Did Robert Wiles's oral discussions about a payment plan prevent New Mexico from levying his bank accounts for unpaid gross receipts tax?

Plain-English summary

New Mexico properly levied Robert Wiles's bank accounts because he remained delinquent and never entered a written installment agreement. His June 2013 conversations with Department employees about a possible payment plan did not legally block collection.

The Department seized $2,161.37 in October 2013. It later abated an unrelated 2008 assessment after confirming those receipts were earned out of state, refunded part of the levy, and returned money that belonged to another person. The remaining levy was applied to Wiles's unpaid 2005 and 2006 gross receipts tax.

Unpaid assessments made Wiles delinquent

Wiles, doing business as Metaforms, was assessed for 2005 and 2006 gross receipts tax in November 2009. He did not protest those assessments and did not pay them in full.

Section 7-1-16 treated an assessment unpaid for 90 days as delinquent, and Section 7-1-31 allowed the Department to collect a delinquent taxpayer's property by levy. The decision found that the warrant and its schedule met Section 7-1-32's requirements and were properly served on the bank.

Payment-plan discussions were not an installment agreement

After a final notice, Wiles met with Department staff in June 2013. He paid $245 and discussed setting up a payment plan. An employee said it could be arranged at a later meeting and would call him, but no written agreement was completed and Wiles made no monthly installment payments.

Section 7-1-21 required an installment agreement to be in writing. Its protection against further levy applied only after the Department entered such an agreement. Because that never happened, the Department remained free to collect.

The employees' failure to follow up did not change the result. Citing Kilmer v. Goodwin, the decision said a taxpayer's inaction is not excused by reliance on an employee's oral statements.

The Department corrected separate errors after the levy

One 2013 assessment sought $9,805.06 for 2008. After the levy, the Department reviewed records Wiles had previously supplied, determined the 2008 receipts were earned out of state, abated that assessment, and refunded $1,174.27.

Wiles also showed that part of one levied account belonged to another person. The Department refunded that person $532.08. After those adjustments, Wiles still owed $533.22 on the 2005 and 2006 assessments as of the hearing.

Bank fees and time were not reimbursed

The levy caused overdraft fees and interest, and Wiles sought reimbursement plus compensation for his time. Section 7-1-29.1 allowed certain costs and fees only to a prevailing taxpayer. Because the levy was upheld, Wiles was not the prevailing party and received no award.

Result: protest DENIED. The warrant of levy was valid and the remaining 2005–2006 balance continued to be owed.

Why the issue date predates the decision number's publication

The hearing officer rendered and dated the decision on March 11, 2014, but it was not sent to the parties for unknown reasons. The Hearings Bureau discovered the error on February 6, 2015 and resubmitted the same decision with an explanation. This page therefore preserves the decision's own 2014 date even though it was published as D&O 15-06.

What this means for you

Taxpayers negotiating a payment plan

Do not assume a conversation or promise of a callback stops collection. Obtain the written installment agreement and comply with its monthly payment terms.

Joint bank-account holders

Keep records showing ownership of funds. Here, the Department refunded money after determining that it belonged to another person, even though Wiles was named on the account.

Taxpayers challenging collection costs

Bank fees caused by a levy are not automatically reimbursed. The decision required prevailing-party status for an award under Section 7-1-29.1.

Common questions

Q: Why did the levy remain valid?
A: Wiles was delinquent, the warrant met the statutory requirements, and no written installment agreement barred enforcement.

Q: Did Department staff's failure to call back create a payment plan?
A: No. The statute required a written agreement, and oral statements did not excuse Wiles's inaction.

Q: What happened to the 2008 assessment?
A: It was abated after the Department verified that the receipts were earned out of state, and $1,174.27 was refunded.

Q: Did the Department keep another person's money?
A: No. After investigating ownership, it refunded $532.08 to that person.

Citations and references

Statutes:

• NMSA 1978, §§ 7-1-16, 7-1-31, and 7-1-32 — delinquent-taxpayer status and levy requirements
• NMSA 1978, § 7-1-21(A), (E) — written installment agreements and protection from levy
• NMSA 1978, §§ 7-1-58 and 7-1-29.1 — collection authority and prevailing-party costs or fees

Case cited:

• Kilmer v. Goodwin, 2004-NMCA-122 — reliance on a Department employee's oral statements did not excuse taxpayer inaction

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Robert Wiles, dba Metaforms
• Decision PDF: D&O 15-06

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
ROBERT WILES, No. 15-06
D/B/A METAFORMS
TO WARRANT OF LEVY ISSUED UNDER
ID NO. L1707083216

DECISION AND ORDER

A formal hearing on the above-referenced protest was held February 20, 2014, before Dee

Dee Hoxie, Hearing Officer. The Hearing Officer rendered the decision on this case on March 11,

2014. The decision was submitted to the Hearings Bureau’s main office in Santa Fe, New Mexico on

that date for distribution and publication. For unknown reasons, the decision was never sent to the

parties. A review of case files revealed the error on February 6, 2015. Therefore, the decision is

being resubmitted with this explanation for its late distribution included.

At the hearing, the Taxation and Revenue Department (Department) was represented by Mr.

Peter Breen, Staff Attorney. Ms. Milagros Bernardo, Auditor, also appeared on behalf of the

Department. Mr. Robert Wiles (Taxpayer) appeared for the hearing and represented himself. The

Hearing Officer took notice of all documents in the administrative file. Based on the evidence and

arguments presented, IT IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. The Taxpayer was engaged in business as Metaforms, and was assessed for gross receipts

taxes on November 3, 2009. Two assessments were done on that date; the first was for the

tax period ending in 2005 and the second for the tax period ending in 2006.

2. The Taxpayer never protested the assessments and did not pay the assessments in full.

3. The Taxpayer was a delinquent taxpayer.

4. On March 21, 2013, the Department sent the Taxpayer a Final Notice Before Seizure which

referenced Lien #1285076 for the amount of $1,218.02.

5. The Taxpayer contacted the Department in April or May 2013 about letters he had received

on the lien. The Taxpayer was told that a lien had been placed on his house for the taxes

owed from 2005 and 2006. The Taxpayer was told that the lien meant that the money would

be subtracted from the sale of his house, in the event that he sold his house. The Taxpayer

did not realize that he needed to take steps to pay off the taxes owed.

6. The Taxpayer was again assessed for gross receipts tax on April 25, 2013 for the tax period

ending 2008 for a total amount of $9,805.06.

7. The Taxpayer did not formally protest this assessment and did not pay anything on the

assessment.

8. The Taxpayer received another Final Notice Before Seizure in June 2013. The Taxpayer

contacted the Department was told that he must pay 20% of what was owed or funds would

be taken from his bank account.

9. On or about June 13, 2013, the Taxpayer met with an employee of the Department and was

told that $245.00 was 20% of what he owed on the 2005 and 2006 assessments and that he

would need to set up a payment plan for the balance. The Taxpayer asked about the

assessment for the 2008 tax period, and the employee told the Taxpayer to bring in his

records on that for review.

10. On or about June 28, 2013, the Taxpayer met with the same employee of the Department and

provided records on the 2008 tax period. The employee advised that the records would have

to be reviewed. The Taxpayer asked again about the payment plan, and the employee

advised that it could be set up the next time they met and that he would call the Taxpayer

when it was ready.

Robert Wiles, d/b/a Metaforms
Letter ID No. L1707083216
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11. The Taxpayer took no further action to set up a payment plan or to pay off his tax liabilities.

12. On October 29, 2013, the Department issued a warrant of levy to the bank where the

Taxpayer had accounts. Funds in the amount of $2,161.37 were seized from the Taxpayer’s

accounts.

13. The Taxpayer learned in November 2013 that his funds had been seized.

14. As a result of the seizure of his funds, the Taxpayer suffered numerous bank fees, including

overdraft fees and interest on the overdrafts.

15. The Taxpayer contacted the employees at the Department with whom he had spoken in June

16. The employees admitted that they had not taken any further action on the records he

brought in on his 2008 tax period.

16. The Department reviewed the records and determined that the Taxpayer’s gross receipts for

the 2008 tax period were earned out of state. On November 25, 2013, the Department abated

the assessment for the 2008 tax period and refunded $1,174.27 to the Taxpayer. The

remainder of the amount seized was kept to satisfy fully the assessments for 2005 and 2006.

17. On November 25, 2013, the Taxpayer filed a formal protest to the warrant of levy. In his

protest, the Taxpayer advised that part of the funds seized from an account actually belonged

to another person even though the Taxpayer was named on the account.

18. The Department investigated the ownership of the funds in the account, and determined that

they did belong to another person. The Department refunded $532.08 to the other person.

This refund caused the amount seized from the Taxpayer to be inadequate to satisfy the 2005

and 2006 assessments. The Taxpayer’s outstanding balance as of the date of the hearing was

$533.22.

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Letter ID No. L1707083216
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19. The Taxpayer feels that the Department improperly seized his funds and should reimburse

him for bank fees and should compensate him for the time he has spent dealing with this

matter.

20. The Department’s position is that the Taxpayer was, and remains, delinquent, and that the

Department may levy against a delinquent taxpayer.

DISCUSSION

The issue to be decided is whether the warrant for levy was done in accordance with law.

Levies.

The Department may collect taxes owed by a delinquent taxpayer by levy on all property of

the taxpayer. See NMSA 1978, § 7-1-31 (1993). A taxpayer is delinquent if any assessment made

against the taxpayer is not paid in full within 90 days of the assessment. See NMSA 1978, § 7-1-16.

The Taxpayer knew he had been assessed for the 2005, 2006, and 2008 tax periods when he began

communicating with the Department in June 2013. The Taxpayer knew the assessments had not

been paid in full at that time. Therefore, it was undisputed that the Taxpayer was a delinquent

taxpayer at the time of the levy in October 2013. Levies are required to meet certain criteria in order

to be valid. See NMSA 1978, § 7-1-32 (1993). The warrant of levy in this case, including its

attached schedule, appears to satisfy these criteria. See id. Consequently, the warrant of levy was

properly executed on the Taxpayer’s accounts.

Payment plans.

The Taxpayer argues that he commenced the process for obtaining a payment plan when he

communicated with the Department in June 2013. The Taxpayer argues that the warrant of levy was

improper on that basis. Installment agreements must be made in writing and must require monthly

installment payments. See NMSA 1978, § 7-1-21 (A). When the Department enters into an

installment agreement with a taxpayer, “no further attempts to enforce payment of the tax by levy or

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Letter ID No. L1707083216
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injunction shall be made”. NMSA 1978, § 7-1-21 (E) (2003). However, the Department may still

take action and proceed to enforce collection in unusual circumstances or when conditions of the

installment agreement are not met. See id.

The Taxpayer never entered into a written installment agreement with the Department.

Although the Taxpayer expressed his desire to obtain a payment plan when he met with Department

employees in June 2013, a written installment agreement was never executed and the Taxpayer was

not making monthly installment payments. Therefore, the Department was free to enforce collection

by levy.

The Taxpayer argues that it was not his fault that the agreement was never done. The

Taxpayer argues that the Department’s employees were negligent in their duties and had promised to

get back in touch with him about setting up a payment plan. The Department argues that the

Taxpayer was negligent in following up with the employees and that the Taxpayer should have been

taking action to pay his taxes. A taxpayer’s failure to take action is not excused by the taxpayer’s

reliance on oral statements of an employee of the Department. See Kilmer v. Goodwin, 2004-

NMCA-122, ¶ 45, 136 N.M. 440. It is a taxpayer’s responsibility to pay taxes owed, and the

Department may take any legal action to enforce collection. See NMSA 1978, § 7-1-58. As the

Taxpayer never entered into a written installment agreement, there was no legal prohibition to keep

the Department from executing a levy.

Bank fees.

The Taxpayer argues that the Department should be held responsible for his bank fees and

should reimburse him for his time dealing with this matter. The Department argues that there is no

basis for granting the Taxpayer’s request in this instance. Some costs and fees may be awarded to a

taxpayer, but only when the taxpayer is the prevailing party. See NMSA 1978, § 7-1-29.1. A

taxpayer will be the prevailing party if they substantially prevail with respect to the amount in

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Letter ID No. L1707083216
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controversy or with respect to the issues involved. See id. The warrant of levy in this case is found

to be valid and properly executed. Therefore, the Taxpayer is not the prevailing party and cannot be

awarded costs or fees.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely written protest to the Warrant of Levy issued under Letter

ID number L1707083216, and jurisdiction lies over the parties and the subject matter of this protest.

2. The Taxpayer was a delinquent taxpayer as of October 29, 2013, and the Department

was able to enforce collection by levy. See NMSA 1978, § 7-1-31.

3. The Warrant of Levy satisfied the statutory requirements and was properly served to the

Taxpayer’s financial institution. See NMSA 1978, § 7-1-32.

4. The Taxpayer’s attempts to obtain a payment plan were not sufficient to block

enforcement by levy. See NMSA 1978, § 7-1-21.

5. The Taxpayer is not entitled to reimbursement for bank fees or for his time. See

NMSA 1978, § 7-1-29.1.

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

DATED: March 11, 2014.

Dee Dee Hoxie
DEE DEE HOXIE
Hearing Officer
Taxation & Revenue Department
Post Office Box 630
Santa Fe, NM 87504-0630

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Letter ID No. L1707083216
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