Could Floyd Carroll defeat a $46,525.58 New Mexico CRS tax assessment because Department personnel had not filed private surety bonds and his chosen nonlawyer could not represent him?

Plain-English summary

Floyd E. Carroll lost his protest of a $46,525.58 assessment because he offered no evidence or legal argument about the assessed taxes. His effort to dismiss the case over state-employee surety bonds failed, and the person he appointed through a power of attorney could not represent him as an attorney because that person was not licensed to practice law in New Mexico.

Carroll did business as L&E Windmill & Waterworks. The Department assessed $31,334.26 of gross receipts tax, $1,034.27 of compensating tax, $515.00 of withholding tax, and additional penalty and interest, for a total of $46,525.58.

Before the hearing, Carroll asked for dismissal on the theory that Department personnel lacked authority because they had not filed bonds under Sections 10-2-2 through 10-2-12. He also submitted a power-of-attorney contract appointing Antonio Gutierrez as his chosen counsel.

The hearing officer rejected both positions in a written prehearing ruling attached to the final decision.

The cited private-bond provisions did not govern state employees

The decision distinguished the general provisions for bonds executed by an individual or firm as surety from the Surety Bond Act's coverage for state employees.

Section 9-11-6 required specified Department officers to have coverage under the Surety Bond Act. Section 10-2-15(A) made that state-provided coverage the exclusive form for state employees and treated other statutory bonding requirements as satisfied when the office or position was covered.

Nothing in the Surety Bond Act required the officers or employees to comply with the recordation rules for privately issued bonds. Their failure to file the bonds Carroll demanded therefore did not remove their authority or invalidate the assessment.

A power of attorney did not license a nonlawyer

Section 7-1-24 limited who could represent a taxpayer at an administrative tax hearing to the taxpayer, a qualifying employee, an attorney, or a certified or registered public accountant.

The decision treated representation before the administrative body as the practice of law. Because Gutierrez was not licensed to practice law in New Mexico, Carroll's private contract could not authorize him to act as counsel.

No evidence overcame the assessment

At the hearing, Carroll represented himself with Gutierrez present. He refused to swear or affirm that his testimony would be truthful, repeatedly returned to the bond issue, and presented no relevant evidence or argument about the tax liability.

The hearing officer terminated the hearing after Carroll would not accept the rulings or proceed with the merits.

Section 7-1-17(C) presumed the Department's assessment correct and placed the burden on Carroll to show otherwise. With no evidence addressing the assessed gross receipts, compensating, or withholding taxes, he failed that burden.

Result: protest DENIED.

What this means for you

Taxpayers protesting an assessment

Present records, testimony, and legal arguments tied to the actual tax calculation. Procedural theories do not replace evidence needed to overcome the presumption that an assessment is correct.

Taxpayers choosing a hearing representative

A private power of attorney does not expand the categories authorized by the tax-hearing statute. Confirm that a representative has the required professional or employee status.

Self-represented taxpayers

Comply with hearing procedures and preserve objections while still presenting the merits. Refusing the oath and declining to address the assessment left no evidentiary basis for relief here.

Common questions

Q: What taxes were assessed?
A: Gross receipts, compensating, and withholding taxes, plus penalty and interest.

Q: What was the total assessment?
A: $46,525.58.

Q: Did the hearing officer accept the private surety-bond theory?
A: No. State employee coverage was governed by the Surety Bond Act.

Q: Could Carroll's chosen nonlawyer act as his attorney?
A: No. A power of attorney did not confer a New Mexico law license.

Q: Why was the tax protest denied?
A: Carroll presented no evidence or legal argument showing that the assessment was incorrect.

Citations and references

Statutes:

• NMSA 1978, § 7-1-17(C) — presumption that an assessment is correct
• NMSA 1978, § 7-1-24 — authorized taxpayer representatives at administrative hearings
• NMSA 1978, § 9-11-6(B)(11) and (12) — bonding of Department officers and employees
• NMSA 1978, §§ 10-2-1 through 10-2-12 — public-officer bonds issued by private sureties
• NMSA 1978, §§ 10-2-13 through 10-2-16 — Surety Bond Act
• NMSA 1978, § 10-2-15(A) — state employee surety-bond coverage

Other authority cited:

• New Mexico Attorney General Opinion 87-42
• State ex rel. Norvell v. Credit Bureau, 85 N.M. 521, 514 P.2d 40 (1973)
• Chisholm v. Rueckhaus, 1997-NMCA-112, 948 P.2d 707

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Floyd E. Carroll d/b/a L&E Windmill & Waterworks
• Decision PDF: D&O 05-07

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
FLOYD E. CARROLL (d/b/a L&E WINDMILL &
WATERWORKS; CRS ID NO. 02-197414-00-4 05-07
TO ASSESSMENT OF GROSS RECEIPTS,
COMPENSATING AND WITHHOLDING TAXES
ISSUED UNDER LETTER ID L1380756480

DECISION AND ORDER

A formal hearing on the above-referenced protest was held on April 7, 2005, before Margaret

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

by Lewis J. Terr, Special Assistant Attorney General. Floyd E. Carroll (“Taxpayer”) represented

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

FOLLOWS:

FINDINGS OF FACT

1. On June 15, 2004, the Department issued an assessment to the Taxpayer in the total

amount of $46,525.58, representing $31,334.26 gross receipts tax, $1,034.27 compensating tax, and

$515.00 withholding tax, plus interest and penalty.

2. On July 16, 2004, pursuant to an extension of time granted by the Department, the

Taxpayer filed a written protest to the Department’s assessment.

3. On February 21, 2005, Lewis J. Terr, the Department’s attorney, filed a Request for

Hearing asking that the Taxpayer’s protest be scheduled for a formal administrative hearing.

4. On February 28, 2005, a Notice of Hearing was sent to the parties scheduling an

administrative hearing for April 7, 2005. Enclosed with the hearing notice was an information sheet

explaining the administrative hearing process.

5. On March 25, 2005, the Hearing Officer received a letter from the Taxpayer asking

that his protest be dismissed, with prejudice, because Department employees had failed to file a

surety bond with the secretary of state’s office pursuant to the provisions of NMSA 1978, §§ 10-2-2

through 10-2-12. The Taxpayer also enclosed a Power of Attorney Contract appointing Antonio

Gutierrez as his “choice of counsel” to assist him at the administrative hearing.

6. On March 28, 2005, the Hearing Officer sent a letter to the parties denying the

Taxpayer’s motion to dismiss and advising the Taxpayer that Mr. Gutierrez was not authorized to act

as the Taxpayer’s counsel because Mr. Gutierrez was not licensed to practice law in New Mexico. A

copy of the Hearing Officer’s March 28, 2005 letter ruling is attached to this decision as Exhibit A

and incorporated herein by reference.

7. On April 5, 2005, the Hearing Officer received a letter from the Taxpayer disputing

the Hearing Officer’s ruling and accusing the Hearing Officer of treason.

8. The Taxpayer’s charge of treason was based on the same arguments raised in his

March 25, 2005 letter and on allegations in an attached memorandum of law concerning a

“conspiracy” consisting of “an assemblage of persons—those exclusively but unlawfully given

authorization to practice law in state courts of law for profit, by those posing as justices in the

Supreme Court of New Mexico.”

9. The Taxpayer further advised the Hearing Officer that: "You may ignore my letter,

its contents, and the attached memorandum only at your own personal peril, I therefore urge you to

survey your circumstance objectively and consider what value you place on your progress in life to

date."

10. On April 7, 2005, the hearing on the Taxpayer’s protest was convened in the

Department’s offices in Santa Fe, Santa Fe County, New Mexico.

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11. Lewis J. Terr appeared on behalf of the Department. The Taxpayer appeared on his

own behalf, accompanied by Antonio Gutierrez.

12. At the beginning of the hearing, the Hearing Officer stated that she had treated the

Taxpayer’s April 5, 2005 letter as a motion for reconsideration of her ruling, but was not persuaded

by his legal arguments and was reconfirming her ruling on the surety bond issue. The Taxpayer was

advised that he would have an opportunity to appeal this ruling to the New Mexico Court of Appeals

once a final decision was entered.

13. The Hearing Officer told the Taxpayer that the hearing was intended to give him the

opportunity to present whatever evidence or legal arguments he had to support the additional issues

raised in his protest to the Department’s assessment.

14. The Hearing Officer then attempted to put the Taxpayer under oath.

15. The Taxpayer refused to either swear or affirm that any testimony he gave would be

the truth. Instead, he demanded to know whether the Hearing Office had filed a surety bond.

16. The Hearing Officer explained that she was not there to answer questions but to give

the Taxpayer an opportunity to present evidence concerning his tax liability.

17. The Taxpayer repeatedly interrupted the Hearing Officer, continuing to demand that

the Hearing Officer state whether she had filed a surety bond.

18. Based on the Taxpayer’s uncooperative behavior, his refusal to accept the Hearing

Officer’s rulings, and his failure to present any relevant evidence or argument on the tax liability at

issue in this protest, the Hearing Officer terminated the hearing.

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CONCLUSIONS OF LAW

A. The Taxpayer filed a timely, written protest to the assessment of gross receipts,

compensating, and withholding taxes issued under Letter ID L1380756480, and jurisdiction lies over

the parties and the subject matter of this protest.

B. NMSA 1978, § 7-1-17(C) of the Tax Administration Act provides that any

assessment of taxes made by the Department is presumed to be correct, and it is the Taxpayer’s

burden to come forward with evidence to show that the assessment is incorrect.

C. The Taxpayer failed to provide any evidence or legal argument concerning his liability

for the taxes assessed by the Department and has failed to meet his burden of proof.

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

DATED April 8, 2005.

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EXHIBIT A
to April 8, 2005 Decision and Order Denying the
Protest of Floyd E. Carroll, CRS ID NO. 02-197414-00-4

HEARING BUREAU
1220 South St. Francis Drive
P. O. Box 630
Santa Fe, NM 87504
(505) 827-0735 Telephone
(505) 827-9732 Fax

March 28, 2005

Via Certified Mail # 7003 0500 0002 3968 9633
with copy mailed by Regular First Class Mail Via Interoffice Mail

Floyd E. Carroll Lewis J. Terr
RR3, 149 Wrangler Road Taxation and Revenue Department
Roswell, NM 88201 P. O. Box 630
Santa Fe, NM 87504

Re: Protest of Floyd E. Carroll (d/b/a L&E Windmill & Waterworks)
CRS ID No. 02-197414-00-4; to Assessment of CRS Taxes
Issued June 15, 2004 Under Letter ID L1380756480

Dear Mr. Carroll and Mr. Terr:

I have reviewed Mr. Carroll’s March 15, 2005 letter (which is postmarked March 21, 2005)
asking that this matter be dismissed based on the failure of Department personnel to file a bond with
the New Mexico Secretary of State. For the reasons set out below, I am denying Mr. Carroll’s
request.

Mr. Carroll states as an “undisputed fact” that various Department employees, including
Secretary Jan Goodwin, “each individually failed or refused, intentionally or otherwise, to obtain and
file the required bond(s) pursuant to 10-2-2 through 10-2-7.” Even assuming that this is true, the
sections cited by Mr. Carroll do not apply to Department employees.

NMSA 1978, §§ 10-2-1 to 10-2-12 set out qualifications and restrictions for bonds of any
public officer of this state “executed by any individual, or firm as surety….” Sections 10-2-5, 10-2-
6, and 10-2-7 require that all such bonds be recorded with and maintained by the office of the
secretary of state. Mr. Carroll asserts that these provisions govern the process for surety bond
coverage for employees of the Taxation and Revenue Department. Upon a careful review of all
relevant state statutes, however, it becomes clear that the general requirements identified in §§ 10-2-

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1 to 10-2-12 are not applicable to surety bond coverage provided by the State of New Mexico to its
officers and employees.

NMSA 1978, § 9-11-6 prescribes the powers and duties of the secretary of the Taxation and
Revenue Department, an executive branch cabinet department. Subsections (B)(11) and (12) of that
section set out the bonding requirements for the secretary and other department employees:
Subsection (B)(11) provides:

B. …the secretary shall:

(11) give bond in the penal sum of twenty five thousand dollars ($25,000.)
and require directors to each give bond in the penal sum of ten thousand dollars
($10,000.00) conditioned upon the faithful performance of duties, as provided in
the Surety Bond Act [10-2-13 to 10-2-16 NMSA 1978]. The department shall
pay the costs of these bonds; (emphasis added).

Subsection (B)(12) of § 9-11-6 requires employees who hold positions other than those of secretary
or director to give bond only when deemed necessary by the secretary. Any bond issued pursuant to
this subsection are also governed by the Surety Bond Act.

The Surety Bond Act, which is compiled at NMSA 1978, §§ 10-2-13 through 10-2-16,
provides the exclusive form of coverage for all state employees. Section 10-2-15(A) of the Act
provides:

A. The [general services] department shall provide surety bond coverage
for all employees. Whenever an employee is required by another law to post
bond or surety as a prerequisite to entering employment or assuming office, the
requirement is met when coverage is provided for the office or position under the
provisions of the Surety Bond Act [10-2-13 to 10-2-16 NMSA 1978].
Notwithstanding any other provisions of law, no state agency or employee shall
purchase any employee surety bond other than pursuant to the provisions of
the Surety Bond Act. (emphasis added)

This statute evidences a clear legislative intent to limit surety bond coverage for state officers and
employees to the coverage provided in the Surety Bond Act. See also, New Mexico Attorney
General Opinion 87-42. This coverage is not the same as the coverage identified in NMSA 1978 §§
10-2-1 through 10-2-12, which is issued by an “individual or firm as surety.” The coverage required
by the Surety Bond Act is a form of self-insurance issued by the General Services Department of the
State of New Mexico. Nothing in the Surety Bond Act requires state agencies or their employees to
comply with the recordation and filing requirements applicable to bonds issued by individuals or
private firms.

For the foregoing reasons, I am ruling against Mr. Carroll’s argument that the failure of
Department employees to comply with the provisions of §§ 10-2-1 through 10-2-12 deprives them of
authority to perform their assigned duties, and I am denying his request that I dismiss the
Department’s assessment against him.

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On another matter, I note that Mr. Carroll’s March 15, 2005 letter (postmarked March 21,
2005) includes a “Power of Attorney Contract” appointing Antonio Gutierrez as his “choice of
counsel” to represent him at the administrative hearing scheduled for April 7, 2005. Pursuant to
NMSA 1978, § 7-1-24, the only persons authorized to represent a taxpayer at an administrative tax
hearing are a bona fide employee (i.e., an employee subject to wage withholding as opposed to an
independent contractor), an attorney, or a certified or registered public accountant. As used in § 7-1-
24, the term “attorney” refers to an attorney licensed to practice law in New Mexico. This is based
on New Mexico case law, which holds that representing a party at an administrative hearing
constitutes the practice of law and may only be undertaken by a licensed attorney. See, State ex rel.
Norvell v. Credit Bureau, 85 N.M. 521, 526, 514 P.2d 40, 45 (1973) ("representation of parties
before judicial or administrative bodies" or "giving legal advice and counsel" would constitute the
practice of law). See also, Chisholm v. Rueckhaus, 1997-NMCA-112, 124 N.M. 255, 948 P.2d 707
cert. denied, 949 P.2d 282 (1997).

In order to practice law in New Mexico, attorneys must be licensed by the New Mexico
Supreme Court. Contrary to the assertions in Mr. Carroll’s letter, the New Mexico Uniform
Licensing Act does not apply to attorneys. See, NMSA 1978, § 61-1-2 (listing licenses covered by
that Act). Pursuant to NMSA 1978, § 36-2-1, the practice of law in New Mexico is regulated by the
state supreme court. In order to be licensed to practice law in this state, an applicant must take and
pass the written examination administered by the Board of Bar Examiners. See, generally, Rules 15-
101 through 15-304 NMRA (2005). In addition, Rule 24-101 NMRA (2005) states that “all persons
now or hereafter licensed in this state to engage in the practice of law shall be members of the State
Bar of New Mexico in accordance with the rules of this court.” NMSA 1978, § 36-2-9.1 specifically
designates the Board of Bar Examiners and the Board of Bar Commissioners of the New Mexico
State Bar as “bodies of the judicial department.” NMSA 1978, § 36-2-27 prohibits any person who
is not licensed by the New Mexico Supreme Court “to advertise or display any matter or writing
whereby the impression may be gained that he is an attorney or counselor at law or hold himself out
as an attorney or counselor at law….”

Based on the above law, the Power of Attorney Contract Mr. Carroll executed does not
confer a license to practice law on Antonio Gutierrez. Accordingly, Mr. Gutierrez will not be
permitted to act as counsel or represent Mr. Carroll as an attorney at the April 7, 2005 hearing on his
protest to the Department’s assessment. Pursuant to NMSA 1978, § 7-1-24, Mr. Carroll may
represent himself at the hearing or may engage the services of a certified or registered public
accountant or an attorney who has been licensed to practice law by the New Mexico Supreme Court
and is a member of the State Bar of New Mexico.

Sincerely,

s/

Margaret B. Alcock
Hearing Officer

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