This memorandum opinion was not selected for pub lication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date. IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO 1 IN THE MATTER OF THE PROTEST OF 2 SOUTHWEST MOBILE SERVICE AND 3 RICHARD CAMERON, 4 SOUTHWEST MOBILE SERVICE and 5 RICHARD CAMERON, 6 Protestants-Appellants, 7

v. NO. 34,551 8 NEW MEXICO TAXATION AND REVENUE 9 DEPARTMENT, 10 Respondent-Appellee. 11 APPEAL FROM THE N.M. TAXATION AND REVENUE DEPARTMENT 12 Dee Dee Hoxie, Hearing Officer 13 Denise Thomas Law P.C. 14 Denise M. Thomas 15 Santa Fe, NM 16 Sanders Law P.C. 17 Tracy T. Sanders 18 Santa Fe, NM 19 for Appellants 20 Hector H. Balderas, Attorney General 21 Elena Romero Morgan, Special Assistant Attorney General 222 Santa Fe, NM 1 for Appellee 2

MEMORANDUM OPINION 3 BUSTAMANTE, Judge. 4

{1} Southwest Mobile Service and its owner, Richard Cameron (Cameron), 5 protested the New Mexico Taxation and Rev enue Department’s assessment of gross 6 receipts taxes based on services that Southw est Mobile sold to an out-of-state buyer. 7 The hearing officer denied their protest of these taxes, and Southwest Mobile and 8 Cameron appeal. We reverse. 9 BACKGROUND 10

{2} Because an understanding of the relevant tax certificates is critical to providing 11 context for the facts here, we begin with an overview of those certificates. “For the 12 privilege of engaging in business, an excisetax equal to five and one-eighth percent 13 of gross receipts is imposed on any pers on engaging in business in New Mexico.” 14 NMSA 1978, § 7-9-4(A) (2010). This tax is known as the “gross receipts tax.” Section 15 7-9-4(B). However, sellers in New Mexi co may deduct receipts from the sale of 16 services to an out-of-state buyer from their taxes if the buyer provides to the seller a 17 certificate stating that the transaction is nontaxable. NMSA 1978, § 7-9-57(A) (2000). 18 Two types of such certificates are at issue here: the “nontaxable transaction 193 certificate” or NTTC, and the “multijuri sdictional uniform sales and use tax 1 certificate,” or MTC. See NMSA 1978, § 7-9-43 (2011); NMSA 1978, § 7-5-1 (1967) 2 (enacting the Multistate Tax Compact). There are ten types of NTTCs, including type 3 2 NTTCs (for purchases of tangible pers onal property) and Type 5 NTTCs (for 4 purchases of services). See 3.2.201.8(C) NMAC (stating that different types of NTTCs 5 are issued). To obtain an NTTC, a buyer mustregister with the Department and apply 6 for an NTTC. 3.2.201.9 NMAC. The Department may decline to issue NTTCs to a 7 buyer if the buyer does not comply withthe Department’s requirements. See NMSA 8 1978, § 7-9-44 (2001). Section 7-9-43(A) includes a good faith provision permitting 9 a seller to rely on the buyer’s NTTC in certain circumstances. This provision is 10 discussed further below. 11

{3} MTCs are promulgated by th e Multistate Tax Commission. See Multistate Tax 12 Commission, http://www.mtc.gov/Resources/Uniform-Sales-Use-Tax-Exemption13 Certificate; § 7-5-1. “In order to coordinateand facilitate the collection of taxes from 14 . . . national corporations, New Mexico executed . . . [the] Multistate Tax Compact 15 (the Compact) with several other states , which established the Multistate Tax 16 Commission.” Siemens Energy & Automation, In c. v. N.M. Taxation & Revenue 17 Dep’t , 1994-NMCA-173, ¶ 1, 119 N.M. 316, 889 P.2d 1238. “The Multistate Tax 18 Commission, in cooperation with various states and taxpayers, . . . created [the MTC, 19 which] is filled out by buyers claiming sales tax exemptions and is maintained on file 204 by sellers.” Id. ¶ 7 (internal quotation marks and c itation omitted). “[An] MTC . . . , 1 like a[n] . . . NTTC[], is delivered by the purchaser to the seller as the documentation 2 required to support the exclusion of the salefrom local sales or gross receipts tax.” Id. 3 Each state is entitled to specify the conditions under which it will accept an MTC. 4 Multistate Tax Commission, FAQ Unif orm Sales and Use Tax Certificate, 5 http://www.mtc.gov/Resources/Uniform-Sales-Use-Tax-Exemption-Certificate/FAQ6 Uniform-Sales-and-Use-Tax-Certificate#B14 (“The applicable state will determine 7 whether a certificate is acceptable for the purpose of demonstrating that sales tax was 8 properly exempted.”). New Mexico will accept an MTC only from buyers not required 9 to be registered with the Department and only for purchase of tangible personal 10 property. Section 7-9-43(A); 3.2.201.13 NM AC. Like the statute governing NTTCs, 11 the Compact includes a good faith provision permitting the seller to deduct its sales 12 based on the buyer’s MTC. This provi sion is discussed further below. 13

{4} With this background in mind, we turn tothe facts leading tothis appeal. They 14 are largely undisputed. Southwest Mob ile is owned and operated as a sole 15 proprietorship by Cameron. It provides vehicl e maintenance and cleaning services for 16 United Parcel Service (UPS) vehicles pursu ant to contracts with UPS Oasis Supply 17 Corporation (Oasis), the procurement contractor for UPS, and has done so since 2001. 18 Southwest Mobile provided Oasis these services in New Mexico, Utah, Wyoming, and 195 Idaho. The present appeal pertains to taxes related to servi ces provided in New 1 Mexico from 2002 through 2008. 2

{5} Near the beginning of Southwest Mobile ’s relationship with Oasis, Oasis 3 provided a letter stating that “[Oasis] is cla ssified in your state as a ‘Reseller’ of most 4 products and services. Therefore, no sales tax is to be charged on these transactions.” 5 Oasis also provided to Southwest Mobile an MTC. The MTC includes a statement that 6 “[t]he issuer and the recipient have the responsibility of determining the proper use 7 of this certificate under applicable laws ineach state, as these may change from time 8 to time.” By signing the MTC, Oasis certif ied that “if any property or service so 9 purchased tax free is used or consumed by th e firm as to make it subject to a Sales or 10 Use Tax we will pay the tax duedirectly to the proper taxi ng authority when state law 11 so provides or inform the seller for added tax billing.” Southwest Mobile now 12 acknowledges that the MTC was not the correct certificate because Southwest Mobile 13 was selling services to Oasis, not tangible goods, and Oasis was registered in New 14 Mexico. Instead, Oasis should have issued a Type 5 NTTC to Southwest Mobile. Over 15 the course of their relationship, Oasis issu ed multiple letters and MTCs to Southwest 16 Mobile stating that it woul d pay any taxes due on its purchases. Consistent with its 17 certification on the MTCs, Oasis paid the gross receipts taxes due on the services 18 purchased from Southwest Mobile. 191 The penalties ($58,851.70) were later abated. 19 6 {6} In 2008 the Department initiated an audit for the period from 2002 to 2008. At 1 a meeting between Southwest Mobile staff and the Department’s auditor, the auditor 2 gave Cameron a “[sixty]-day letter,” whic h advised him that “Section 7-9-43 . . . 3 requires that . . . New Mexico NTTCs (o r other required documentation) be in your 4 possession within sixty (60) days from the date this notice is given to your firm or 5 organization.” The letter warned that “[i] f the above listed required documentation is 6 not . . . delivered or mailed to the auditor w ithin sixty (60) days from the date of this 7 notice, deductions previously claime d relating to that documentation will be 8 disallowed.” Cameron entrusted the respons e to the audit to Southwest Mobile’s 9 accountant and the accountant repeatedly assured Cameron that “the necessary 10 documents were being obtained.” However, the accountant did not obtain an NTTC 11 within the deadline and the Department a ssessed taxes, penaltie s, and interest of 12 $504,931.82 1 against Southwest Mobile. The h earing officer found that Cameron did 13 not realize the right documents were not f iled until after the assessment was made and 14 the protest filed. After the assessment, and as soon as he learned that an NTTC was 15 required, Cameron requested one from Oa sis, which provided a proper NTTC to 16 Cameron on February 2, 2009. The auditor rejected the NTTC on the ground that it 17 was not dated within or prior to the sixty- day deadline stated in the sixty-day letter. 187 Oasis then provided a backdated NTTC on April 2, 2009, but this too was rejected 1 because “its execution to [Southwest Mob ile] was after the [sixty]-day deadline.” 2

{7} Southwest Mobile protested the tax a ssessment. A two-day hearing was held. 3 At the hearing, the Department “conceded that [Southwest Mobile] would have been 4 able to deduct the sales to Oasis from [its] gross receipts if [it] had obtained the NTTC 5 within the [sixty]-day deadline.” It also c onceded that “the MTC would have allowed 6 [Southwest Mobile] to deduct [its] sales to Oasis from [its] gross receipts if [it] were 7 selling tangible property rather than servi ces.” Southwest Mobile argued that it had 8 timely accepted the MTCs in good faith and th at the MTCs should serve as evidence 9 that it was entitled to the deduction. The hearing officer found that Southwest Mobile 10 had accepted the MTCs in good faith. However, she ultimately concluded that the 11 good faith provision in the Compact did not apply and that Southwest Mobile had not 12 overcome the presumption of correctness accorded the Department’s assessment of 13 taxes, and denied the protest of gross receipts taxes. This appeal followed. 14 DISCUSSION 15

{8} Southwest Mobile makes three arguments which we consolidate into two. First, 16 it maintains that it is entitled to a deduction because it accepted the MTCs in good 17 faith and because an MTC is, or should be , treated like an NTTC. Second, it contends 18 that “[t]his Court should equitably estop the Department from assessing the gross 19 receipts tax in this case as justice demands it.” Because we conclude that the good 208 faith provision applies here, we do not reach Southwest M obile’s equitable estoppel 1 argument. 2

{9} Beginning with the presumption that the Department’s tax assessment was 3 correct, we may reverse the hearing officer’s decision only if it is “(1) arbitrary, 4 capricious or an abuse of discretion; (2) not supported by substantial evidence in the 5 record; or (3) otherwise not in accordance with the law.” ITT Educ. Servs. Inc. v. 6 Taxation & Revenue Dep’t , 1998-NMCA-078, ¶ 4, 125 N.M. 244, 959 P.2d 969 7 (internal quotation marks and citation omitted); NMSA 1978, § 7-1-17(C) (2007) 8 (“Any assessment of taxes or demand for payment made by the department is 9 presumed to be correct.”). “Under [the whole record review] standard, we view the 10 evidence presented at trial in the light most favorable to the . . . findings entered below 11 and determine whether the [hearing officer], in rendering [her] decision, correctly 12 applied the law to the facts.” Trujillo v. City of Albuquerque , 1993-NMCA-114, ¶ 13, 13 116 N.M. 640, 866 P.2d 368. 14

{10} Section 7-9-43(A) provides: 15 When the seller or lessor accepts a[ n NTTC] within the required time 16 and in good faith that the buyer or lessee will employ the property or 17 service transferred in a nontaxab le manner, the properly executed 18 nontaxable transaction certificate shall be conclusive evidence, and the 19 only material evidence, that the proceeds from the transaction are 20 deductible from the seller’s or lessor’s gross receipts. 219 {11} In Leaco Rural Tel. Coop., In c. v. Bureau of Revenue , this Court stated that an 1 NTTC becomes conclusive evidence of de ductibility when a properly completed and 2 signed NTTC is timely accepted in good faith. 1974-NMCA-076, ¶ 15, 86 N.M. 629, 3 526 P.2d 426. In that case, Leaco’s deducti ons were disallowed, not because of a 4 failure of any of these three conditions, but because the NTTCs were “improperly 5 issued.” Id. ¶ 16 (internal quotation marks omitted) . The Court held that “deduction[s] 6 based on NTTCs held in compliance with [what is now Section 7-9-43(A) are] not 7 conditioned upon proper issuance of the NTTC.” Id. ¶ 20. It went on, “Whether the 8 NTTC has been properly issued is a matter between the [Department] and the one who 9 issues the NTTC.” Id. Thus, although Leaco’s sales were not actually deductible “in 10 the first instance,” and hence the buyer improperly issued NTTCs to Leaco, once 11 Leaco accepted the NTTCs in good faith, it wa s protected from tax liability under the 12 good faith provision in Section 7-9-43(A). Id. ¶ 22; see Cont’l Inn of Albuquerque, 13 Inc. v. N.M. Taxation & Revenue Dep’t , 1992-NMCA-030, ¶ 12, 113 N.M. 588, 829 14 P.2d 946 (applying Leaco ). 15

{12} The Compact also includes a good faith provision titled “Exemption 16 Certificates, Vendors May Rely.” Section 7-5-1, art. V, § 2 reads: 17 Whenever a vendor receives and accep ts in good faith from a purchaser 18 a resale or other exemption certif icate or other written evidence of 19 exemption authorized by the appropriate state or subdivision taxing 20 authority, the vendor shall be relieved of liability for a sales or use tax 21 with respect to the transaction. 2210 {13} Like Section 7-9-43(A), “[t]his provision has been interprete d to offer a seller 1 who accepts such a certificate ingood faith a safe harbor th at provides absolute relief 2 from sales tax liability irresp ective of whether the underlyi ng transaction qualified for 3 an exemption.” Siemens , 1994-NMCA-173, ¶ 15. The seller’s good faith “may rest 4 solely upon the representations made by the buyer in the exemption certificate, as such 5 reliance fulfills the function of exemption certificates.” Id. (internal quotation marks 6 and citation omitted). The SiemensCourt noted that these qualities of the MTC good 7 faith provision are “virtually identical to this Court’s treatment of NTTCs, which serve 8 the same purpose in intrastate transactions that are served by MTCs for interstate 9 [transactions].” Id. ¶ 16 (citing Cont’l Inn, 1992-NMCA-030, ¶ 12, which addressed 10 good faith in the acceptance of NTTCs). 11

{14} Our review of the statutes and cases construing the good faith provisions leads 12 us to conclude that Southwest Mobile’s acceptance of the MTCs falls within the good 13 faith provision in Article V, Section 2 of the Compact. See Section 7-5-1. We are not 14 persuaded by the Department’s arguments to the contrary. 15

{15} First, the Department argues that “[s] ince the MTC did not apply to Southwest 16 [Mobile’s] transaction at all, it is not e ligible for the good faith provision in [the 17 Compact].” The hearing offi cer appears to have base d its decision on similar 18 reasoning, i.e. , that because the Department had notauthorized the use of MTCs for 19 taxable services, the good faith provision did not apply. See§ 7-5-1, art. V, § 2 2011 (“Whenever a vendor receives and accepts ingood faith from a purchaser a resale or 1 other exemption certificate . . . authorized by the appropriate state .” (emphasis 2 added)). Essentially, the argument is that because no MTC should have been issued 3 for Southwest Mobile’s services, Southwest Mobile’s acceptance of the MTC does not 4 fall within Article V, Section 2 at all. This interpretation would gut the good faith 5 exception altogether. As a hearing offi cer in an earlier similar case wrote, 6 [I]f the good faith safe harbor only applied to instances where the buyer 7 timely executed a proper type of NTTC to a seller-taxpayer for a 8 legitimately [deductible] transac tion, a seller-taxpayer would have 9 already qualified for the deduction . . . without ever having to consider 10 that statute’s safe harbor provision. In other words, there would be no 11 purpose in creating a good faith, safe harbor exception . . . if the only 12 way a taxpayer could ever qualify for the exception is by otherwise 13 satisfying the statute’s primary NTTC requirements. 14 In re Protest of Case Manager to A ssessment Issued U nder Letter ID No. 15 L0767748416 , Dec. No. 13-12, 15 (May 15, 2013), available at 16 http://www.tax.newmexico.gov/tax-decisions-orders.aspx. In Leaco , the good faith 17 provision applied to permit a deduction evenwhen the underlying transaction was in 18 fact taxable. 1974-NMCA-076, ¶ 22. The responsibility for submitting the wrong form 19 was placed on the buyer, not on the seller. See id. ¶ 20 (“Whether the NTTC has been 20 properly issued is a matter between the [D epartment] and the one who issues the 21 NTTC.”)

. The situation here is more mundane than in Leaco , because the parties agree 22 that the transactions would have been de ductible if only the correct form had been 2312 used. If the good faith provision applied to the facts in Leaco , we see no reason why 1 it would not apply here. 2

{16} Next, seeming to acknowledge that if Southwest Mobile had received an NTTC 3 that was improper in some way the good faith provision would apply, the Department 4 seems to argue that there should not bea good faith exception for acceptance of MTCs 5 because the Department does not have “authority” over a buyer under the MTC, and, 6 consequently, “[i]t cannot require the buyer to provide information or examine its tax 7 records” and may address non-compliant buyers only by reporting them to the 8 Multistate Tax Commission. The Department does not provide citations to support 9 these contentions. Even if the Department’s authority over buyers issuing MTCs is 10 limited under the Compact, any such limitation does not alter the applicability of the 11 good faith provision. The Department’s argument is essentially a policy position. But 12 the Legislature indicated a contrary po licy when it adopted the good faith provision 13 along with all the other terms of the Compact. “It is . . . a cardinal rule of construction 14 that, where possible, effect must be given to every part of a statute.” State ex rel. 15 Clinton Realty Co. v. Scarborough , 1967-NMSC-152, ¶ 9, 78 N.M. 132, 429 P.2d 16 330; see Baker v. Hedstrom , 2013-NMSC-043, ¶ 24, 309 P.3d 1047 (“[Appellate 17 courts] must interpret a statute so as to avoid rendering the Legislature’s language 18 superfluous.”). We therefore assume th at the Legislature intended the good faith 19 provision to apply to out-of-state buyers. Any quarrel the Department has with the 2013 extent of its ability to monitor buyers issuing MTCs under the Compact is best 1 addressed with that body. 2

{17} Moreover, the Department’s argument does not apply to the facts here. The 3 parties agree that Oasis was re quired to and in fact did re gister with the Department. 4 Indeed, Oasis prepared a proper NTTC, issued by the Department, on request by 5 Southwest Mobile. Oasis did not dispute th at it owed taxes and the hearing officer 6 found that Oasis had “paid the New Mexico gross receipts tax on its resales of 7 [Southwest Mobile’s] services.” These facts establish that Oasis was subject to the 8 Department’s authority in all ways material to the transactions atissue. The fact that 9 Oasis prepared the wrong form for Southw est Mobile does not outweigh these other 10 facts. See N.M. Taxation & Revenue Dep’t v. Maestas , No. 32,940, mem op. ¶ 8 (N.M. 11 Ct. App. Apr. 29, 2015), cert. denied 2015-NMCERT-006, 367 P.3d 850 (“[T]he 12 Department appears to be arguing that [thet]axpayer’s deduction that is otherwise 13 allowable, should be disallowed here because[the t]axpayer had the wrong form at the 14 right time and the right form at the wrong time. This argument exalts form over 15 substance.”) 16

{18} Finally, the Department briefly argues that Southwest Mobile did not act in 17 good faith because it “could have been determined [that the MTC was not the proper 18 form] by simply reading the MTC form which sets out in plain language the 19 limitations of the MTC.” We defer to the hearing officer’s finding of fact on this issue 2014 because it is supported by the evidence. See Trujillo , 1993-NMCA-114, ¶ 13 (“Under 1 [the whole record review] standard, we viewthe evidence presented at trial in the light 2 most favorable to the . . . findings entere d below[.]”). The hearing officer found that 3 “[Southwest Mobile] believed th at its sales in New Mexicowere not subject to the 4 gross receipts tax based on the MTCs provi ded, the representations made by Oasis, 5 and the advice of its accountant, who was a CPA.” She also found that Southwest 6 Mobile “accepted the MTCs in good faith.” In spite of the language on the MTCs, 7 these findings are supported by Cameron’s testimony at the hearing. 8 CONCLUSION 9

{19} We conclude that the hearing officer’s decision that the Compact’s good faith 10 provision did not apply here was a misapp lication of law. Southwest Mobile timely 11 accepted the MTC in good faith consistent w ith Article V, Section 2 of the Compact. 12 Consequently, we reverse the hearing officer’s decision. 13

{20} IT IS SO ORDERED. 14

15 MICHAEL D. BUSTAMANTE, Judge 16 WE CONCUR: 17

__________________________________ 18 RODERICK T. KENNEDY, Judge 1915 __________________________________ 1 STEPHEN G. FRENCH, Judge 2