Aurelia Shorty

11-17

The Taxpayer is an enrolled tribal member of the Navajo Nation, a member of a Chapter in Arizona.  The Taxpayer is the only remaining immediate member of her family and is the only person with interest in their home site lease in Arizona, which the Taxpayer considers to be her permanent home.  The Taxpayer is a teacher working for the US Department of the Interior, Bureau of Indian Education.  As part of her job, the Taxpayer travels to schools across the Navajo Nation, including schools in Arizona and New Mexico.  Beginning in 2001, the Taxpayer was employed year round at a school in Crownpoint, New Mexico.  All of the Taxpayer’s income in 2005 came from work performed within the Navajo Nation a this school in Crownpoint.  Since 2003, the Taxpayer rented an apartment in Gallup, New Mexico.  The Taxpayer used this address in Gallup on her bank account, on the New Mexico driver’s license she obtained, and on the registration for several cars in New Mexico.  Beginning in tax year 2006, Taxpayer filed and paid her personal income taxes in New Mexico, identifying herself as a New Mexico resident and listing her Gallup address.  In August 2009, the Department assessed the Taxpayer for unfiled and unpaid personal income tax, penalty and interest for the 2005 tax year.  The Taxpayer filed a written protest to the assessment, arguing that her income was exempt under Section 7-2-5.5 NMSA 1978, which gives an exemption for income earned by a member of a Nation, Tribe or Pueblo who lives and works on their Nation, Tribe or Pueblo’s land.  The Taxpayer was a member of a Nation and did earn income on that Nation’s land, so the only question to be decided in protest was whether she lived within the boundaries of the Nation’s land during tax year 2005.  Although the Taxpayer considered her permanent home to be on the Navajo Nation’s land in Arizona, she failed to show any evidence that she lived within the Navajo Nation during the 2005 tax year.  Taxpayer lived in Gallup, paid her utilities in Gallup, and commuted to work from Gallup during tax year 2005.  The assessment for unpaid personal income tax, plus interest, was correctly assessed.  However, the hearing officer ordered the Department to abate penalty that had been imposed in excess of the 10% not to exceed cap allowable under the law at the time this tax was due.  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)