Could a taxpayer avoid penalty and interest on unpaid 1998 New Mexico income tax because the Department waited 29 months to assess him and he missed the 1999 amnesty period?

Plain-English summary

Gerard Desjardins remained liable for penalty and interest on his late-paid 1998 New Mexico personal income tax. The Department assessed him within the statutory three-year period, and it had no duty to notify him of his missing payment before the state's 1999 tax-amnesty period expired.

Desjardins filed his 1998 PIT-1 on October 15, 1999. The return showed $1,018 of tax due, but he sent no payment.

The Department later assessed the $1,018 principal, a $101.80 penalty, and $445.93 of interest. Desjardins accepted and paid the principal but protested penalty and interest, arguing that the Department's 29-month delay was unreasonable and deprived him of a chance to use tax amnesty.

The assessment was issued on time

Section 7-1-18(A) gave the Department three years from the end of the calendar year in which the tax was due to assess an underpayment. Because the 1998 income-tax payment was due April 15, 1999, the Department had until December 31, 2002 to assess it.

The assessment was issued in March 2002, within that period. The decision therefore found no legal basis for an undue-delay argument.

The taxpayer was responsible for paying the return

New Mexico used a self-reporting tax system. Under Section 7-1-13(B), Desjardins was responsible for ensuring that the tax shown on his return was paid on time.

His failure to include payment could not be attributed to the Department. The Department was not required to discover the omission and notify him quickly enough to preserve an amnesty opportunity.

Filing during amnesty did not waive penalty and interest

The 1999 legislation authorized an amnesty period of no more than 90 days during fiscal year 2000. The Department's period ran from August 16 through November 12, 1999 and waived penalty and interest when the underlying tax was paid before the period ended.

Desjardins filed his unpaid return on October 15, only 28 days before amnesty ended. Because he did not pay the principal during the amnesty period, he did not meet the condition for waiver.

Result: protest DENIED. Desjardins failed to prove that the penalty and interest assessment was incorrect.

What this means for you

Individuals filing a balance-due return

Filing the return does not pay the reported liability. Confirm that the payment is transmitted and received by the due date.

Taxpayers evaluating an older assessment

Compare the assessment date with the statutory period. A long administrative delay is not enough when the assessment was still issued within the authorized window.

People seeking tax amnesty

Read the program's payment conditions. Filing a return during amnesty did not qualify when the underlying tax remained unpaid at the deadline.

Taxpayers expecting a Department reminder

New Mexico's self-reporting system placed the first responsibility for correct filing and payment on the taxpayer; the Department did not have to provide a reminder in time to preserve amnesty.

Common questions

Q: How much tax did Desjardins report for 1998?
A: $1,018.

Q: Did he dispute the tax principal?
A: No. He acknowledged and paid the $1,018 principal.

Q: What amounts remained disputed?
A: A $101.80 penalty and $445.93 of interest.

Q: When did the 1999 amnesty period end?
A: November 12, 1999.

Q: Was the Department required to alert him before amnesty expired?
A: No. The decision placed responsibility for timely payment on the taxpayer.

Citations and references

Statutes and legislation:

• NMSA 1978, § 7-1-18(A) — three-year period for assessing an underpayment
• NMSA 1978, § 7-1-13(B) — taxpayer responsibility in the self-reporting system
• Laws 1999, ch. 10 — authorization for a tax-amnesty period during fiscal year 2000

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Gerard G. Desjardins
• Decision PDF: D&O 04-01

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
GERARD G. DESJARDINS No. 04-01
ASSESSMENT NO. 436081

DECISION AND ORDER

A formal hearing on the above-referenced protest was held January 7, 2004, before Margaret

B. Alcock, Hearing Officer. The Taxation and Revenue Department ("Department") was represented

by Bruce J. Fort, Special Assistant Attorney General. Gerard G. Desjardins (“Taxpayer”) represented

himself. Based on the evidence and arguments presented, IT IS DECIDED AND ORDERED AS

FOLLOWS:

FINDINGS OF FACT

1. On October 15, 1999, the Taxpayer filed a New Mexico personal income tax return

(Form PIT-1) for the 1998 tax year.

2. The Taxpayer’s 1998 PIT-1 showed a tax liability of $1,018.00, but no payment was

included with the return.

3. On March 19, 2002, the Department issued Assessment No. 436081 to the Taxpayer

in the amount of $1,018.00, plus $101.80 penalty and $445.93 interest.

4. On April 5, 2002, the Taxpayer filed a written protest to the Department’s assessment

of penalty and interest. The Taxpayer acknowledged his liability for the $1,018.00 of tax principal

and has paid this amount.
DISCUSSION

The issue presented is whether the Taxpayer is liable for the penalty and interest assessed on

his late payment of 1998 personal income tax. The Taxpayer acknowledges that payment of his

1998 taxes was not made by the statutory due date, but protests the assessment of penalty and

interest. The Taxpayer maintains that the 29-month delay between the date he filed his 1998 return

and the date the Department issued its assessment was unreasonable and deprived him of the

opportunity to claim amnesty under the tax amnesty program authorized by the New Mexico

Legislature.

The Taxpayer’s argument ignores the plain language of NMSA 1978, § 7-1-18(A), which

gives the Department three years from the end of the calendar year in which a tax is due to issue an

assessment for any underpayment of that tax. This means that the Department had until December

31, 2002 to assess the Taxpayer for 1998 personal income tax, payment of which was due on April

15, 1999. The assessment issued on March 3, 2002 was well within the statutory time period

allowed by the New Mexico Legislature.

The Taxpayer’s amnesty argument is also without merit. New Mexico has a self-reporting

tax system, and it was the Taxpayer’s responsibility to insure that his 1998 taxes were paid in a timely

manner. See, NMSA 1978, § 7-1-13(B). The Taxpayer’s negligence in failing to include his tax

payment with his 1998 return cannot be attributed to the Department, and the Department had no

obligation to notify the Taxpayer of his oversight in time for him to claim amnesty.

The tax amnesty program was authorized by Laws 1999, Ch. 10, and allowed the secretary of

the Taxation and Revenue Department, with the concurrence of the governor, “to declare an amnesty

period of no more than ninety days, provided that any amnesty period occur within fiscal year 2000.”

Fiscal year 2000 began on July 1, 1999 and ended on June 30, 2000. As set out in the “1999 Tax

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Amnesty Fact Sheet”, which is a public record of the Department, the amnesty period designated by

the secretary began on August 16, 1999 and ended on November 12, 1999. During this period,

penalty and interest on unpaid tax liabilities would be waived if the underlying tax principal was paid

prior to the end of the amnesty period. The Taxpayer’s 1998 PIT return was filed, without payment,

on October 15, 1999, just 28 days before the amnesty program ended. The Taxpayer’s assertion that

the Department had an obligation to immediately notify him of his negligent failure to pay his taxes,

thereby allowing him to take advantage of the amnesty program, is unsupported by either law or

equity.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely, written protest to Assessment No. 436081, and jurisdiction

lies over the parties and the subject matter of this protest.

2. Assessment No. 436081 was issued within the statutory time period authorized by

NMSA 1978, § 7-1-18(A), and there is no legal basis for the Taxpayer’s argument of undue delay.

3. The Taxpayer failed to meet his burden of proving that the Department’s assessment of

penalty and interest was incorrect.

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

DATED January 8, 2004.

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