchased directly from wholesalers in the...