Could Christina Evaro use New Mexico's one-year late-payment refund rule after filing her missing 2010 return in 2015 when wage withholding had paid the tax in 2010?

Plain-English summary

Christina Evaro could not use New Mexico's extra one-year refund rule after filing her missing 2010 return in 2015, because wage withholding had already paid the 2010 tax within the normal three-year period. Her $595 claim remained time-barred.

Evaro recalled mailing a 2010 PIT-1 by April 15, 2011, but the Department had no record of receiving it. The return claimed a $595 refund, and her 2010 wage withholding was more than enough to pay all tax due.

In March 2015, while filing her 2014 return through the Taxpayer Access Point, Evaro noticed the missing 2010 filing. She used her paper copy to submit the 2010 return online on March 17, 2015.

The normal refund deadline had expired

The 2010 return was due April 15, 2011. Section 7-1-26(D)(1) therefore allowed a refund claim through December 31, 2014.

The March 2015 TAP filing came after that date. The Department lacked statutory authority to grant a claim filed outside the general limitation.

Even if the Department had received the original April 2011 mailing, Evaro did not protest or sue within 210 days after any Department inaction, so that earlier claim would also have become stale under Kilmer v. Goodwin.

The late-payment exception did not fit withholding paid on time

Evaro relied on an online summary of a federal rule allowing an additional two-year period after payment. New Mexico instead had a one-year provision under Section 7-1-26(D)(4), and only when the tax payment itself occurred outside the normal three-year window.

Her wage withholding paid the 2010 liability in 2010. Filing the return in 2015 did not change the payment date, so the exception did not apply.

A genuinely late erroneous payment was refunded

After the refund denial, Evaro made an unnecessary $74 payment in April 2015. Because that amount was actually paid late and was not owed, the Department refunded it under the one-year rule. That separate payment did not revive the older $595 withholding overpayment.

Result: protest DENIED. The $595 claim was barred; the unrelated $74 payment had already been returned.

What this means for you

Employees relying on wage withholding

For refund timing, withholding generally counts as tax payment even if the return is filed much later. A late return does not necessarily create a new payment-based claim period.

Taxpayers using federal refund summaries

Do not assume the federal two-year rule applies to New Mexico. Read the state statute's different period and triggering conditions.

Taxpayers whose mailed return is missing

Retain proof of mailing and monitor the account. Even a timely original claim can be lost if Department inaction is not formally challenged within the preservation window.

Common questions

Q: How much refund did Evaro claim for 2010?
A: $595.

Q: When was the general deadline?
A: December 31, 2014.

Q: Why did the March 2015 filing not qualify?
A: It was late, and the tax had already been paid by 2010 withholding rather than by a later payment.

Q: Did a federal two-year rule apply?
A: No. The AHO applied New Mexico's separate one-year late-payment provision.

Q: Why was the $74 payment refunded?
A: It was an erroneous amount actually paid in 2015 and fell within the late-payment claim rule.

Citations and references

Statutes:

• NMSA 1978, § 7-1-26(D) — general refund period and one-year rule for tax paid outside that period
• NMSA 1978, § 7-2-12 — return due date used to calculate the limitation

Case cited:

• Kilmer v. Goodwin, 2004-NMCA-122 — stale claims and no authority to grant refunds outside statutory deadlines

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Christina L. Evaro
• Decision PDF: D&O 15-39

Original ruling text

STATE OF NEW MEXICO
ADMINISTRATIVE HEARINGS OFFICE
TAX ADMINISTRATION ACT

IN THE MATTER OF THE PROTEST OF
CHRISTINA L. EVARO No. 15-39
TO THE DENIAL OF REFUND ISSUED
UNDER LETTER ID NO. L0281210832

DECISION AND ORDER

A protest hearing occurred on the above captioned matter on December 7, 2015 before

Brian VanDenzen, Esq., Interim Chief Hearing Officer, in Santa Fe. At the hearing, Christina L.

Evaro (“Taxpayer”) appeared pro se. Theresa Lopez was also present with Taxpayer. Staff

Attorney Gabrielle Dorian appeared representing the State of New Mexico Taxation and

Revenue Department (“Department”). Protest Auditor Veronica Galewaler appeared as a witness

for the Department. Taxpayer Exhibits #1-2 were admitted into the record. Department Exhibit A

and C were admitted into the record. Based on the evidence and arguments presented, IT IS

DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. On April 6, 2015, through letter id. no. L0281210832, the Department denied

Taxpayer’s claim for refund of paid 2010 personal incomes taxes, citing that the statute of

limitations had expired for the claim.

2. On June 25, 2015, Taxpayer protested the Department’s denial of claim for

refund.

3. On July 27, 2015, the Department’s protest office acknowledged receipt of a valid

protest.

4. On August 25, 2015, the Department filed a request for hearing in this matter with

the Administrative Hearings Office.

5. On August 27, 2015, the Administrative Hearings Office set this matter for a

scheduling hearing on September 23, 2015.

6. On September 18, 2015, Taxpayer moved to continue the September 23, 2015

hearing and waived the 90-day hearing requirement.

7. On September 21, 2015, the Administrative Hearings Office issued a Continuance

Order and Amended Notice of Administrative Hearing, setting the hearing for December 7, 2015

at 1:00 p.m.

8. Taxpayer recalls mailing in her 2010 PIT-1 return on or before April 15, 2011,

claiming a refund of $595.00, however the Department has no record of receiving Taxpayer’s

2010 PIT-1 return.

9. Taxpayer’s 2010 wage withholdings received by the Department in 2010 were

sufficient to pay her entire 2010 personal income tax liability.

10. Even if the Department had received Taxpayer’s 2010 PIT-1 Return in April of

2011 and failed to act on Taxpayer’s claim for refund on that return, Taxpayer did not protest or

file civil suit within 210-days of the Department’s inaction.

11. In March of 2015, Taxpayer logged into the Department TAP system to file her

2014 PIT-1 Return. While reviewing her account, she noticed that the Department had not

received her 2010 PIT-1 Return.

12. On March 17, 2015, using a paper copy of her 2010 PIT-1 Return, Taxpayer

completed and submitted her 2010 PIT-1 Return online through TAP, showing that Taxpayer

was due a refund of $595.00.

In the Matter of the Protest of Christina L. Evaro, page 2 of 6

13. As referenced in finding of fact number one, on April 6, 2015 the Department

denied Taxpayer’s claim for refund of 2010 personal income tax because more than three years

from the end of the calendar year from which the 2010 personal income taxes were due had

lapsed.

14. On April 16, 2015, Taxpayer made a $74.00 payment towards her 2010 personal

income taxes, an amount that Taxpayer did not owe.

15. The Department did refund this $74.00 payment, as Taxpayer’s 2010 PIT-1 return

did not establish any tax liability.

DISCUSSION

At issue in this protest is whether Taxpayer’s claim for refund was barred under the

statute of limitations. Citing an online summary of federal law, Taxpayer argues that since she

filed and paid her 2010 personal incomes taxes when she logged into TAP in 2015, she has an

additional two-years to make a claim for refund. The Department argues that since Taxpayer

paid the tax in 2010 with her 2010 wage withholdings, three years from the end of the calendar

year in which the 2010 personal income taxes were due had lapsed by the time Taxpayer finally

filed her return in March of 2015.

Because no assessment was issued in this case, other than Taxpayer’s self-assessment of

tax in her 2010 PIT-1 return, no presumption of correctness attaches in this protest. See NMSA

1978, § 7-1-17 (2007) and Regulation 3.1.6.10 NMAC. Nevertheless, for reasons that will be

discussed in more detail throughout the decision, under the relevant statute and controlling case

law, Taxpayer had the obligation to both timely file her claim for refund and preserve their claim

through resolution of the claim.

In the Matter of the Protest of Christina L. Evaro, page 3 of 6
In pertinent part under NMSA 1978, Section 7-1-26 (D) (1) (2007), no refund can be

granted unless as a result of a claim made within three-years of the end of the calendar year in

which the tax was due. At issue in this protest is the payment of 2010 personal income tax.

Under NMSA 1978, Section 7-2-12 (2003), 2010 personal income tax returns were due on April

15, 2011, making December 31, 2011 the end of the calendar year from which the taxes were

due. Therefore, under Section 7-1-26 (D) (1), Taxpayer had until December 31, 2014 to make

any claim for refund to the Department for 2010 personal income taxes.

After this December 31, 2014 date, any claim for refund for the paid 2010 personal

income tax period was time barred by the general statute of limitations on refund claims unless if

another provision of Section 7-1-26 (D) applied. Taxpayer’s March 17, 2015 tax return filing

claiming refund was made after this three-year deadline, making it untimely under Section 7-1-

26 (D)(1). Under the plain language of Section 7-1-26 (D) (1), the Department had no statutory

authority to grant a claim for refund made after three years from the end of the calendar year in

which the tax was due. In Kilmer v. Goodwin, 2004-NMCA-122, ¶16, 136 N.M. 440, the Court

of Appeals noted that the Legislative purpose of the deadlines under NMSA 1978, Section 7-1-

26 is “to avoid stale claims, which protects the Department's ability to stabilize and predict, with

some degree of certainty, the funds it collects and manages.”

The only other New Mexico provision1 that might allow this claim for refund is found

under Section 7-1-26 (D)(4):

if the payment of an amount of tax was not made within three years of the
end of the calendar year in which the original due date of the tax or date of
the assessment of the department occurred, a claim for refund of that
amount of tax can be made within one year of the date on which the tax
was paid

1
Taxpayer presented an online summary of a similar IRS rule that allows a two-year additional window instead of
the one-year reference under New Mexico statute.

In the Matter of the Protest of Christina L. Evaro, page 4 of 6
Essentially, if payment is not initially made within the traditional three year statute of limitation

window, Section 7-1-26 (D)(4) allows a claim for refund for one year from when the tax was

paid. However, in this case Taxpayer’s withholdings provided to the Department in 2010 paid

Taxpayer’s 2010 personal income tax liability. While the tax return had not been filed, the taxes

were paid in 2010 from withholdings, within the three year window and rendering Section 7-1-

26 (D)(4) inapplicable in this protest. However, the erroneous $74.00 payment that was never

due or owing, which Taxpayer made after the Department’s denial of the claim for refund, was

refundable under Section 7-1-26 (D)(4).

The fact that Taxpayer argued she filed her 2010 PIT-1 return by mail in April of 2011

does not alter the analysis. That is because even assuming that the return was filed, Taxpayer had

an obligation to either file a protest or a civil action within 210-days of the Department’s inaction

of the claim for refund became state. See Kilmer. The Department properly denied the refund

claim because it lacked authority to grant Taxpayer’s claim for refund filed after the expiration

of the statute of limitations. See Kilmer, ¶24.

CONCLUSIONS OF LAW

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

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

B. Taxpayer’s March 17, 2015 claim for refund of 2010 personal income tax was

beyond the three-year statute of limitations deadline for the filing of a claim for refund under

NMSA 1978, Section 7-1-26 (D) (1) (2007).

D. Since Taxpayer paid the 2010 personal income tax in 2010 with her wage

withholdings, NMSA 1978, Section 7-1-26 (D)(4) did not provide Taxpayer an additional one-

year to claim the refund beyond the normal statute of limitations under Section 7-1-26 (D) (1).

In the Matter of the Protest of Christina L. Evaro, page 5 of 6
For the foregoing reasons, the Taxpayers’ protest IS DENIED.

DATED: December 16, 2015.

Brian VanDenzen
Interim Chief Hearing Officer
Administrative Hearings Office
P.O. Box 6400
Santa Fe, NM 87502

In the Matter of the Protest of Christina L. Evaro, page 6 of 6