Court Opinion

ID: 9558758
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:16:29.027724+00
Date Added: 2024-06-11T09:09:34.488763
License: Public Domain

HARTZ, Judge (specially concurring). I concur in the result. TAXABILITY OF THE TRANSACTION When the pawnshop sold pawned items, it was responsible for gross receipts tax on the full sales price, unless the pawnshop could establish that it was acting only as an agent of the pawnor in the sale. On the evidence in this case, which is summarized in Judge Apodaca’s opinion, the hearing officer was not compelled to find that taxpayer had satisfied his burden of proving that he acted as the pawnor’s agent. Therefore, we must affirm. The pertinent part of the statutory definition reads: “ ‘[G]ross receipts’ means the total amount of money or the value of other consideration received from selling property in New Mexico[.]” NMSA 1978, § 7-9-3(F) (Repl.Pamp.1990). So long as the seller owns the property, the manner in which the seller acquired the property is irrelevant. The seller may have found the property, acquired it in satisfaction of a debt, traded for it, or purchased it, perhaps at a cost greater than the sale price. No matter what the manner of acquisition, the seller-owner’s sale price is a gross receipt. One who is engaged in business must then pay a tax on the gross receipt. NMSA 1978, § 7-9-4(A) (Repl.Pamp.1990). When, however, the seller is not the owner, but is selling the item only as agent for the owner, the only gross receipt for which the seller is taxable is the seller’s commission. See § 7-9-3(F) (defining “gross receipts” to include agent’s commissions); Stohr v. New Mexico Bureau of Revenue, 90 N.M. 43, 559 P.2d 420 (Ct.App.1976) (carpenter not responsible for gross receipts tax with respect to materials purchased as agent for carpenter’s customer); New Mexico Enters., Inc. v. Bureau of Revenue, 86 N.M. 799, 528 P.2d 212 (Ct.App.1974) (motel management consultant not acting as agent of motels for whom it purchased supplies). A pawnshop could act as the agent of a pawnor who is unable to raise the money to pay the principal and interest owed to pawn the item. The pawnshop could sell the item and remit the proceeds to the pawnor, who could then pay the pawnshop its commission, the principal owed, and the accrued interest. As already stated, the commission would be a gross receipt of the pawnshop and would be subject to tax. The principal and interest paid by the pawnor to the pawnshop would not be taxable. See NMSA 1978 § 7-9-25 (Repl.Pamp.1990) (receipts received as interest on money loaned is exempt from gross receipts tax). More realistically, the pawnshop would retain from the sale proceeds the amount owed it by the pawnor and remit any excess to the pawnor. Cf. NMSA 1978, § 56-12-11(C) (Repl.Pamp.1986) (requiring pawnshop to remit to pawnor any surplus from sale). The tax consequences should be the same whether or not the money actually passes from the pawnshop to the pawnor and back to the pawnshop.1  The question in this case was whether the taxpayer did in fact act as an agent of the pawnors when he sold pawned items. Taxpayer failed to convince the hearing officer. On this record, we should not reverse the hearing officer’s determination. ESTOPPEL I also agree that the department was not estopped by its letter to taxpayer. My only difference with the majority in this regard is that I would place greater emphasis on NMSA 1978, Section 7-1-60 (Repl.Pamp. 1990), which sets forth circumstances in which the director may be estopped. We should be cautious about estopping the state in matters relating to the public fisc. See Office of Personnel Management v. Richmond, — U.S.-, 110 S.Ct. 2465, 110 L.Ed.2d 387 (1990). When the legislature has spoken directly on the issue of estoppel against the state, we should be most reluctant to expand the circumstances in which we find estoppel. I read Taxation & Revenue Dep’t v. Bien Mur Indian Mkt. Center, Inc., 108 N.M. 228, 770 P.2d 873 (1989), as indicating that ordinarily reliance by a taxpayer is not justifiable unless it is reliance expressly permitted by Section 7-1-60. FAIR HEARING I agree that taxpayer has not shown that he was deprived of a fair hearing.  . I have intentionally refrained from expressing a view on the gross-receipts-tax treatment of a pawn service charge, see NMSA 1978, § 56-12-13 (Repl.Pamp.1986), which may be deductible in whole or in part from gross receipts as a loan origination or handling charge. See NMSA 1978, § 7-9-61.1.