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Orders are written statements to implement a decision after a Department administrative hearing. 

A taxpayer may file an appeal with the New Mexico Court of Appeals within 30 days after the date of the decision. Appeals are decided based on the evidence and arguments presented at the administrative hearing. 

All Posts > 2005



Richard S. Giron

The Department assessed the taxpayer for personal income tax for 2000 and 2001, based upon information from the IRS regarding underreporting of income.  The taxpayer protested the assessment, claiming that it violated the statute of limitations and that disclosure agreements with the IRS were invalid.  The hearing officer found both arguments, and the taxpayer’s additional points, to be without merit.  The taxpayer also failed to provide any financial records or other evidence to rebut the Department’s assessments.  The taxpayer failed to appear at his hearing, at which his protest was denied.



Bruce A. Kelly

The taxpayer protested an assessment of gross receipts tax that was based on the business income reported on his 2001 federal income tax return.  The taxpayer, who engaged in the business of home repair, purchased materials under his own name.  Upon completion of a job, he charged the home owner based on time worked plus the cost of materials.  The taxpayer argued that he was exempt from gross receipts tax because he was acting as an employee and not as an independent contractor.  He also argued that he should not be taxed on receipts attributable to the cost of materials because he paid tax at the time of purchase and did not add a mark-up when billing his clients.  The hearing officer found that the taxpayer did not fall within the statutory definition of an employee and was, in fact, doing business as an independent contractor.  The hearing officer also found that taxation of the taxpayer’s total receipts, including the cost of materials, did not result in double taxation.  The protest was denied.



Donald Barnes

The taxpayer protested an assessment of 1999 personal income tax that was based on information the Department received from the IRS.  The taxpayer argued that his income did not fit the definition of “gross income” defined in the Internal Revenue Code; that only the Secretary of the United States Treasury had authority to determine the taxpayer’s liability for state tax; and that the information exchanged between the IRS and the Department was based upon fraud and errors.  The Department moved for summary judgment, and the taxpayer failed to file a response.  The hearing officer granted the Department’s motion, finding that the taxpayer’s first argument resulted from an erroneous reading of the Internal Revenue Code; that there was no legal authority to support the taxpayer’s argument that only the Secretary of the Treasury may determine and assess New Mexico personal income taxes; and that the information exchange agreement between the Department and the IRS met statutory requirements.  The taxpayer’s protest was denied.



Richard Sanchez

After being selected for audit by the Department, the taxpayer failed to respond to repeated requests for his tax records.  The auditor then determined the taxpayer’s liability for CRS taxes based on his 1998, 1999, and 2000 federal income tax returns.  Because the taxpayer did not file income tax returns for 2001 or 2002, gross receipts for those years were determined based on receipts reported for the previous three years.  Following the audit, the Department assessed the taxpayer for the period 1998-2002.  The taxpayer protested, arguing that the Department’s method of determining his CRS liability was unreliable because it was based on estimates.  The hearing officer noted that the assessment of taxes for the first three years was based on actual receipts reported as business income on the taxpayer’s federal income tax returns and that the estimate for later years was reasonable given the taxpayer’s failure to provide any records or credible evidence concerning his receipts.  The protest was denied.



Daniel C de Baca

In 2005, the Department assessed the taxpayer for additional 2001 personal income tax, plus interest, which was due as the result of an error the taxpayer made in completing his return.  The taxpayer paid the assessed tax but protested the interest, arguing that the Department waited too long to issue its assessment and that the 15 percent interest rate is too high and does not reflect market rates.  The hearing officer denied the protest, finding that the assessment was issued within the three-year limitations period provided by Section 7-1-18 NMSA 1978 and that the Department has no discretion to change the interest rate set statutorily by the New Mexico Legislature.



United Drilling

The taxpayer’s accounting firm used an incorrect account number when transmitting information for the taxpayer’s ACH transfer for the October 2004 reporting period.  The taxpayer’s bank rejected the payment, though a bank employee had corrected the same erroneous account number on transfers for previous CRS reporting periods.  After noting that the payment had not cleared the taxpayer’s account, the accounting firm called the Department and was told that the taxpayer had no outstanding tax liability.  Approximately three weeks later, the Department assessed the taxpayer for unpaid CRS taxes resulting from the rejected ACH transfer, plus penalty and interest.  The taxpayer waited almost two months before paying the tax principal assessed and protested the assessment of penalty and interest.  The hearing officer denied the protest, finding no legal grounds for abatement.



Jo Ann Stockton

Based upon information provided by the Internal Revenue Service, the Department assessed the taxpayer for $330.00 of 1999 personal income tax, plus penalty and interest.  The taxpayer protested the assessment and the tax lien subsequently filed by the Department.  The protest addressed five issues:  1) whether the IRS’s disclosure of information met the requirements of 26 U.S.C. § 6103, 2) whether the IRS’s Revenue Agent Report had to be signed under penalty of perjury pursuant to the provisions of 26 U.S.C. § 6065, 3) whether the taxpayer’s wage income was subject to personal income tax, 4) whether the Department’s Claim of Lien was valid, and 5) whether Department employees must file a surety bond with the New Mexico Secretary of State before they may legally execute their duties as state employees.  The hearing officer found in the Department’s favor on all five issues and denied the protest.



Sterling Kennedy

In July 1997, the Department filed a tax lien on the taxpayer’s property based on personal income tax assessments issued in 1992 and 1993.  In 2003, the taxpayer asked the Department to release the lien.  The Department refused, and the taxpayer protested, claiming that the lien should be released because Section 7-1-19 NMSA 1978 prevented the Department from taking any action to foreclose the tax lien.  The hearing officer denied the protest, finding that Section 7-1-39, rather than Section 7-1-19, sets out the statutory prerequisites for releasing or extinguishing tax liens.



Yvonne Barnum

The taxpayer performed consulting and quality assurance services in New Mexico as a subcontractor.  The taxpayer did not realize that she was subject to New Mexico gross receipts tax on the receipts from her services.  She did not consult with her accountant or with the Department and did not obtain an NTTC from the company that resold her services in New Mexico.  As a result of an information-sharing program with the IRS, the Department assessed the taxpayer for gross receipts tax, penalty, and interest.  The taxpayer protested the assessment, claiming that she was not liable for gross receipts tax because:  her services were sold for resale; she worked as an employee; the Department never notified her of the requirement to pay gross receipts tax; and the Department abated an assessment of gross receipts tax against another, similarly situated taxpayer.  The hearing officer denied the protest, finding that the taxpayer’s receipts from performing services in New Mexico were subject to gross receipts tax and that the taxpayer failed to meet her burden of establishing her entitlement to any statutory exemptions or deductions.



Raul & Antonieta Arizpe

The taxpayers are Texas residents.  During tax year 2004, Ms. Arizpe had substantial gamblings winnings and losses from a casino located in New Mexico.  On their 2004 income tax returns, which were prepared by a Texas office of H&R Block, the taxpayers listed the gambling winnings the casino reported on Form W-2G as income and claimed an equal amount of gambling losses as an itemized deduction.  On their New Mexico return, the taxpayers failed to allocate the gambling winnings to New Mexico, but claimed a refund for the entire $11,252 of tax withheld by the casino.  The Department denied the refund, citing insufficient substantiation of the claimed losses.  The taxpayers protested the denial and, at the hearing on their protest, presented evidence that established approximately one-half of the gambling losses claimed on their income tax return.  The hearing officer granted a portion of the taxpayers refund based on this evidence, but denied the balance of the refund due to a lack of evidence.



Kevin’s Kustom Welding

When the taxpayer started his business, he called the Department to ask whether he was required to use NTTCs.  A Department employee explained that NTTCs would allow the business to purchase materials without paying the supplier’s passed-on cost of gross receipts tax, but that use of NTTCs was voluntary.  The taxpayer incorrectly assumed, but did not verify with the Department, that choosing not to use NTTCs when purchasing materials would relieve the taxpayer from paying gross receipts tax on his resale of the materials.  When billing customers, the taxpayer separated the cost of materials from the cost of labor and charged gross receipts tax only on his labor.  In 2004, the Department assessed the taxpayer for additional gross receipts tax (plus interest) due on his receipts from the resale of materials.  The taxpayer protested the assessment, arguing that it resulted in double taxation and that he had been misled by the Department employee who told the taxpayer that use of NTTCs was voluntary.  The hearing officer denied the protest, finding that there was no double taxation and that the information provided by the Department employee concerning the use of NTTCs was correct.  



Errol Chaisson

In August, 1999, the taxpayer filed an amended 1997 New Mexico personal income tax return reporting a refund due and requesting that the amount be refunded directly to him.  Three days later, the taxpayer filed a second amended 1997 return, claiming a slightly larger refund and asking that the refund amount be applied to tax year 1998.  The taxpayer then filed his 1998 New Mexico personal income tax return showing the refund amount from his second amended 1997 return as a payment against his 1998 tax liability.  The taxpayer subsequently received a check for the refund amount requested on his first amended 1997 return and deposited it in his account.  The taxpayer did not check the refund against his 1997 returns and failed to realize that accepting the cash refund requested in his first amended return would nullify the request in his second amended return that this same amount be applied to the 1998 tax year.  In 2002, the Department assessed the taxpayer for the resulting underpayment of his 1998 income tax, plus penalty and interest.  The taxpayer protested the penalty and interest, arguing that the Department should have applied his 1997 refund to his 1998 taxes.  The hearing officer denied the protest, finding that the taxpayer was responsible for any confusion created by his conflicting 1997 income tax returns and that interest and penalty were properly assessed pursuant to Sections 7-1-67 and 7-1-69 NMSA 1978.  ?



Garcia’s Kitchen

During the calendar year 2003, the taxpayer’s average monthly payment of gross receipts, compensating and withholding taxes exceeded $25,000.  On December 15, 2003, the Department mailed a notice to the address shown in the taxpayer’s registration record advising the taxpayer that it was now required to submit its 2004 CRS taxes using one of the special payment methods set out in Section 7-1-13.1 NMSA 1978.  Due to a relocation of its business offices, the taxpayer did not receive the notice and continued mailing its CRS reports as in the past.  Because statute requires checks of special payment taxpayers to be received by the Department at least one banking day prior to the statutory due date, the taxpayer’s CRS payments for several months during 2004 were late, resulting in assessments of penalty and interest.  A refund requested by the taxpayer in September, 2004, was granted, but the Department offset the refund against the assessed penalty and interest.  The taxpayer protested the refund offset.  The hearing officer denied the protest, finding that the fact that the taxpayer did not receive the Department’s notice of special payment obligation did not excuse the taxpayer from compliance, and the Department was authorized to offset the refund.



DePuy, Inc.

In 2000, DePuy, Inc., filed a New Mexico corporate income tax return for 1999 on a unitary domestic combined basis, as it had in previous years.  The return requested a refund of nearly $80,000.  In 1998, Johnson and Johnson, Inc., acquired DePuy. After Johnson and Johnson told DePuy that it should file on a separate entity basis, DePuy filed an amended return for 1999 on that basis. In 2002, DePuy sent a letter formally requesting permission to change its filing status from unitary domestic combined to separate entity, beginning with the 1999 tax year.  In February, 2004, DePuy received a letter from the Department granting permission to file as a separate corporate entity, beginning with the 1999 tax year.  DePuy resubmitted its amended 1999 corporate income tax return, showing a refund due of $79,241.  The Department denied the refund because DePuy’s amended returns were resubmitted after expiration of the three-year limitations period set by Section 7-9-26 NMSA 1978.  DePuy protested the refund denial.  The hearing officer denied the protest, finding that the Department’s February, 2004, letter giving DePuy retroactive permission to change to separate entity filing was effective for all years still within the statutory limitations period, but the amended 1999 returns DePuy filed in 2004 were beyond that period.



Derek V. Larson

The taxpayer, a New Mexico resident, made out-of-state purchases of a car and a travel trailer and brought both back to be titled and registered in New Mexico.  At the time of titling and registration, the taxpayer paid New Mexico motor vehicle excise tax.  He then submitted requests for refund of the tax, and, when the requests were denied, protested the denials, claiming that vehicles purchased outside New Mexico are not subject to New Mexico motor vehicle excise tax when they are titled and registered in this state.  The hearing officer denied the protests, finding that, except for specifically stated exemptions, the Motor Vehicle Excise Tax Act imposes on every applicant for a New Mexico certificate of title an excise tax equal to three percent of the price paid for the vehicle, including vehicles purchased outside the state.

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