Jack and Karen Dill

17-42

On April 18, 2017, the Department issued a return adjustment notice for personal income tax. On April 28, 2017, the Taxpayer filed a formal protest with the Department. For the tax year at issue, the Taxpayer performed remote work for a company based in New Mexico. The Taxpayer resided in the states of Indiana and New Jersey. The Taxpayer estimated that during the 2016 tax year he was present in the state of New Mexico for approximately 88 days or 24 percent of the year. Based on this calculation, the Taxpayer allocated his income from the New Mexico based company. The Taxpayer relied on information in the statute and the PIT-B instructions to determine how the income from wages should be allocated. The Department adjusted the return to fully allocate the wages from the New Mexico based company to New Mexico for tax purposes and sent out the adjusted refund to the Taxpayer. The Department agreed that the Taxpayer was not a resident of New Mexico during the time at issue. However, the Department asserted that 100 percent of the wages reported by the New Mexico based company were taxable because the Taxpayer was employed in New Mexico. The Hearing Officer determined that the Taxpayer overcame the presumption of correctness and established entitlement to the original refund claimed. The Taxpayer was entitled to apportion and allocation of income based on the percentage of the wages that was made while within the state pursuant to Section 7-2-11(A)(4) NMSA 1978. For the reasons above, the Taxpayer’s protest is granted.