V. Phillip and Peggy J. Soice

06-12

The Taxpayers unintentionally filed erroneous federal and state personal income tax returns for tax years 1998-2004.  The error resulted from a misreading of the W-2 forms their CPA prepared for the Taxpayers’ wholly-owned S corporation.  In 2005, the Taxpayers discovered the error and filed corrected returns, with payment of the additional tax due.  After receiving the returns, the Department assessed the Taxpayers for penalty and interest on their late payments.  The Taxpayers protested the assessments and subsequently filed a claim for refund of the tax principal paid for years that were beyon the three-year limitations period set out in NMSA 1978, § 7-1-18.  The refund was denied and the Taxpayers protested.  Held:  The limitations period in § 7-1-26 applies to assessments issued by the Department and not to the Taxpayers’ own self-assessments.  Because the taxes were due and owing to the state, there is no basis for a refund.  The Taxpayers’ erroneous reading of their W-2 forms and failure to consult with the CPA who prepared the forms was negligent, and penalty and interest were properly imposed.  The Taxpayers’ protest is denied.     ?