Thomas J. Nagle

11-21

The Taxpayer and his former wife failed to file a personal income tax return by April 16, 2007 for tax year 2006.  On March 29, 2010, the Department assessed the Taxpayer for personal income tax, penalty and interest.  On April 21, 2010, the Taxpayer filed a written protest to the assessment.  The Department’s assessment was based on a tape match in which wage information was provided by the Department of Labor.  This information did not include how much state income tax was withheld from the wages.  The Taxpayer provided the Department with a wage statement or pay stub from December 15, 2006 indicating his year-to-date state withholding.  The Department provided the Taxpayer with a credit for the amount indicated on the wage statement.  On August 30, 2011, the Taxpayer filed a return for tax year 2006.  The Department agreed to all the amounts on the return except for the amount of New Mexico income tax claimed to be withheld, with exceeded the amount shown on the statement the Taxpayer had provided to the Department.  The Taxpayer argued that this included withholding for his ex-wife and withholding for a two week period.  W-2s could not be found for the Taxpayer or his ex-wife.  The Taxpayer did not dispute that he owed the tax shown on the return he filed, plus penalty and interest on that amount, but he argued that he did not owe the amount calculated by the Department.  The Taxpayer argued that he should be credited an additional amount for withholding since the documentation he provided did not show withholding through December 31, 2006.  The hearing officer agreed with the Taxpayer that he provided sufficient documentation as to his own withholding, but the Taxpayer failed to show with sufficient evidence his wife’s withholding.  Additionally, the Department had assessed 20% penalty, under the current amended statute that allows that amount.  The statute in effect at the time this tax was due only allowed penalty up to 10%, so the hearing officer found.  The Taxpayer’s protest was granted in part and denied in part.  
 NOTE: The New Mexico Court of Appeals has overruled the 10% penalty issue mentioned in this decision.  (Case No. 30,932)