Can New Mexico refund overpaid gross receipts tax if the business discovers a missed deduction and files its refund claim more than three years after the tax was due?

Plain-English summary

A trucking company that discovered it had overpaid gross receipts tax in 1997 could not get a refund, because it filed its claim more than three years after the tax was due. Protest DENIED.

Perez Trucking hauls asphalt and other materials. In July 1997, the owner's wife, Anna Zazueta, took over the company's accounting; she was unfamiliar with New Mexico's gross receipts tax and it took time to learn how to complete the returns. In 2001, she realized that for the July–September 1997 periods she had failed to claim a deduction for hauling done for a customer that had given the company a Type 2 nontaxable transaction certificate (NTTC). On July 19, 2001, Perez Trucking filed a claim to refund $1,094.42 of gross receipts tax, attaching the NTTC. The Department denied the claim as untimely.

The three-year refund deadline had already passed

Section 7-1-26(D) allows a refund only if the claim is filed within three years of the end of the calendar year in which the tax payment was originally due (or, if there was an assessment, three years from the end of the year the overpayment resulted from it). No assessment was involved here. Under Section 7-9-12, gross receipts tax is due by the 25th of the month after the taxable event — so the July, August, and September 1997 taxes were due in August, September, and October 1997. The three-year window for all of them closed on December 31, 2000. Perez Trucking did not file until July 19, 2001, more than six months late, so the claim was properly denied. Because the deadline decided the case, the hearing officer did not need to reach the Department's second argument (that the Type 2 NTTC covered only tangible personal property, not hauling services).

Inexperience and hardship could not extend the deadline

Perez Trucking asked the Department to take into account that it was a small, struggling business and that the late claim stemmed from the owners' unfamiliarity with New Mexico tax law. The hearing officer explained those factors cannot be considered. Citing State ex rel. Taylor v. Johnson, the decision reiterated that an administrative agency cannot alter, modify, or extend a law the Legislature created. New Mexico law bars refunds of claims filed outside the Section 7-1-26 deadline, and neither the Department nor a hearing officer may make exceptions for a taxpayer's financial or personal circumstances.

Result: protest DENIED. The refund claim was time-barred.

What this means for you

Watch the three-year refund clock — it runs from when the tax was due

If you overpaid gross receipts tax, you generally have only three years from the end of the calendar year in which the payment was due to claim a refund (Section 7-1-26). Miss that window and the money is gone, no matter how clearly you overpaid.

Discovering a missed deduction later does not reset the deadline

Realizing years afterward that you should have claimed a deduction — even with a valid NTTC in hand — does not extend the limitations period. The clock runs from the original due date, not from when you notice the mistake. Review past periods well before the three-year mark.

Inexperience and hardship are not legal excuses

Being new to New Mexico's tax system, or being a small business under financial strain, will not persuade the Department or a hearing officer to waive the refund deadline. They have no authority to make exceptions to the statute.

File protective or amended claims early

If you suspect an overpayment, file the refund claim promptly rather than waiting to gather every detail. A timely claim preserves your rights; a perfect claim filed late does not.

Common questions

Q: What was the refund for?
A: Perez Trucking sought to recover $1,094.42 of gross receipts tax it paid for July–September 1997, after realizing it had failed to claim a deduction for hauling done under a Type 2 NTTC.

Q: Why was the claim denied?
A: It was filed on July 19, 2001, but under Section 7-1-26(D) the three-year deadline for those 1997 periods expired on December 31, 2000. The claim was untimely.

Q: When exactly did the deadline run from?
A: From the end of the calendar year in which the tax was due. The 1997 taxes were due in August–October 1997 (Section 7-9-12), so the three-year window closed at the end of 2000.

Q: Did the NTTC deduction question matter?
A: No. Because the claim was time-barred, the hearing officer did not decide whether the Type 2 NTTC (which covers tangible personal property) applied to the company's hauling receipts.

Q: Couldn't the Department make an exception for a small business that didn't know the rules?
A: No. Under State ex rel. Taylor v. Johnson, an agency cannot override a statute the Legislature enacted. The refund deadline applies regardless of inexperience or hardship.

Citations and references

Statutes:

• NMSA 1978, § 7-1-26(D) — a claim for refund must be filed within three years of the end of the calendar year in which the tax was originally due (or the overpayment resulted from an assessment)
• NMSA 1978, § 7-9-12 — gross receipts tax is due on or before the 25th day of the month following the month of the taxable event

Cases cited:

• State ex rel. Taylor v. Johnson, 1998-NMSC-015, 961 P.2d 768

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Perez Trucking
• Decision PDF: D&O 01-33

Original ruling text

BEFORE THE HEARING OFFICER
OF THE TAXATION AND REVENUE DEPARTMENT
OF THE STATE OF NEW MEXICO

IN THE MATTER OF THE PROTEST OF
PEREZ TRUCKING No. 01-33
ID NO. 02-278207-00-9
DENIAL OF CLAIM FOR REFUND

DECISION AND ORDER

A formal hearing on the above-referenced protest was held December 13, 2001, before Margaret

B. Alcock, Hearing Officer. Perez Trucking (“Taxpayer”) was represented by Anna Zazueta, one of its

owners. The Taxation and Revenue Department ("Department") was represented by Javier Lopez, Special

Assistant Attorney General. Based on the evidence and arguments presented, IT IS DECIDED AND

ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. The Taxpayer is engaged in the business of hauling asphalt and other materials.

2. In July 1997, Anna Zazueta, the owner’s wife, took over the company’s accounting

functions.

3. Ms. Zazueta was not familiar with New Mexico’s gross receipts tax and it took time for

her to learn the proper way to complete the Taxpayer’s gross receipts tax returns.

4. Sometime in 2001, Ms. Zazueta realized that during the three-month period July through

September 1997, she failed to claim a gross receipts tax deduction for receipts from performing hauling

services for a company that had provided the Taxpayer with a Type 2 nontaxable transaction certificate

(“NTTC”).

5. On July 19, 2001, the Taxpayer filed a claim for refund of $1,094.42 of gross receipts

tax paid for reporting periods July through September 1997 and included a copy of the Type 2 NTTC.

6. On August 6, 2001, the Department sent the Taxpayer a letter denying the claim for

refund because it was filed beyond the limitations period set out in Section 7-1-26 NMSA 1978.

7. On August 22, 2001, the Taxpayer filed a written protest to the denial of its claim for

refund.

DISCUSSION

The issue to be determined is whether the Department properly denied the Taxpayer’s claim for

refund of $1,094.42 of gross receipts tax paid for tax periods July through September 1997. At the

December 13, 2001 hearing, the Department stated that the refund was denied for two reasons: (1)

because it was filed beyond the limitations period set out in Section 7-9-26 NMSA 1978 and (2)

because the form of NTTC submitted by the Taxpayer only applied to the sale of tangible personal

property and did not cover the Taxpayer’s receipts from hauling.

Section 7-1-26(D) NMSA 1978 sets out the time limits for claiming a refund of tax paid to the

Department and provides, in pertinent part:

[N]o credit or refund of any amount may be allowed or made to any person
unless as the result of a claim made by that person as provided in this
section:

(1) within three years of the end of the calendar year in which:

(a) the payment was originally due or the overpayment resulted
from an assessment by the department pursuant to Section 7-1-17 NMSA
1978, whichever is later;

No assessment was made against the Taxpayer. Accordingly, Taxpayer’s claim for refund of gross

receipts tax was required to be filed within three years of the end of the calendar year in which payment

of tax was originally due for the reporting periods at issue.

Section 7-9-12 NMSA 1978 states that gross receipts taxes “are to be paid on or before the

twenty-fifth day of the month following the month in which the taxable event occurs.” Gross receipts

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taxes for reporting period July 1997 were due August 25, 1997; gross receipts taxes for reporting period

August 1997 were due September 25, 1997; and gross receipts taxes for reporting period September

1997 were due October 25, 1997. In each case, the time within which the Taxpayer could claim a

refund of these taxes expired December 31, 2000. The Taxpayer’s claim for refund was not filed with

the Department until July 19, 2001. Because the claim was not filed within the limitations period

required by Section 7-1-26(D), it was properly denied by the Department.1

The Taxpayer asks the Department to consider the fact that it is a small, struggling business and

that its failure to file a timely refund claim was due to the owners’ lack of knowledge of New Mexico’s

tax laws. These factors are not something the Department can consider. In State ex rel. Taylor v.

Johnson, 1998-NMSC-015 ¶ 022, 961 P.2d 768, 774-775, the New Mexico Supreme Court made the

following observations concerning the power of administrative agencies:

Generally, the Legislature, not the administrative agency, declares the policy and
establishes primary standards to which the agency must conform. See State ex rel. State
Park & Recreation Comm'n v. New Mexico State Authority, 76 N.M. 1, 13, 411 P.2d
984, 993 (1966). The administrative agency's discretion may not justify altering,
modifying or extending the reach of a law created by the Legislature. [citations omitted].

In this case, the law prohibits the Department from granting claims for refund that are not filed within

the time limits set out in Section 7-1-26 NMSA 1978. The legislature has not granted the Department

or its hearing officer the authority to ignore or make exceptions to the law based on the financial or

personal circumstances of individual taxpayers.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely, written protest to the Department’s denial of its claim for

refund, and jurisdiction lies over the parties and the subject matter of this protest.

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Based on this conclusion, there is no need to address the NTTC issue.

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2. The Taxpayer's July 19, 2001 claim for refund of $1,094.42 of gross receipts tax paid for

reporting periods July through September 1997 is barred by the limitations period set out in Section 7-1-26

NMSA 1978.

3. The hearing officer does not have authority to override the provisions of New Mexico’s tax

laws to grant a claim for refund filed beyond the limitations period set out in Section 7-1-26 NMSA 1978.

For the foregoing reasons, the Taxpayer's protest IS DENIED.

DATED December 17, 2001.

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