Jennifer A Skeet

19-28

On December 18, 2018, the Department issued an assessment to the Taxpayer for personal income tax, penalty, and interest. On January 15, 2019, the Taxpayer protested the assessment providing documentation as support. The issue to be determined in the case was whether the Taxpayer could claim the exemption from personal income tax for members of an Indian Nation, tribe, or pueblo who earn income and live on tribal land. There was no dispute regarding the key facts which were requirements for the Taxpayer to qualify for the exemption. The Taxpayer was both a member of the Navajo Nation and earned income on Navajo land. The area of dispute was only whether the Taxpayer met the requirement to live within the boundaries of the Navajo Nation. The Taxpayer owned a house in Albuquerque but during the week worked and stayed within the Navajo Nation in Arizona. The Department contended that since the Taxpayer owned a home in Albuquerque which she returned to each week, this was her domicile and outside the boundaries of the tribal land. The Department was able to show too that the Taxpayer met many of the factors for determining domicile, including that it was where she maintained a fixed permanent residence and the place she returned to after work. The Taxpayer, however, argued that the majority of her time in the tax year in question was spent in the Navajo Nation, since she stayed there during the week. She also argued that her domicile in New Mexico was not pertinent to deciding if she qualified for the exemption. The Hearing Officer agreed, explaining that domicile or residency is never used in the statute providing for the exemption but only states that the individual must live within the boundaries of tribal land. Previous decisions cited by the Hearing Officer showed that there was no definition, standard, or test to determine what was meant to live within the boundaries of tribal land, though weight was given to a continuing physical presence. Other decisions in similar cases did not look to where the tribal member resided but where they worked. Since the Taxpayer physically spent most of the tax year living on tribal land, the Hearing Officer determined that she qualified for the exemption and ordered that the assessment abated and the protest granted.