Yates Petroleum Corporation

16-35

On March 17, 2016, the Department assessed the Taxpayer for oil and gas tax, penalty and interest for the return filed on February 24, 2016.  On April 8, 2016, the Taxpayer filed a protest of the assessment.  On May 23, 2016, the Taxpayer filed a withdrawal of the protest.  On June 1, 2016, the Taxpayer filed a request to have a hearing on the protest, but limited to the issued of the assessed penalty and interest.  The Taxpayer filed its tax return and submitted a payment electronically on February 24, 2016.  They inadvertently sent the payment to the New Mexico Land Office rather than the Department.  The Land Office initially applied the payment to the royalties account, but then realized the Taxpayer’s mistake and forwarded the payment to the Department.  After the protest was filed, the Department learned that the Taxpayer’s payment had been received only a few days late, and the amount of interest was reduced accordingly.  The Taxpayer argued that it should not have to pay penalty because the State of New Mexico had the payment on the due date, although the Taxpayer agreed that the payment should have been sent to the Department.  The hearing officer found that the penalty did apply because the Taxpayer failed to make the payment to the Department on the due date and was therefore negligent.  The imposition of interest is mandatory pursuant to Section 7-1-67 NMSA 1978.  The Taxpayer’s protest was denied.