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    "judges": [
      "WE CONCUR: RICHARD C. BOSSON, Chief Judge, and JAMES J. WECHSLER, Judge."
    ],
    "parties": [
      "MPC LTD., d/b/a Manpower of New Mexico, a New Mexico corporation, Plaintiff-Appellant, v. NEW MEXICO TAXATION AND REVENUE DEPARTMENT, and T. Glenn Ellington, Secretary of the New Mexico Taxation and Revenue Department, Defendants-Appellees."
    ],
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      {
        "text": "OPINION\nSUTIN, Judge.\n{1} MPC, Ltd. d/b/a Manpower of New Mexico (Manpower) appeals the district court\u2019s denial of a claim for refund of gross receipts tax assessed by the New Mexico Taxation and Revenue Department (the Department). Manpower asserted it was not liable for tax on its gross receipts (receipts) from clients to which it provided temporary staffing services. Employing statutory presumptions that receipts are taxable and the Department\u2019s assessment was correct, the district court held the receipts are taxable as reimbursements of payroll-related expenditures.\n{2} Manpower contends the receipts are not subject to tax, pursuant to NMSA 1978, \u00a7 7-9-3(F)(2)(f) (2002), which excludes receipts received in a \u201cdisclosed agency capacity\u201d from the definition of gross receipts. We hold the receipts are subject to tax and affirm the district court.\nBACKGROUND\n{3} Manpower locates, recruits, tests, and trains prospective employees, and maintains \u201ca data base that has a broad range of skilled applicants.\u201d Based on the job description or needs provided by a client, Manpower matches the skills required with those of the persons in its database and then assigns the prospective employee to the client for work.\n{4} The majority of Manpower\u2019s business with its clients is done verbally. Of its estimated 350 New Mexico clients, Manpower has about five to seven written contracts, most of which are national contracts. The contracts do not mention any joint employer status or requirement that the client is obligated for payroll if Manpower does not pay. Some written contracts state that Manpower is an independent contractor. For example, Manpower\u2019s Unysis contract states that Manpower is an independent contractor and not an agent of Unisys and also states that Manpower is responsible for employment taxes, discipline, and payroll taxes. Manpower\u2019s contract with Public Service Company of New Mexico states that Manpower is an independent contractor and that Manpower assumes all liability and agrees to protect the company from all suits.\n{5} The client supervises the day-to-day activities of the assigned employee. The client does not pay the employee; rather, the client pays Manpower. Manpower then pays the employee\u2019s wages, benefits, and withholdings. (These payroll obligations will be referred to as \u201cpayroll\u201d in this opinion.) The client does not pre-pay payroll or create a fund from which Manpower draws to pay payroll. Manpower\u2019s employees complete W-4 forms and Manpower issues W-2s. In addition to amounts representing payroll, the client also pays an amount that Manpower attributes to its overhead and profit. Manpower paid $904,066 for tax on its receipts used for payroll. Thereafter, it submitted a refund request to the Department. The Department took no action and the request was deemed denied. Manpower filed a refund action in district court pursuant to NMSA 1978, \u00a7 7-1-26 (2001) to recover the taxes paid.\n{6} The district court found that Manpower was engaged in the selling of temporary staffing services under mostly oral contracts; that Manpower had employees whom Manpower used to provide temporary staffing services for its clients; that Manpower\u2019s clients could not direct Manpower to terminate an employee, but could only ask that the employee be removed from the job site; that, after Manpower provided its services and paid its own business-related expenses, Manpower billed its clients and collected the amounts set by contract, as opposed to collecting prepaid amounts from clients for expenses Manpower incurred in hiring its employees; that Manpower was acting as a principal on its own behalf and not as an agent on behalf of a principal; that Manpower\u2019s employees were an integral part of its business and not an integral part of the clients\u2019 businesses; that Manpower controlled for whom an employee worked, where and when the employee was to report to work, and the duration of the work assignment; and that the payroll was Manpower\u2019s own obligation and was not made as an intermediary or on behalf of its clients.\n{7} The district court also concluded that \u201cManpower did not meet its burden of overcoming the presumption of correctness that attaches to the ... Department\u2019s assessment of tax and the presumption that [Manpower\u2019s] receipts are taxable\u201d; that \u201cManpower\u2019s receipt of payroll ... as a reimbursement of expenditures incurred in ... providing [its] services [constituted] gross receipts as defined by [Section 7-9-3(F)]\u201d; and that the court was \u201cnot persuaded that Manpower engaged in any of the necessary elements needed to prove its case.\u201d The court upheld the Department\u2019s assessments, including interest and penalty.\n{8} Manpower contends on appeal that it does not owe tax because it received the amounts \u201cpurely as a conduit\u201d between its clients and its employees. Manpower contends this is consistent with, and based upon, the Department\u2019s regulation, 3.2.1.19(E)(2) NMAC (2002), which states that funds that pass through the hands of a \u201cjoint employer\u201d for the purpose of federal labor law are not subject to tax.\n{9} Manpower thus asserts the district court erred in determining that Manpower\u2019s payment of payroll was its own obligation. Manpower also attacks two other findings of fact on the ground they lack substantial evidence; namely, the findings that Manpower was acting as a principal on its own behalf and not as an agent on behalf of a principal, and that Manpower\u2019s employees were an integral part of its business and not an integral part of its clients\u2019 businesses.\n{10} Further, Manpower attacks the district court\u2019s conclusions of law that Manpower did not overcome the statutory presumptions of correct tax assessment and taxability, that the receipts were for performing services rather than acting as the disclosed agent of another, and that Manpower failed to prove the tax assessment did not apply. In essence, Manpower contends its evidence was not only sufficient to rebut the presumptions, but the evidence established that Manpower received the receipts solely as a disclosed agent of its clients, and the evidence \u201coverwhelmingly\u201d established that Manpower was a joint employer with each of its clients pursuant to which the employees had legally enforceable rights against the client for payroll if Manpower did not pay. Further, Manpower contends that the Department\u2019s evidence did not disprove Manpower\u2019s joint employer status with its clients.\nDISCUSSION\nStandard of Review\n{11} A statutory tax refund action is a civil action initiated by a complaint setting forth the circumstances and demanding a refund. See \u00a7 7-1-26(0(2). The district court\u2019s findings of fact are reviewed by this Court to determine whether they are supported by substantial evidence. Creson v. Amoco Prod. Co., 2000-NMCA-081, \u00b6 10, 129 N.M. 529, 10 P.3d 853. Questions of law, such as interpretation of a statute, are reviewed by this Court de novo, without deference to the district court\u2019s decision. Id.; Johnson v. Yates Petroleum Corp., 1999-NMCA-066, \u00b6 3, 127 N.M. 355, 981 P.2d 288. Findings that are not directly attacked are deemed conclusive and are binding on appeal. See Rule 12-213(A)(3) NMRA 2002; Stueber v. Pickard, 112 N.M. 489, 491, 816 P.2d 1111, 1113 (1991).\nPresumptions and Burden\n{12} There exists a statutory presumption that all receipts are taxable. NMSA 1978, \u00a7 7-9-5(A) (2002). The taxpayer claiming that receipts are not taxable bears the burden of proving the assertion. TPL, Inc. v. Taxation & Revenue Dep\u2019t, 2000-NMCA-083, \u00b6 8, 129 N.M. 539, 10 P.3d 863, cert. granted, 129 N.M. 519, 10 P.3d 843 (Sept. 13, 2000); ITT Educ. Servs., Inc. v. Taxation & Revenue Dep\u2019t, 1998-NMCA-078, \u00b6 5, 125 N.M. 244, 959 P.2d 969; Brim Healthcare, Inc. v. Taxation & Revenue Dep\u2019t, 119 N.M. 818, 820, 896 P.2d 498, 500 (Ct.App.1995); Wing Pawn Shop v. Taxation & Revenue Dep\u2019t, 111 N.M. 735, 741, 809 P.2d 649, 655 (Ct.App.1991).\n{13} There also exists a statutory presumption of correctness of the Department\u2019s tax assessment. NMSA 1978, \u00a7 7-1-17(C) (1992). \u201cThe effect of the presumption of correctness is that the taxpayer has the burden of coming forward with some countervailing evidence tending to dispute the factual correctness of the assessment made by the secretary. Unsubstantiated statements that the assessment is incorrect cannot overcome the presumption of correctness.\u201d 3.1.6.12(A) NMAC (2002). A taxpayer may rebut the presumption, shifting the burden to the Department to show the correctness of the tax assessment. See Archuleta v. O\u2019Cheskey, 84 N.M. 428, 431, 504 P.2d 638, 641 (Ct.App.1972).\nThe Tax and the Disclosed Agency Capacity Exception\n{14} Tax is imposed for the privilege of engaging in business and for services performed in New Mexico. See NMSA 1978, \u00a7 7-9-4(A) (1990); \u00a7 7-9-3(F). \u201cThe tax is imposed upon gross receipts, which means \u2018the total amount of money or the value of other considerations received from selling property or from performing services.\u2019 \u201d Brim, 119 N.M. at 820, 896 P.2d at 500 (quoting N.M. Enters., Inc. v. Bureau of Revenue, 86 N.M. 799, 800, 528 P.2d 212, 213 (Ct.App.1974)). Receipts include payments received for one\u2019s own account and then expended to meet one\u2019s own responsibilities. Id. However, no tax is imposed on amounts received \u201csolely on behalf of another in a disclosed agency capacity.\u201d \u00a7 7-9-3(F)(2)(f); see Carlsberg Mgmt. Co. v. Taxation & Revenue Dep\u2019t, 116 N.M. 247, 250, 861 P.2d 288, 291 (Ct.App.1993) (\u201cAn agent for a disclosed principal is, therefore, not liable for sales-type taxes on amounts for which he is reimbursed by his principal.\u201d). Manpower does not attack the district court\u2019s conclusion of law that the receipts attributed to payroll constituted \u201creimbursement of expenditures incurred.\u201d\n{15} The disclosed agency capacity exception in Section 7-9-3(F)(2)(f) requires our discussion of two Department regulations, 3.2.1.19(C) and 3.2.1.19(E). Such regulations are \u201cpresumed to be a proper implementation of the provisions of the laws that are charged to the [Department.\u201d NMSA 1978, \u00a7 9-11-6.2(G) (1995). Manpower contends it does not have to pay tax because it is a \u201cjoint employer\u201d under Regulation 3.2.1.19(E)(2). The Department argues that Manpower is not a joint employer under Regulation 3.2.1.19(E)(2), and that it owes tax under Regulation 3.2.1.19(C)(3). We also discuss two cases in which the assessments predate the 1994 enactment of Section 7-9-3(F)(2)(f) and the 1997 adoption of Regulation 3.2.1.19(E) but which remain instructive on the tax issues; namely, Brim and Carlsberg.\n1. Department Regulation 3.2.1.19(E)\n{16} Manpower asserts that Regulation 3.2.1.19(E) is applicable. Under this regulation, no tax is imposed on receipts \u201c[w]hen a person engaging in the leased employee business is a \u2018joint employer\u2019, as that term is used by the United States department of labor for purposes of enforcing federal labor law.\u201d 3.2.1.19(E)(2) NMAC. This is because \u201c[sjuch receipts instead are receipts of a disclosed agent on behalf of others.\u201d Id.\n{17} Based on the regulation language \u201c[w]hen a person engaging in the leased employee business is a \u2018joint employer\u2019, ... for purposes of enforcing federal labor law,\u201d Manpower engages in a discussion of federal labor law. For example, Manpower discusses a United States Department of Labor (DOL) regulation adopted pursuant to the Fair Labor Standards Act of 1938, 29 U.S.C. \u00a7\u00a7 201-19 (2000) (FLSA), that \u201cmake[s] available in one place the general interpretations of the [DOL] pertaining to the joint employment relationship under the [FLSA].\u201d 29 C.F.R. \u00a7\u00a7 791.1, .2 (2002). Manpower further discusses an opinion letter of the Wage-Hour Administrator in which, according to Manpower, the Administrator on an issue of employer responsibility for record keeping stated: \u201c[T]ypically employees of a temporary help company working on assignments in various business establishments are joint employees of both the temporary help company and the business establishment in which they are employed.\u201d Opinion Letter, 10/1/68, \u00b6 30,883 of CCH Wage & Hour & Administrative Rulings. Manpower also points to a DOL regulation under the Family and Medical Leave Act of 1993, 29 U.S.C. \u00a7\u00a7 2601-54 (1999) (FMLA), which discusses how \u201cjoint employment is treated under FMLA.\u201d 29 C.F.R. \u00a7 825.106 (2002). Pointing to particular language of Regulation 3.2.1.19(E) (see emphasized language in footnote 1), Manpower asserts it was a joint employer and therefore its payroll receipts are not subject to tax because \u201cunder federal labor law, as well as 3.2.1.19(E) NMAC, the obligation was clearly at least in part that of Manpower\u2019s customer, who could be held liable for the entire amount.\u201d\n{18} Manpower acknowledges it is not an employee leasing firm, but rather a temporary staffing agency. As Manpower understands the difference, a temporary staffing agency is delegated the authority by its client to hire and it creates the employee/employer relationship, whereas in an employee leasing arrangement, the client hires and places the person on the employee leasing firm\u2019s payroll. That Regulation 3.2.1.19(E)(2) places a joint employer specifically within the context of a \u201cleased employee business,\u201d Manpower argues, is irrelevant because, according to Manpower, \u201cno material distinction for the purposes of this case [exists] between an employee leasing agency or a temporary employment agency,\u201d in that both involve similar relationships and thus either can be a joint employer.\n{19} Manpower asserts that a factual determination of joint employment must be made and must be based on the economic realities of, among other things, the client\u2019s authority to reject and supervise employees, control job performance, and determine salary. Manpower cites FLSA cases to make the point. See Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 755 (9th Cir.1979) (stating that \u201c[economic realities, not contractual labels, determine employment status for the remedial purposes of the FLSA\u201d); McLaughlin v. Lunde Truck Sales, Inc., 714 F.Supp. 920, 924 (N.D.Ill.1989) (giving \u201cexamples of where the \u2018economic reality\u2019 of the circumstances dictates that a (joint) employment relationship exists\u201d).\n{20} Manpower then lays out the following as undisputed facts showing such economic realities:\nWhile Manpower does cut payroll checks for employees, the employee\u2019s activities are under the direct, day-to-day control of its customer. The customer, among other things, sets the employee wage; supervises and manages day-to-day activities and work schedules; trains the employee for the customer\u2019s needs; provides tools and supplies to the employee; subjects the employee to work rules; [and] controls work place conditions.\n{21} The Department responds to the issue of joint employer status by arguing that Manpower cannot rely on Regulation 3.2.1.19(E) in any regard because Manpower is not an \u201cemployee leasing business.\u201d In fact, the Department barely discusses the question of joint employer status, focusing almost solely on whether Manpower is an employee leasing business. The Department distinguishes selling temporary staffing services from leasing employees. To show the difference, the Department refers to the Employee Leasing Act, NMSA 1978, \u00a7\u00a7 60-13A-1 to -14 (1993, as amended through 1995) (the ELA), which forbids a person from doing business in New Mexico as an employee leasing contractor unless the person is registered as required under the ELA. See \u00a7 60-13A-3.\n{22} \u201cEmployee leasing arrangement,\u201d \u201cemployee leasing contractor,\u201d \u201cleased worker,\u201d and \u201ctemporary worker,\u201d are defined in the ELA. \u00a7 60-13A-2(D), (E), (F), (H). An \u201c \u2018employee leasing arrangement\u2019 means any arrangement in which a client contracts with an employee leasing contractor for the contractor to provide leased workers to the client; provided, \u2018employee leasing arrangements\u2019 does not include temporary workers.\u201d \u00a7 60-13A~2(D). \u201c \u2018[E]mployee leasing contractor\u2019 means any person who provides leased workers to a client ... through an employee leasing arrangement,\u201d and \u201c \u2018leased worker\u2019 means a worker provided to a client through an employee leasing arrangement.\u201d \u00a7 60-13A-2(E), (F). In contrast, a \u201ctemporary worker\u201d is defined as \u201ca worker hired and employed by an employer to support or supplement another\u2019s work force in special work situations, such as employee absences, temporary skill shortages, temporary provision of specialized professional skills, seasonal workloads and special temporary assignments.\u201d \u00a7 60-13A-2(H). The ELA deems the contractor and its client to be co-employers for the purposes of the Workers\u2019 Compensation Act, requiring that both be co-insureds, assuring client liability as a principal for the workers\u2019 compensation obligation, and at the same time granting the client the benefit of the workers\u2019 compensation laws\u2019 exclusive remedy requirement. See \u00a7 60-13A-5(B), (C).\n{23} The Department emphasizes that the ELA requires employee leasing contractors to be registered with the State, \u00a7 60-13A-3, and that under the ELA:\n[t]he employment relationship between the client and the leased workers shall be established by written agreement between the employee leasing contractor and the client. Written notice of the employment relationship and of compliance with the requirements of [workers\u2019 compensation insurance] shall be given by the contractor to each leased worker.\n\u00a7 60-13A-9. Thus, through the ELA, the Legislature created a specific circumstance of co-employer status for those engaged in the employee leasing business by which worker, contractor, client, and government would be aware of the obligation for workers\u2019 compensation insurance.\n{24} In an attempt to rebut the Department\u2019s contentions, Manpower argues that the use of this device for interpretation of the meaning of leased employee business in Regulation 3.2.1.19(E) does not preclude compliance with the regulation in the gross receipts tax setting by a temporary staffing agency because the leased employee business and temporary staffing agency are \u201cperforming the exact same functions.\u201d\n2. Department Regulation 3.2.1.19(C) NMAC\n{25} Manpower contends Regulation 3.2.1.19(C), which relates specifically to reimbursed expenses and requires a disclosed agency with specific bookkeeping requirements, was voided in Carlsberg and is therefore inapplicable. We disagree. Carlsberg addressed a Department policy that had been employed with respect to tax assessment and apparently was adopted into Regulation 3.2.1.19(C) at some point after the tax year at issue. See 116 N.M. at 250, 861 P.2d at 291. Carlsberg held as \u201cunreasonable and contrary to law\u201d that part of the policy that allowed \u201cexemption for reimbursement of agency costs only when the principal is disclosed,\u201d and held that disclosure of the agency was irrelevant under the circumstances in Carlsberg. Id. at 252, 861 P.2d at 293. However, the fact that Section 7-9-3(F)(2)(f), enacted after Carlsberg, excludes from tax those receipts received solely on behalf of another in a disclosed agency capacity, indicates that the Legislature intended disclosure to be reinstated as a required circumstance for exclusion from tax. The enactment of Section 7-9-3(F)(2)(f) rendered the Carlsberg language ineffective.\n{26} In support of the district court\u2019s dismissal, the Department first argues that the court\u2019s findings are supported by sufficient evidence and support the conclusion that the amounts Manpower received were not received solely on behalf of another in a disclosed agency relationship as required under Section 7-9~3(F)(2)(f). It next argues that even were an agency relationship to have existed, it was not disclosed. Specifically, Manpower failed to establish that it had the authority to bind its clients contractually so the employees could enforce the contract against the client, that Manpower accounted for its receipts as a reduction of expense and not as revenue, that Manpower separately stated the expenses on the billings to its clients, and that Manpower identified the receipts in its books and records as reimbursements of expenses incurred on behalf of its clients. See 3.2.1.19(C)(1), (2), (3) NMAC.\n{27} Anticipating we might not accept its argument that Regulation 3.2.1.19(C)(2) is void under Carlsberg, Manpower asserts the agency was disclosed because Manpower, its clients, and the employees \u201call knew the details of the relationship and whom was doing what for whom\u201d in regard to payroll. Manpower also asserts it \u201csubstantially complied\u201d with the gross receipts statutes and regulations. Manpower concedes that it \u201coften did not separately state the employee expenses on invoices\u201d to its clients, but asserts that its clients were \u201cfully aware of the separate amounts.\u201d\n3. The Brim and Carlsberg Cases\n{28} The only New Mexico cases closely related to the issues are Brim and Carlsberg. As earlier indicated, the tax assessments in these two cases predate the application of Section 7-9-3(F)(2)(f). The Department argues that although these two cases \u201care difficult to reconcile,\u201d the facts in the present case more closely parallel those of Brim. Manpower argues that Carlsberg is closer.\n{29} In Carlsberg, the taxpayer (the company in Manpower\u2019s position) contracted with the owner of an apartment complex to manage the apartments with the taxpayer\u2019s own employees. Carlsberg, 116 N.M. at 248-49, 861 P.2d at 289-90. In a written contract detailing all management aspects, the owner was designated as \u201cOwner,\u201d and taxpayer was designated as \u201cAgent.\u201d Id. at 249, 861 P.2d at 290. Although the contract provided that the employees were only employees of the taxpayer, to be hired, paid, supervised, and discharged by the taxpayer, the taxpayer had to abide by a management plan specifying the number of people to hire for each task, employee wages, how the apartments were to be managed, and giving the owner\u2019s president the absolute authority in making decisions regarding the apartments. Id. The employees\u2019 salaries were paid from the owner\u2019s general operating account, an account also used to reimburse the taxpayer for workers\u2019 compensation and taxes paid on behalf of the employees. Id. The taxpayer treated the reimbursements as an offset for expenses. Id.\n{30} Carlsberg held that the taxpayer was an agent of the owner and therefore did not have to pay tax on the amounts received for reimbursement for employee-related expenses. Id. at 252-53, 861 P.2d at 293-94. This Court stated that the \u201ckey characteristic of an agency relationship\u201d is the principal\u2019s control over the agent, and detailed the owner\u2019s retention of control, delegation of specified duties, delegation of authority, and \u201cultimate approval authority over Taxpayer\u2019s actions,\u201d as significant circumstances. Id. at 250-52, 861 P.2d at 291-93. Yet this Court indicated that control was \u201conly one necessary element to prove entitlement to the agency tax exemption.\u201d Id. at 250, 861 P.2d at 291. Stating that \u201cthe agency relationship has to be one in which the agent could bind the principal in dealings with third parties,\u201d id., this Court held the owner obligated for the employees\u2019 payroll as \u201can undisclosed principal is liable for contracts its agent enters into in the ordinary course of business,\u201d id. at 252, 861 P.2d at 293. Carlsberg also states, \u201cthe indemnification clause in the Agreement, requiring Owner to pay Taxpayer for employment expenses, indicates to us that payment of wages to on-site employees was ultimately the duty of Owner.\u201d Id.\n{31} Carlsberg was thus decided primarily on the basis of the owner\u2019s control over the taxpayer, but also to some extent because the taxpayer, as agent of an undisclosed principal, and based on an indemnity agreement, could bind the principal to pay the employees\u2019 payroll. Following Carlsberg, the Legislature in 1994 enacted Section 7-9-3(F)(2)(f), requiring that the relationship between taxpayer and client be that of a \u201cdisclosed agency\u201d for taxpayer avoidance of tax. See 1994 N.M. Laws eh. 45, \u00a7 1.\n{32} Brim was decided less than two years following Carlsberg. In Brim the taxpayer contracted with two hospitals to manage the hospitals with the taxpayer\u2019s own employees. 119 N.M. at 819, 896 P.2d at 499. The contracts provided that the hospitals would reimburse the taxpayer for salaries, fringe benefits, and expenses for the taxpayer\u2019s management employees working at the hospitals. Id. The taxpayer recruited management employees, and selected the personnel for each hospital, although with the approval of the hospital boards of directors. Id. The taxpayer was \u201cessentially responsible for the management function of the hospitals,\u201d including day-to-day management and operation. Id. The employees kept the boards informed about hospital operations, but were primarily accountable to the taxpayer for their performance in carrying out the taxpayer\u2019s management plan for the operation of the hospitals. Id. The contracts stated that the taxpayer was \u201cacting at all times as an independent contractor in performing its services and is not an agent of the hospitals,\u201d and that neither party was liable for the debts, obligations, or liabilities of the other. Id.\n{33} The taxpayer in Brim relied on Carlsberg to support its position it was not required to pay tax. Brim, 119 N.M. at 820, 896 P.2d at 500. This Court in Brim distinguished Carlsberg on the basis that the taxpayer in Brim was \u201cnot merely a conduit for funds to be paid to third parties,\u201d but was \u201creceiving the payments from the hospitals for its own account and then expending them to meet its own responsibilities.\u201d Id. Brim stated that \u201cthe most significant distinction between this case and Carlsberg \u2018lies in the fact that in the instant case [Brim ], there is no broad indemnification clause which has the effect of shifting the duty to pay wages to the employees to the hospitals.\u2019 \u201d Id. Brim also noted other factors such as the right of the taxpayer to make changes in the employees, the taxpayer\u2019s control over when the employees were paid, the first-line reporting by the employees to the taxpayer, the employees\u2019 reporting to the hospital boards as part of the taxpayer\u2019s management team, and, except as to negligence claims, the hospitals had no liability for the taxpayer\u2019s obligations to pay the employees. Id. Further distancing Carlsberg, Brim pointed out that this evidence showed the taxpayer \u201calone was responsible to its employees for their salaries and benefits.\u201d Id. Finally, Brim specifically pointed out that, unlike Carlsberg, the contracts expressly stated that the taxpayer was not the agent of the hospitals. Id.\n{34} This Court in Brim required the taxpayer to pay tax, determining that, under the facts, \u201c[t]he employees continued their relationship with their employer ... and their salaries remained the legal obligation of [the taxpayer]\u201d who received the amounts for its own use and benefit, and paid the amounts out to satisfy its own obligations. See id. at 822, 896 P.2d at 502.\n{35} In sum, Carlsberg did not require the taxpayer to pay tax; Brim did. Neither case was decided under Section 7-9-3(F)(2)(f). Carlsberg must be considered questionable precedent given the subsequent enactment of Section 7-9-3(F)(2)(f). Brim does not discuss Regulation 3.2.1.19(C) and was decided before Regulation 3.2.1.19(E) was effective, which was in October 1997. To the extent these cases remain viable, they are merely instructive for any analyses in regard to control by Manpower\u2019s clients on the issue of agency (Carlsberg), and with respect to the presence or absence of an agreement by which Manpower\u2019s clients can be held responsible to the employee for payroll obligations on the issue of binding the principal (Brim). Manpower is left unassisted by either case. Manpower proved no agreement by which any client could be held ultimately obligated for payroll as among the clients, Manpower, and the employees. Furthermore, the issue of client control is not a particularly significant consideration in the present case.\n4. Applicability of the Statute and Regulations\n{36} Regulation 3.2.1.19(E)(1) and (2) permit a taxpayer to escape tax if the taxpayer is performing \u201cemployee leasing services\u201d and is a \u201cjoint employer.\u201d The regulation requires that Manpower be an \u201cemployee leasing business.\u201d Although nowhere is this regulation expressly tied to the ELA, it is not unreasonable for the Department to argue that \u201cemployee leasing business\u201d in the regulation must be construed to require Manpower to be the business defined in the ELA, because the written agreement and disclosure requirements in the ELA would bring Manpower within the letter and purpose of Section 7-9-3(F)(2)(f).\n{37} Regulation 3.2.1.19(C) defines an \u201cagency relationship\u201d to exist if \u201ca person has the power to bind a principal in a contract with a third party so that the third party can enforce the contractual obligation against the principal.\u201d 3.2.1.19(C)(1) NMAC. Here, this must be construed to define \u201cdisclosed agency capacity\u201d by two required circumstances: (1) the agent (Manpower) has the authority to bind the principal (the client) to an obligation (to the employee) created by the agent (Manpower), and (2) the beneficiary of that obligation (the employee) is informed by contract that he or she has a right to proceed against the principal (the client) to enforce the obligation. Yet, under the regulation, even the fulfillment of these two circumstances appears to be insufficient for the taxpayer to earn exclusion from tax. To prove its exclusion entitlement the taxpayer must also engage in specific bookkeeping and billing procedures. See 3.2.1.19(C)(2) NMAC.\n{38} We are unpersuaded by Manpower\u2019s claim of protection, under Regulation 3.2.1.19(E)(1) and (2). Section 7-9-3(F)(2)(f) requires a disclosure to the employee of an agency relationship. This breaks down into the requirements that there be a relationship by which the principal is liable (and knows he is liable) to the employee for payroll if the agent fails to pay, and that the agent disclose this relationship and obligation to the employee, requirements obviously intended by the Department to be enforced through Regulation 3.2.1.19(C) as well as through Regulation 3.2.1.19(E)(2). That said, we fail to see why under Regulation 3.2.1.19(E)(1) and (2) a taxpayer must be both an employee leasing contractor under the ELA and a joint employer under federal law, since it would appear either would be sufficient to provide the agency relationship and disclosure the Department interprets Section 7-9-3(F)(2)ffi to require. In this case, Manpower established neither of the two prongs of required proof and therefore did not rebut the presumptions that the reimbursed expenses are taxable and that the assessment was correct.\n{39} Manpower showed no evidence of any contract with its employees, as required in Regulation 3.2.1.19(C)(1). Manpower states only that its employees were aware of the relationship. Manpower nowhere specifically sets out whether the employees were told they could enforce a payroll obligation against the client. Manpower fails even to show any understanding, oral, or written, with any of its clients that the client would or could be obligated to the employee for payroll. These failures in proof make it unnecessary to determine whether the relationship between Manpower and its clients was one of principal-agent, rather than an independent contractor.\n{40} Manpower fared no better in its attempt to meet the requirements of Regulation 3.2.1.19(E). Manpower is admittedly not a leased employee business. Its argument that it should be considered a leased employee business because the economic realities require no distinction to be drawn between a leased employee business and its own temporary staffing business for the purposes of taxation is not persuasive. It is not the economic realities that control in this circumstance, but compliance with the disclosed agency requirement. Moreover, Manpower has not shown joint employer status or provided this Court with legal authority based on which we can comfortably determine that the DOL would necessarily determine Manpower\u2019s clients and Manpower to be joint employers.\n{41} We hold substantial evidence supports the district court\u2019s determination that Manpower was not acting in a disclosed agency capacity as required under Section 7-9 \u2014 3(F) (2)(f).\nCONCLUSION\n{42} We affirm the final order of the district court.\n{43} IT IS SO ORDERED.\nWE CONCUR: RICHARD C. BOSSON, Chief Judge, and JAMES J. WECHSLER, Judge.\n. Regulation 3.2.1.19(E) reads:\n(1) A person who engages in the leased employee business in New Mexico is performing services in New Mexico. The person\u2019s receipts from performing the employee leasing services in New Mexico are subject to the gross receipts tax, except as provided otherwise in Paragraph (2)of [this subsection].\n(2) When a person engaging in the leased employee business is a \u201cjoint employer\", as that term is used by the United States department of labor for purposes of enforcing federal labor law, then the person\u2019s receipts of amounts comprising wages, taxes withheld with respect to the wages, Federal Insurance Contributions Act payments, unemployment compensation payments and the like with respect to the joint employees of the client and the person engaging in the leased employee business are not receipts from performing employee leasing services and are not subject to the gross receipts tax. Such receipts instead are receipts of a disclosed agent on behalf of others.\n(3)Example: X engages in the leased employee business in New Mexico. Under the terms of its contracts, X is primarily responsible and liable for payment of employee wages, all payroll taxes, employer contributions required under the Federal Insurance Contributions Act and for providing an employee benefits package which includes health insurance and other benefits as specified in each contract. If X fails to properly pay the payroll, payroll taxes or unemployment insurance or if X fails to comply with other administrative functions, X\u2019s client, as joint employer, is responsible for such compliance or payment. X has determined itself to be a \"joint employer\" as that term is used by the United States department of labor for the purpose of enforcing federal labor law. The client is also required to place a cash deposit to guarantee payment of the client's obligations under the contract. Every week each of X\u2019s clients is required to pay X the client\u2019s payroll obligation for the week plus an additional two percent (2%) as X\u2019s fee. X has no gross receipts from the amount representing the payroll obligation; this amount is not subject to the gross receipts tax. The additional two percent (2%), however is X\u2019s fee for performing employee leasing services and is subject to tax.\n(Emphasis is Manpower\u2019s.)\n. The regulation in pertinent part reads:\n(1) The receipts of any person received as a reimbursement of expenditures incurred in connection with the performance of a service or the sale or lease of property are gross receipts as defined by Subsection F of Section 7-9-3 NMSA 1978, unless that person incurs such expense as agent on behalf of a principal while acting in a disclosed agency capacity. An agency relationship exists if a person has the power to bind a principal in a contract with a third party so that the third party can enforce the contractual obligation against the principal.\n(2) Receipts from the reimbursement of expenses incurred as agent on behalf of a principal while acting in a disclosed agency capacity are not included in the agent's gross receipts if:\n(a) the agent accounts for such receipts in the agent\u2019s books and records as a reduction of the expense and not as revenue; and\n(b) the expenses are separately stated on the agent's billing to the client and are identified in the agent\u2019s books and records as reimbursements of expenses incurred on behalf of the principal party.\n(3) If these requirements are not met, the reimbursement of expenses are included in the agent's gross receipts.\n3.2.1.19(C) NMAC.\n. We seriously question whether the Department contemplated by Regulation 3.2.1.19(E)(2) a full-scale trial on whether employers are joint employers under federal labor law. It would appear that a DOL determination of joint employer status is the showing the Department has in mind. At the very least, something more than Manpower's listing of \"economic realities\u201d and calling our attention to fairly general DOL documents is required to establish joint employer status.",
        "type": "majority",
        "author": "SUTIN, Judge."
      }
    ],
    "attorneys": [
      "Curtis W. Schwartz, Timothy R. Van Valen, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Santa Fe, NM, for Appellant.",
      "Patricia A. Madrid, Attorney General, Bridget Jacober, Special Assistant Attorney General, Santa Fe, NM, for Appellees."
    ],
    "corrections": "",
    "head_matter": "2003-NMCA-021\n62 P.3d 308\nMPC LTD., d/b/a Manpower of New Mexico, a New Mexico corporation, Plaintiff-Appellant, v. NEW MEXICO TAXATION AND REVENUE DEPARTMENT, and T. Glenn Ellington, Secretary of the New Mexico Taxation and Revenue Department, Defendants-Appellees.\nNo. 22,158.\nCourt of Appeals of New Mexico.\nOct. 2, 2002.\nCurtis W. Schwartz, Timothy R. Van Valen, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Santa Fe, NM, for Appellant.\nPatricia A. Madrid, Attorney General, Bridget Jacober, Special Assistant Attorney General, Santa Fe, NM, for Appellees."
  },
  "file_name": "0217-01",
  "first_page_order": 249,
  "last_page_order": 258
}