April 18, 2012 – In re Protest of Barnesandnoble.com LLC, New Mexico Taxation and Revenue Department v. Barnesandnoble.com LLC, No. 31,231

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number:
Filing Date: 	April 18, 2012
NO. 31,231
IN THE MATTER OF THE PROTEST
OF BARNESANDNOBLE.COM LLC,
NEW MEXICO TAXATION AND REVENUE
DEPARTMENT,
Plaintiff-Appellant,
v.
BARNESANDNOBLE.COM LLC,
Defendant-Appellee.
APPEAL 	FROM 	THE 	NEW 	MEXICO 	TAXATION 	AND 	REVENUE
DEPARTMENT
Monica Ontiveros, Hearing Officer
Gary K. King, Attorney General
Santa Fe, NM
Tonya Noonan Herring, Special Assistant Attorney General
Santa Fe, NM
for Appellant

Brann & Isaacson
George S. Isaacson
David W. Bertoni
Lewiston, ME
Brownstein, Hyatt, Farber & Schreck, P.C.
Timothy R. Van Valen
Albuquerque, NM
for Appellee

OPINION
BUSTAMANTE, Judge.
{1} 	The New Mexico Taxation and Revenue Department (Department) issued an
audit assessment to Barnesandnoble.com LLC (Taxpayer) for gross receipts tax (GRT)
and interest in the amount of $534,563.11 for sales into New Mexico between January
31, 1998 and July 31, 2005 (the audit period). The sole issue on appeal is whether
the hearing officer correctly concluded that Taxpayer did not have a substantial nexus
with New Mexico, as required under the Commerce Clause of the U.S. Constitution.
Because we conclude that the in-state use of the Barnes & Noble trademarks was
sufficient to meet the constitutional standard, we reverse.
I. 	BACKGROUND
{2} 	After Taxpayer filed a timely protest, both parties moved for summary
judgment. The facts were not disputed, and the parties agreed that the GRT statute
applied to Taxpayer’s activities. However, Taxpayer argued that application of the
statute was unconstitutional because there was no substantial nexus between Taxpayer
and New Mexico. 	Department argued that the GRT statute applied to Taxpayer’s
sales and that the presence of Barnes & Noble Booksellers, Inc. (Booksellers) stores
in New Mexico created a sufficient nexus to permit the tax.

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A. 	Corporate Structure
{3} 	Taxpayer is a limited liability company organized under the laws of the State
of Delaware “with all of its operations, facilities, and personnel located outside of the
State of New Mexico.” 	Taxpayer maintained its own offices separate from those
occupied by other Barnes & Noble corporations. 	Taxpayer did not own or lease
property in New Mexico, had no retail stores within the state, and had no sales agents
or employees here.
{4} 	During the audit period, Taxpayer was at all times a wholly owned subsidiary
of barnes&noble.com, inc. The ownership of barnes&noble.com, inc. varied during
the period; however, at least 40% was owned by B&N.com Holding Corp. at all times.
B&N.com Holding Corp. was at all relevant times a wholly owned subsidiary of
Barnes & Noble, Inc. (Parent). It follows that during the audit period, Parent had an
interest of between 40% and 100% in Taxpayer.
{5} 	Parent also owned several other companies relevant to our discussion. Most
importantly, it owned Booksellers. Booksellers operates physical Barnes & Noble
book stores throughout the United States, including three stores in New Mexico.
Parent also owned Marketing Services (Minnesota) Corporation, Inc. (MSMC), which
provided gift card services to Taxpayer and Booksellers.

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B. 	In-state Activities
{6} 	Booksellers performed activities at its three in-state stores that Department
argues created a substantial nexus between Taxpayer and New Mexico. These include
the sales of gift cards, the loyalty program memberships, and a return policy that
allowed Booksellers to accept Taxpayer’s merchandise.
{7} 	Both Taxpayer and Booksellers, as well as other retailers, sold Barnes & Noble
gift cards. These gift cards could be redeemed either in-store or online. The gift card
program was run by MSMC. When Booksellers (or any other vendor) sold a card, it
received a small fee from MSMC, and it sent the proceeds from the sale to MSMC.
When a card was later redeemed by a customer, MSMC credited the value of the card
to the retailer who had honored it. The reverse side of the Barnes & Noble gift cards
displayed the address of Taxpayer’s website.
{8} 	Taxpayer and Booksellers also sold memberships to a loyalty program called
the “Readers’ Advantage Program.” Customers could purchase a membership in this
program for $25. Membership entitled customers to discounts at Booksellers’ stores
and online. Fees went to Parent, who administered the loyalty program and deducted
expenses from the fee income. Taxpayer and Booksellers each received a share of the
remaining fees that was based on the percentage of discounts they accounted for.

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{9} 	Bookstores also implemented an expansive return policy. 	Customers could
return salable items to Booksellers regardless of their origin. Booksellers provided
in-store credit (or, equivalently, gift cards that could only be used in the stores) for
such items. Customers could only return items for cash if they could produce a receipt
showing that the items had been purchased in-store. Taxpayer provided information
about Booksellers’ return policy on its website. Taxpayer’s website also provided a
store locator and descriptions of in-store events.
II. 	DISCUSSION
{10} 	Taxpayer prevailed below based on the hearing officer’s conclusion that there
was not a substantial nexus between Taxpayer and the State of New Mexico. 	The
hearing officer concluded that the activities of Booksellers “did not create and
establish and maintain a market for” Taxpayer. Department contends that the decision
was in error because “the activities of Booksellers, an in-state affiliate, with a physical
presence in this state, helped Taxpayer create, establish[,] and maintain a market in
New Mexico.” 	Taxpayer argues that the hearing officer did not err and that
imposition of the GRT would violate the Due Process Clause of the U.S. Constitution.
{11} 	This Court will set aside the ruling of a hearing officer in a tax appeal if the
ruling is found to be an abuse of discretion or if it is not in accordance with the law.
See NMSA 1978, § 7-1-25(C) (1989). “[T]he trial court abuses discretion when it

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applies an incorrect standard, incorrect substantive law, or its discretionary decision
is premised on a misapprehension of the law.” Aragon v. Brown, 2003-NMCA-126,
¶ 9, 134 N.M. 459, 78 P.3d 913. The sole question on appeal is whether the hearing
officer correctly applied the law to the facts when it determined that there was no
substantial nexus between Taxpayer and New Mexico. 	“[O]ur review of the
application of the law to the facts is conducted de novo.” 	State v. Elinski, 1997-
NMCA-117, ¶ 8, 124 N.M. 261, 948 P.2d 1209.
A. 	Commerce Clause
{12} 	We begin with Department’s argument that the hearing officer erred in
concluding that no substantial nexus existed to support the assessment of GRT against
Taxpayer. Department contends that a substantial nexus exists because (1) Taxpayer
and Booksellers had close corporate connections, (2) Taxpaper and Booksellers used
common trademarks and logos, and (3) Booksellers’ in-state activities helped
Taxpayer create and maintain a market in New Mexico. Taxpayer argues that it had
no contact with New Mexico and that Booksellers’ in-state activities should not be
considered because they were not undertaken on Taxpayer’s behalf.
{13} 	Our Supreme Court has set forth a two-part analysis to determine whether the
GRT applies in multi-state transactions:
First, we must engage in statutory interpretation to determine if the
Legislature intended to tax those receipts under the GRT. Second, if we

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conclude [in the affirmative], we must determine whether the tax violates
the Commerce Clause . . . of the United States Constitution.
Kmart Corp. v. Taxation & Revenue Dep’t, 2006-NMSC-006, ¶ 11, 139 N.M. 172,
131 P.3d 22. 	In the instant case, the parties have stipulated that Taxpayer sold
property in New Mexico that is subject to the GRT. 	The sole issue on appeal is
whether such a tax violates the Commerce Clause.
{14} 	It is well settled that under the Commerce Clause, a tax may not be applied to
an activity absent a substantial nexus with the taxing state. Dell Catalog Sales L.P.
v. Taxation & Revenue Dep’t, 2009-NMCA-001, ¶ 40, 145 N.M. 419, 199 P.3d 863
(citing Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977)). 	In Quill
Corp. v. North Dakota, 504 U.S. 298, 317 (1992), the Supreme Court reaffirmed the
bright-line rule from National Bellas Hess, Inc. v. Department of Revenue, 386 U.S.
753 (1967), that a seller must have a physical presence in a state in order to satisfy the
substantial nexus requirement. 	The physical presence requirement is met when
“activities performed in this state on behalf of a taxpayer are significantly associated
with the taxpayer’s ability to establish and maintain a market in the taxing state for the
sales.” Dell, 2009-NMCA-001, ¶ 43 (quoting Tyler Pipe Indus., Inc. v. Wash. State
Dep’t of Revenue, 483 U.S. 232, 250 (1987) (alteration and emphasis omitted)).
{15} 	The threshold for establishing a physical presence is not high. It can result from
the presence of a single employee. See Standard Pressed Steel Co. v. Wash. Dep’t of

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Revenue, 419 U.S. 560, 561-64 (1975) (rejecting a commerce clause challenge to a tax
on an out-of-state corporation that employed a single person in-state). 	It does not
depend on whether the individual is classified as an employee or an independent
contractor. See Tyler Pipe Indus., Inc., 483 U.S. at 249-51; Scripto, Inc. v. Carson,
362 	U.S. 	207, 	211 	(1960) 	(concluding 	that 	whether 	in-state 	salesmen 	were
independent contractors or employees was “without constitutional significance”). It
can be established by the presence of in-state offices even when the activities of those
offices are not related to the in-state activity being taxed. Nat’l Geographic Soc’y v.
Cal. Bd. of Equalization, 430 U.S. 551, 561 (1977) (“[T]he relevant constitutional test
to establish the requisite nexus for requiring an out-of-state seller to collect and pay
the use tax is not whether the duty to collect the use tax relates to the seller’s activities
carried on within the [s]tate, but simply whether the facts demonstrate some definite
link, some minimum connection, between the [s]tate and the person it seeks to tax.”
(alteration, internal quotation marks, and citation omitted)).
{16} 	This Court has had the opportunity to apply both Scripto and Tyler Pipe. In
Dell, we addressed the question of “the extent to which a third party . . . can establish
a substantial nexus on behalf of [an] out-of-state business.” 2009-NMCA-001, ¶ 43.
Dell took mail and internet orders for computers from its location in Texas and
delivered the computers to New Mexico customers via common carrier. Id. ¶ 4. Dell

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had no property, stores, sales agents, or employees in New Mexico. Id. ¶ 2. However,
Dell did hire a third-party corporation to service machines in New Mexico. Id. ¶ 7.
Consumers purchased service contracts through Dell. 	Id. ¶ 8. 	When they needed
service, they made service requests through Dell. Id. ¶ 9. Complaints about service
were also registered through Dell. Id. ¶ 12.
{17} 	We began by recognizing that the Supreme Court had carved out a “safe
harbor” protecting “out-of-state vendors whose only connection with the state seeking
to impose taxation was the shipping of goods into the state by mail or common
carrier.” Id. ¶ 42. However, we observed that in Scripto and Tyler Pipe, the Supreme
Court had held that the activities of third parties performed in-state were sufficient to
create a substantial nexus. Dell, 2009-NMCA-001, ¶¶ 44-45. In Dell, technicians had
been dispatched on 1273 service calls in New Mexico. Id. ¶ 49. The hearing officer
found that the availability of in-home service was a significant factor in establishing
a market for Dell sales and that about 75% of Dell’s New Mexico customers had
purchased a service contract. 	Id. ¶ 48. Because the service calls performed by the
third-party provider on behalf of Dell helped establish and maintain a market for Dell
computers, we concluded that a substantial nexus existed. See id. ¶ 51.
1. 	Physical Activities in State

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{18} 	With these cases in mind, we proceed to Department’s argument that
Booksellers helped Taxpayer create and maintain a market in New Mexico.
Department identifies four types of activities it alleges helped Taxpayer create and
maintain a market: (1) that Taxpayer “advertised Booksellers’ physical locations and
events happening in Booksellers’ retail stores” on its website, (2) that Taxpayer
discussed Booksellers’ return policy on its website, (3) that both Taxpayer and
Booksellers participated in a loyalty program, and (4) that both Taxpayer and
Booksellers sold gift cards that could be redeemed at either business. Taxpayer argues
that it had no contact with New Mexico and that none of Booksellers’ in-state
activities were undertaken on its behalf.
a. 	Store Finder and Return Policy
{19} 	We begin with the portions of Taxpayer’s website allowing users to find
Booksellers’ stores and listing events at Booksellers’ stores. We do not believe that
the transmission of this information was an activity that physically occurred within
the State of New Mexico. In addition, this information was not provided on behalf of
Taxpayer. Instead, Taxpayer was paid to provide this information on behalf of Parent.
As the website had no physical connection to New Mexico and the information was
not provided on behalf of Taxpayer, it could not have contributed to the creation of
a substantial nexus.

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{20} 	A similar analysis applies to the portion of Taxpayer’s website that discussed
Booksellers’ return policy. The posting of this information on Taxpayer’s website
was not a physical activity that took place within the state. However, Department asks
us to conclude that Booksellers’ policy, which allowed customers to return books
purchased from Taxpayer for in-store credit useable only at Booksellers, created or
helped create a substantial nexus between Taxpayer and New Mexico. This we cannot
do. 	First, the record contains no evidence that any customer ever returned a book
purchased from Taxpayer to any of Booksellers’ New Mexico stores. 	Second,
Booksellers’ return policy did not give preference to Taxpayer. 	Customers could
return salable books and other merchandise regardless of where they were originally
acquired. Customers returning items were given gift cards or credits usable only at
Booksellers’ stores. 	Booksellers was not obligated to return or report on books
originally purchased from Taxpayer. 	Indeed, since no receipt was required,
Booksellers generally would not have known where the books had been originally
purchased.
{21} 	We are not persuaded by Department’s argument that the return policy in this
case is analogous to Borders Online, LLC v. State Board of Equalization, 29 Cal. Rptr.
3d 176 (Ct. App. 2005). Unlike the instant case, the return policy in Borders Online
treated Borders customers preferentially. 	Id. at 182. 	The Borders Online court

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distinguished SFA Folio Collections, Inc. v. Tracy, 652 N.E.2d 693 (Ohio 1995),
where “returns were accepted according to the department store’s own policy for its
own benefit and for the convenience of its customers.” Borders Online, 29 Cal Rptr.
3d at 191. The same distinction applies here—Booksellers accepted returns without
receipts for its own benefit, not on behalf of Taxpayer or any other third party. We
cannot disagree with the hearing officer’s conclusion that the return policy does not
establish a substantial nexus.
b. 	Gift Cards
{22} 	The gift card sales present a closer question. There are two relevant scenarios.
In the first scenario, customers purchase a gift card from Taxpayer and redeem it in-
state at Booksellers. Taxpayer receives a fee from MSMC for selling the card and
Booksellers receives from MSMC the amount redeemed from the card. This scenario
does not create a nexus because Taxpayer performs no activity in-state and
Booksellers’ redemption of the card does not benefit Taxpayer. 	In the second
scenario, customers purchase a card in-state from Booksellers and redeem it online
from Taxpayer. Booksellers receives a fee from MSMC and Taxpayer receives from
MSMC the amount redeemed. Booksellers’ act of selling the gift card does result in
a sale for Taxpayer, but this result is incidental. 	Booksellers has no control over
where a gift card purchaser will redeem a card. To the extent that Booksellers can

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control where cards will be used, we have no doubt that it would prefer the customers
to use the gift cards in one of its stores, thereby generating additional profits. Under
these circumstances, we cannot say that the hearing officer abused her discretion in
concluding that the gift cards did not create a substantial nexus.
c. 	Readers’ Advantage Loyalty Program
{23} 	The final and most difficult issue is the loyalty program. Both Taxpayer and
Booksellers sold $25 annual memberships to a loyalty program called the “Readers’
Advantage Program.” 	Members were provided discounts in stores and online.
Although the record is silent on the issue, we presume that the purpose of the program
was to encourage consumers, by means of a discount, to make purchases at Barnes &
Noble stores and online that they would otherwise have made at competing retailers.
{24} 	The loyalty program is analogous to the gift card program, if less intuitively
obvious. Like the gift cards, loyalty program discounts could be used either in-store
or online. 	As with the gift cards, Booksellers would prefer customers to use the
discounts in-store, since this would increase both sales and the amount of the post-
expenses membership fees it eventually received. 	The two differ in one respect:
whereas the gift card created an incentive to spend the face value of the gift card at a
store or online, members of the loyalty program had an incentive (the discount) to
prefer Barnes & Noble over other retailers. This incentive was designed to capture

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sales that might otherwise have gone to other vendors, thus increasing the market for
Barnes & Noble affiliates, including Taxpayer, in New Mexico.
{25} 	The loyalty program could reasonably be viewed in one of two ways. First, the
hearing officer could have concluded that Booksellers’ sales of loyalty program
memberships did not directly produce revenues to Taxpayer by means of sales made
or orders taken in-state by Booksellers. 	See St. Tammany Parish Tax Collector v.
Barnesandnoble.com, 481 F. Supp. 2d 575, 581 (E.D. La. 2007) (Order and Reasons).
This appears to be the course the hearing officer actually followed. 	[See RP 33]
Alternatively, the hearing officer could have concluded that the effect of the program
was to increase Taxpayer’s sales in New Mexico. The hearing officer did not reach
this conclusion. We view this as a close question and conclude that the hearing officer
could have reached either conclusion without abusing her discretion.
{26} 	Looking to all four activities, we cannot say that the hearing officer abused her
discretion in concluding that there was not a substantial nexus between Taxpayer and
New Mexico. Taxpayer’s inclusion of a store finder on its website was not done in-
state and cannot be considered. 	Because Booksellers’ return policy was not
preferential to Taxpayer, it was not done on behalf of Taxpayer. The hearing officer
could have concluded either way with respect to the gift cards and the reader loyalty
program; however, especially given the absence in the record of any indication of the

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impact of these programs on Taxpayer’s sales, we conclude that there was no abuse
of discretion in the hearing officer’s conclusion that these programs did not create a
substantial nexus between Taxpayer and the State of New Mexico.
2. 	Trademark
{27} 	The abuse of discretion discussion does not end our analysis, for we may also
reverse if the hearing officer’s ruling is not in accordance with the law. Department’s
second argument is that Taxpayer’s use of shared marketing, name recognition, and
trademarks and logos created and established a market in New Mexico. 	Taxpayer
responds that Department did not cite, nor was Taxpayer aware of, any case “finding
that the use of a common or similar corporate logo created a ‘substantial nexus’ for
an out-of-state retailer.” Taxpayer also contends that Booksellers’ use of the Barnes
& Noble trademarks in-state was not done on behalf of Taxpayer. We conclude that,
as a matter of law, the manner in which the Barnes & Noble trademarks were used by
Booksellers in New Mexico was sufficient to create a substantial nexus.
{28} 	This Court has previously held that the tangible use of trademarks at stores in
New Mexico is “the functional equivalent of physical presence.” Kmart Props. Inc.
v. Taxation & Revenue Dep’t (KPI), 2006-NMCA-026, ¶ 39, 139 N.M. 177, 131 P.3d
27. In KPI, the Kmart Corporation transferred the rights in its trademarks to a holding
company in Michigan. The holding company then granted to Kmart the exclusive

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right to use the Kmart trademarks in the United States in return for 1.1% of Kmart’s
revenues. 	Id. ¶ 3. 	When New Mexico assessed the GRT against the holding
company, the holding company protested, arguing that the assessment of the GRT
against it was unconstitutional because there was no substantial nexus between it and
the State of New Mexico. Id. ¶¶ 5-6, 10.
{29} 	We acknowledged that the holding company in KPI “lack[ed] the usual indicia
of physical presence described in Quill.” KPI, 2006-NMCA-026, ¶ 25. However, we
reasoned that the physical presence requirement could be satisfied if “the nature of
trademarks and [the holding company’s] relationship with Kmart Corporation within
New Mexico . . . constitute[d] physical presence or its functional equivalent.” 	Id.
(emphasis added). 	Observing that “a trademark, and its goodwill, are inseparable
property rights that, as a practical matter, are bound to the business that generates the
goodwill,” id. ¶ 26, we turned our attention to the close relationship between goodwill
and the physical business.
When a company acquires trademarks and goodwill, the essence
of what it obtains is the right to inform the public that it is in possession
of the special experience and skill symbolized by the name of the
original concern, and of the sole authority to market its products. 	The
value of what it obtains is tied to the underlying business that generates
the goodwill associated with the trademarks. If there is no business and
no good will, a trademark symbolizes nothing. Goodwill is bound to the
business with which it is associated, and can no more be separated from
a business than reputation from a person.

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Id. ¶ 27 (internal quotation marks and citations omitted).
{30} 	Given the facts in KPI and the close relationship between goodwill and
conducting business, we concluded that Kmart Corporation and the holding company
were “corporate ‘Siamese Twins,’ inextricably bound to each other.” Id. ¶ 28. The
holding corporation needed access to the physical stores to maintain the goodwill
behind its trademarks, and the stores needed to use the trademarks to differentiate
themselves from other general merchandising stores. 	Id. 	Furthermore, “Kmart
customers . . . had no way of knowing that they were dealing with representatives of
[the holding company’s] goodwill; apparently few people were actually aware that
[the holding company], and not Kmart Corporation, owned the [trademarks] and
associated goodwill.” Id. ¶ 30. The nature of trademarks meant that the two could not
be separated. We therefore concluded that the combination of Kmart Corporation’s
stores in New Mexico and the tangible presence in New Mexico of the trademarks
owned by the holding company was “the functional equivalent of physical presence
as afforded by the independent representatives in Scripto and Tyler Pipe” and that the
imposition of the GRT on the out-of-state holding company was constitutionally
sound. See KPI, 2006-NMCA-026, ¶ 39.
{31} 	Our Supreme Court ultimately reversed our opinion in KPI, concluding that the
GRT statute did not apply to the licensing transaction at issue in that case. Given the

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statutory basis for its decision, the Supreme Court did not find it necessary to reach
the constitutional question. Nevertheless, we regard then-Judge Bosson’s analysis of
the constitutional issues as persuasive. 	As we discuss below, pursuant to Judge
Bosson’s reasoning in KPI, Booksellers’ in-state activities performed under the banner
of the Barnes & Noble trademarks were sufficient to create a nexus between
Booksellers and College Bookstores, the owner of the trademarks. In the instant case,
however, we must go one step further, and decide whether Department may impute
the in-state activities of one licensee (Booksellers) of the Barnes & Noble trademarks
to another licensee (Taxpayer) who used the Barnes & Noble trademarks to make
internet sales to residents of New Mexico.
{32} 	We begin with the most obvious in-state activity: Booksellers’ operation of
three stores in New Mexico. As in KPI, Booksellers’ in-state activities of running
retail stores strengthened the goodwill behind the Barnes & Noble trademarks.
Booksellers used the Barnes & Noble trademarks on and in its stores. By doing so,
Booksellers personified the goodwill owned by College Bookstores and facilitated
sales in New Mexico. See id. ¶ 30. Under the reasoning of Kmart, this activity cannot
be separated from College Bookstores’ ownership of the trademarks.
{33} 	Because consumers expect to be able to find businesses on the internet, some
of this goodwill inevitably accrues to Taxpayer. “[C]onsumers increasingly rely [on

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goodwill] to locate the true source of genuine goods and services on the Internet.” S.
Rep. No. 106-140, at 5 (1999). Booksellers’ customers “had no way of knowing that
they were dealing with representatives of [College Bookstore’s] goodwill,” KPI,
2006-NMCA-026, ¶ 30, or that different corporate entities represented the goodwill
of College Bookstore’s Barnes & Noble trademarks on the internet and in physical
stores. In fact, consumers saw only one entity: Barnes & Noble. Just as the goodwill
generated by in-state business in KPI could not be separated from ownership of those
trademarks, we believe that it is not possible to separate the goodwill generated by
Booksellers’ in-state stores into physical and internet components.
{34} 	In addition to the vicarious accrual of goodwill to Taxpayer by virtue of
Booksellers’ stores in New Mexico, additional activities at the physical stores directly
increased goodwill for Taxpayer’s website. 	As noted above, the stores sold and
accepted gift cards displaying the Barnes & Noble trademarks. These cards indicated
that they could be redeemed at either the physical stores or through the Barnes &
Noble website. 	Similarly, the stores sold and honored Readers’ Advantage
memberships. The memberships entitled customers to discounts at the stores and at
the Barnes & Noble website. We have decided that these activities standing alone do
not create a sufficient nexus. 	But viewing them as cross-marketing activities
performed at in-state stores and explicitly mentioning the Barnes & Noble website—in

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the context of creating and enhancing goodwill not only for the Barnes & Noble
trademarks but explicitly for Taxpayer’s web business—they are probative.
{35} 	By licensing the trademarks to Taxpayer and Booksellers, College Bookstores
was in effect telling customers to consider Taxpayers and Booksellers to be one and
the same. 	The goodwill developed both directly, by in-store activities promoting
Taxpayer’s website, and indirectly, by consumers’ increased awareness of Barnes &
Noble due to the presence of in-state stores, helped to establish and maintain a market
in New Mexico for Taxpayer. This created a substantial nexus between Taxpayer and
New Mexico sufficient to support the imposition of the GRT.
B. 	Due Process and the State Rules Act
{35} 	Taxpayer asserts that even if the GRT is constitutional as applied in this case,
imposition would nevertheless violate its due process rights and would violate the
state rules act. This argument has no merit.
{36} 	Throughout this litigation, Taxpayer’s position has been that it was not required
to pay the GRT because the constitutional requirement of substantial nexus between
it and New Mexico was not met. As the hearing officer noted, “[i]f ‘substantial nexus’
is found, . . . Department and Taxpayer have stipulated that there were net taxable
sales of property in New Mexico . . . and gross receipts tax would be due on the
sales.” Taxpayer can hardly stipulate that the GRT applies and then argue that it was

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not clear that the GRT applied. 	And although Taxpayer has cited cases for the
proposition that vague statutes and rules may violate due process, see Old Dearborn
Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 145-46 (1936), it has
pointed to no authority suggesting that due process is violated when a question of
constitutional law is resolved against it.
{37} 	Taxpayer also suggests that the state rules act bars Department from applying
the GRT against it. 	The basis for this argument is the assertion that “[w]hen an
agency seeks to expand the reach of a statute to situations that are not reasonably
apparent from its terms, it must engage in rulemaking.” However, Taxpayer provides
no authority to support this assertion. In re Adoption of Doe, 100 N.M. 764, 765, 676
P.2d 1329, 1330 (1984) (stating that absent cited authority to support an argument, we
assume no such authority exists.). We therefore decline to address this argument.

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III. 	CONCLUSION
{38} 	For the foregoing reasons, we reverse the order granting summary judgment and
remand for further proceedings consistent with this Opinion.
{39} 	IT IS SO ORDERED.
MICHAEL D. BUSTAMANTE, Judge
WE CONCUR:
RODERICK T. KENNEDY, Judge
MICHAEL E. VIGIL, Judge