Can New Mexico assess me for gross receipts tax based on a criminal tax-fraud plea agreement and a restitution order?

Plain-English summary

William Gardner pleaded no contest to two counts of tax fraud in a New Mexico criminal case and, as part of the plea agreement, agreed to pay $162,534.06 in restitution — $139,431.98 in unpaid taxes plus $23,102.08 in interest. The Taxation and Revenue Department then issued him a civil gross receipts tax (GRT) assessment for that same amount, covering periods from July 2016 through June 2019.

Gardner protested, arguing (among other things) that the Department shouldn't be able to piggyback a civil assessment onto a criminal restitution order, that he — rather than his business — wasn't the one responsible for the tax, and that the case should be paused while a civil lawsuit he'd filed played out. Hearing Officer Dee Dee Hoxie denied the protest and upheld the assessment. Here's why each argument failed:

• A restitution order doesn't block a civil assessment. The statute lists specific limits on when the Department can assess (Section 7-1-18), and none of them carve out cases where a court has already ordered restitution for tax fraud. New Mexico and federal case law both allow a civil tax assessment to run alongside criminal restitution.
• The statute of limitations was no help. Assessments are generally due within three years, but that window is extended for fraud, and Gardner offered no evidence the assessment was too late.
• No tax return was needed. A valid assessment doesn't require the taxpayer to have filed a return; the Department's formal "notice of assessment" was effective on its own (Section 7-1-17(B)(2)).
• He was personally liable. Even assuming his business, not he, incurred the tax, by signing the plea agreement Gardner agreed to be personally liable for it.
• He couldn't re-litigate the plea here. A plea agreement can't be collaterally attacked in a tax hearing, and merely having filed a civil lawsuit didn't show the plea was invalid.
• The stay was refused. His civil lawsuit had an indefinite timeline and unclear bearing on the tax, so there was no compelling reason to pause.

Two guardrails favored Gardner. Because he stipulated to the facts and challenged only legal questions, and because the Department must credit any restitution payments against the civil assessment so the tax is collected only once. After six $100 payments, his balance was $161,934.06.

What this means for you

Anyone who pleads to a tax crime with restitution

A criminal plea and restitution order for tax fraud do not close the book on the civil side. The Department can still issue a civil assessment for the same tax, and signing a plea agreement that admits the debt can make you personally liable even if a business incurred the tax. The one protection: money you pay toward restitution must be credited against the civil assessment, so you don't pay the same tax twice.

Business owners who operate through an entity

Gardner argued the tax belonged to his business, not to him personally. Ordinarily the person or entity that incurred the tax owes it — but a formal admission, like a signed plea agreement or installment agreement, can pin the liability on you individually regardless. Be careful what you sign.

Taxpayers thinking about a collateral attack

You cannot use a tax protest to attack the validity of a criminal plea. The Administrative Hearings Office has no authority to overturn a conviction, and a pending, vaguely described civil lawsuit is not evidence that the plea was constitutionally or statutorily invalid. If you believe the plea itself is defective, that fight belongs in the criminal or appellate courts, not the tax hearing.

Tax professionals

The decision walks through the mechanics of assessment authority: Section 7-1-17(A)'s duty to assess unpaid tax over $50; the three effective-assessment paths in Section 7-1-17(B) (return, notice of assessment, jeopardy assessment) and that a "return" (Section 7-1-3(T)) isn't required; Section 7-1-18's fraud extension of the limitations period; the Whitener double-jeopardy limit (a civil assessment fails only if impermissibly punitive); and the federal line — Morse, Barrington, Creel, Tucker, Helmsley — allowing restitution-based civil assessments while requiring restitution payments to reduce the civil liability. Note also the procedural trap under Section 7-1B-8(F): moving for a discretionary ruling waived Gardner's peremptory excusal of the hearing officer.

Common questions

Q: If I already agreed to pay restitution in a criminal tax case, can the state still assess me civilly?
A: Yes. A restitution order does not prevent a civil gross receipts tax assessment for the same tax. The two proceedings can run together; the payments you make on one must reduce the other so the tax is collected only once.

Q: The tax was my business's, not mine — am I off the hook?
A: Not if you signed a plea agreement (or similar admission) accepting the liability. By signing, Gardner agreed to be personally liable regardless of whether he or his business incurred the tax.

Q: Can I use the tax protest to challenge my plea deal?
A: No. A plea agreement can't be collaterally attacked in an administrative tax proceeding, which has no power to overturn a conviction. Filing a separate civil lawsuit, without more, doesn't show the plea was invalid.

Q: Does the statute of limitations protect me if the assessment came years later?
A: Often it can, but the assessment window is extended in fraud cases. Gardner presented no evidence the assessment was untimely, so the presumption that it was correct stood.

Q: Can I rely on this decision for my own situation?
A: Not directly. A Decision and Order resolves one taxpayer's protest on its specific facts and is not a general ruling or advisory opinion of the Department. It illustrates how assessment authority, personal liability, and restitution credits interact, but your facts may differ.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-1-17(A), (B), (C) (2023) — duty to assess unpaid tax over $50; the three ways an assessment becomes effective; presumption of correctness
• NMSA 1978, § 7-1-18 (2021) — time limits on assessment, extended for fraud
• NMSA 1978, § 7-1-3(T) (2019) — definition of a tax "return"
• NMSA 1978, § 7-1B-8(B), (F) (2019) — protest/hearing timing; peremptory excusal barred after a discretionary ruling
• 22.600.3.24(B) NMAC (2020); 3.1.6.12(A), 3.1.6.13 NMAC (2001); 22.600.1.18, 22.600.3.8, 22.600.3.9(G) NMAC — burden of proof; presumption of correctness; procedure

Cases:

• Weiss v. N.M. Bd. of Dentistry, 1990-NMSC-077, 110 N.M. 574 (a plea agreement cannot be collaterally attacked in an administrative proceeding)
• Casias v. N.M. Taxation & Revenue Dep't, No. A-1-CA-36316 (NMCA, Mar. 25, 2019) (non-precedential); State v. Montano, 2004-NMCA-094, 136 N.M. 144 (a signed agreement can make a taxpayer personally liable; a plea binds both parties unless invalid)
• N.M. Taxation & Revenue Dep't v. Whitener, 1993-NMCA-161, 117 N.M. 130 (a civil assessment violates double jeopardy only when impermissibly punitive)
• Morse v. Comm'r, 419 F.3d 829 (8th Cir. 2005); Barrington v. Comm'r, 124 T.C.M. (CCH) 1 (2022) (a civil assessment may be based on criminal restitution, but the taxpayer may still challenge it)
• Creel v. Comm'r, 419 F.3d 1135 (11th Cir. 2005); U.S. v. Tucker, 217 F.3d 960 (8th Cir. 2000); U.S. v. Helmsley, 941 F.2d 71 (2d Cir. 1991) (restitution payments must reduce the civil liability so the tax is collected once)
• Gemini Las Colinas, LLC v. N.M. Taxation & Revenue Dep't, 2023-NMCA-039; El Centro Villa Nursing Ctr. v. Taxation & Revenue Dep't, 1989-NMCA-070; Archuleta v. O'Cheskey, 1972-NMCA-165; N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-NMCA-099 (presumption of correctness; taxpayer's burden)
• Severns v. N.M. Taxation and Revenue Dep't, No. 31,817 (NMCA, Apr. 1, 2013) (non-precedential); Breen v. State Taxation and Revenue Dep't, 2012-NMCA-101 (identifying who the taxpayer is)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: William Gardner
• Decision PDF: D&O 24-10

Original ruling text

1 STATE OF NEW MEXICO
2 ADMINISTRATIVE HEARINGS OFFICE
3 TAX ADMINISTRATION ACT

4 WILLIAM GARDNER

5 v. AHO No. 24.01-006A, D&O No. 24-10

6 TAXATION AND REVENUE DEPARTMENT

7 DECISION AND ORDER
8 On May 31, 2024, Hearing Officer Dee Dee Hoxie, Esq. conducted a videoconference

9 hearing on the merits of the protest to the assessment of William Gardner (Taxpayer). The Taxation

10 and Revenue Department (Department) was represented by David Mittle, Staff Attorney. The Taxpayer

11 did not personally appear at the hearing, but the Taxpayer was represented by his attorney, Bradley

12 Odegard. The Hearing Officer took notice of all documents in the administrative file. The

13 Department’s exhibits A (plea agreement), B (assessment), C (payments), and D (current balance)

14 were admitted1.

15 The main issue to be decided is whether the Department may assess the Taxpayer based on

16 his plea agreement in a criminal case for tax fraud, which included a provision to pay restitution on

17 unpaid taxes and interest. The Hearing Officer considered all of the evidence and arguments

18 presented by both parties. Because the Taxpayer failed to overcome the presumption of correctness

19 on the assessment and there is no prohibition on assessing when there is a plea agreement that

20 requires restitution of unpaid taxes, the Hearing Officer finds in favor of the Department. IT IS

21 DECIDED AND ORDERED AS FOLLOWS:

1
At the hearing, the Taxpayer’s counsel stipulated to the Department’s exhibits and indicated that there were no
disputes of material facts.
William Gardner
Case No. 24.01-006A
page 1 of 15
1 FINDINGS OF FACT

2 Procedural findings.

3 1. On November 22, 2023, the Department issued a notice of assessment to the

4 Taxpayer for the tax periods from July 31, 2016 to June 30, 2019. The assessment was for gross

5 receipts tax of $162,534.06. The assessment reflects $0.00 for penalty and $0.00 for interest.

6 [Exhibit B].

7 2. On November 22, 2023, the Taxpayer filed a timely written protest to the assessment

8 and a request for an informal conference. [Admin. file protest].

9 3. On November 22, 2023, the Department acknowledged its receipt of the protest by

10 email. [Admin. file].

11 4. On December 12, 2023, the Chief Hearing Officer issued a letter to the Taxpayer

12 rejecting the Taxpayer’s attempt to file a request for hearing as it was not timely2. [Admin. file].

13 5. On January 22, 2024, the Taxpayer filed a timely request for hearing with the

14 Administrative Hearings Office. [Admin. file request].

15 6. On January 23, 20243, the Administrative Hearings Office issued a notice of

16 telephonic scheduling hearing and notified the parties that the protest was assigned to Hearing

17 Officer Hoxie. [Admin. file].

18 7. On January 23, 20244, the Taxpayer filed a motion to excuse the Department’s

19 attorney. [Admin. file].

20 8. On January 25, 2024, the Taxpayer filed a motion to excuse Hearing Officer Hoxie.

21 [Admin. file].

2
See NMSA 1978, § 7-1B-8 (B) (prohibiting requests for hearing from being filed less than sixty days from the date
of the protest).
3
At approximately 10:04 AM by the email time stamp.
4
At approximately 11:32 AM by the email time stamp.
William Gardner
Case No. 24.01-006A
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1 9. On February 2, 2024, the order5 denying the motion to excuse Hearing Officer Hoxie

2 was issued. The order denied the motion because the Taxpayer moved for a discretionary ruling

3 when he filed the motion to excuse the Department’s attorney, and a peremptory excusal may not be

4 exercised after moving for a discretionary ruling. [Admin. file]. See NMSA 1978, § 7-1B-8 (F)

5 (2019).

6 10. On February 2, 2024, the Department filed its answer to the protest and filed its

7 response to the motion to excuse the Department’s attorney. [Admin. file].

8 11. On February 5, 2024, the Taxpayer filed an objection to the order denying excusal of

9 Hearing Officer Hoxie and another motion to excuse Hearing Officer Hoxie. [Admin. file].

10 12. On February 7, 2024, an order denying the motion was issued. [Admin. file].

11 13. On February 8, 2024, an order denying the motion to excuse the Department’s

12 attorney was issued. [Admin. file].

13 14. On February 9, 2024, the Taxpayer filed the tax information authorization for his

14 attorney to represent him. [Admin. file].

15 15. On February 9, 2024, a telephonic scheduling hearing was conducted, which was

16 within 90 days of the request for hearing, as required by statute. [Admin. file].

17 16. On February 13, 2024, the notice of administrative hearing by videoconference was

18 issued. [Admin. file].

19 17. On April 1, 2024, the Department filed a motion for summary judgment (hereafter,

20 Department’s motion). [Admin. file].

5
The order was signed by Hearing Officer Hoxie and the Chief Hearing Officer pursuant to Regulation 22.600.3.9
(G) NMAC (2018).
William Gardner
Case No. 24.01-006A
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1 18. On April 24, 20246, the Taxpayer filed a response (hereafter, Taxpayer’s response) to

2 the Department’s motion. [Admin. file].

3 19. On April 29, 2024, the Department filed a notice of completion of briefing. [Admin.

4 file].

5 20. On May 3, 2024, the order denying the Department’s motion was issued. The order

6 found that there seemed to be disputed facts, and the Department’s motion and the Taxpayer’s

7 response would still be considered as arguments after the hearing on the merits. [Admin. file].

8 21. On May 22, 2024, the Taxpayer filed a motion to stay the proceedings because the

9 Taxpayer has filed a civil lawsuit. [Admin. file].

10 22. On May 23, 2024, the Department filed its response, opposing the Taxpayer’s motion

11 to stay. [Admin. file].

12 23. On May 24, 2024, the Department filed its proposed exhibits. [Admin. file].

13 24. On May 28, 2024, the order denying the Taxpayer’s motion to stay was issued.

14 [Admin. file].

15 Substantive findings.

16 25. On January 18, 2022, the Taxpayer signed a plea agreement, which was filed in the

17 2nd Judicial District Court in Bernalillo County, New Mexico on February 9, 2022. [Exhibit A].

18 26. The Taxpayer pleaded no contest to two counts of Tax Fraud. [Exhibit A-001].

19 27. The Taxpayer was originally charged with several counts. [Exhibit A; Taxpayer’s

20 response].

6
Prior to the Taxpayer’s response, the Department filed and withdrew a notice of completion of briefing. Part of the
Department’s withdrawal stipulated to allowing the Taxpayer to file the response to the Department’s motion even
though it was not within 15 days as required by the notice of administrative hearing by videoconference.
William Gardner
Case No. 24.01-006A
page 4 of 15
1 28. Although the Taxpayer pleaded to only two counts, the restitution was ordered based

2 on all counts, including those that were dismissed pursuant to the plea agreement. [Taxpayer’s

3 response; Exhibit A].

4 29. The Taxpayer agreed to pay full restitution of $139,431.98 in unpaid taxes and

5 $23,102.08 in interest, totaling $162,534.06. [Exhibit A-002].

6 30. The Department assessed the Taxpayer for the total amount of restitution in the plea

7 agreement, but it was listed in the assessment solely under the tax column. [Exhibit B].

8 31. The Taxpayer has made six $100.00 payments to the Department toward the

9 restitution ordered. [Exhibit C].

10 32. The Department applied the six payments to the amount assessed, and the current

11 balance is $161,934.06. [Exhibit D].

12 DISCUSSION

13 Burden of proof.

14 “The taxpayer shall have the burden of proof, except as otherwise provided by law.”

15 22.600.3.24 (B) NMAC (2020). Assessments by the Department are presumed to be correct. See

16 NMSA 1978, § 7-1-17 (2023). See El Centro Villa Nursing Ctr. v. Taxation and Revenue Department,

17 1989-NMCA-070, 108 N.M. 795. See also Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M.

18 428. See also N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-NMCA-099, ¶8. The

19 presumption extends to the assessment of penalty and interest. See 3.1.6.13 NMAC (2001).

20 “The effect of the presumption of correctness is that the taxpayer has the burden of coming

21 forward with some countervailing evidence tending to dispute the factual correctness of the assessment”.

22 3.1.6.12 (A) NMAC (2001). See Gemini Las Colinas, LLC v. N.M. Taxation & Revenue Dep’t, 2023-

William Gardner
Case No. 24.01-006A
page 5 of 15
1 NMCA-039. See also 22.600.1.18 and 22.600.3.24 NMAC. At the hearing, the Taxpayer stipulated to

2 the facts and argued that the protest was based solely on legal issues7.

3 Motion to stay.

4 The Taxpayer argued that he has filed a civil lawsuit for violations of his rights related to the

5 criminal case. [Taxpayer’s response]. The Taxpayer initially tried to file the request for hearing early,

6 and then filed the request on the first day that a request was allowed, but the Taxpayer later filed a

7 formal motion to stay the protest proceedings pending the outcome of his civil lawsuit. [Admin. file].

8 The details of the civil lawsuit are unclear, as the only information is that the Taxpayer “has contended

9 that his civil rights and taxpayer rights were violated in connection with the original action that resulted

10 from” the plea agreement8. [Taxpayer’s response]. The Taxpayer also indicates that he has an action in

11 federal court “regarding the Plea and Disposition Agreement.” [Taxpayer’s response]. This information

12 lacks specificity as to the tenure and scope of the lawsuits. It is unclear if the lawsuits are seeking civil

13 damages, or if they are seeking to collaterally attack the plea agreement, or both, or neither.

14 The motion was denied as the conclusion date of the lawsuit is indefinite, and the potential

15 impact of the civil lawsuit’s outcome on the protest proceedings is unclear. [Admin. file]. There was no

16 evidence that the plea agreement in the criminal case has been overturned9 or that it would be invalidated

17 by a separate civil lawsuit that the Taxpayer filed. See generally Bounds v. Hamlett, 2011-NMCA-078,

7
The arguments considered were only those made on the record at the hearing on the merits, made in the
Department’s motion, and made in the Taxpayer’s response. Any other arguments contained in other documents
submitted by the Taxpayer, such as the protest, are deemed abandoned as they were not addressed at the hearing on
the merits and no evidence or arguments were presented at the hearing on those claims. Moreover, the contentions
in the protest appear to be a collateral attack on the underlying plea agreement. See Weiss v. N.M. Bd. Of Dentistry,
1990-NMSC-077, ¶ 42, 110 N.M. 574 (holding that a plea agreement cannot be collaterally attacked in an
administrative proceeding as the administrative tribunal has no authority to determine the validity of a conviction,
nor to overturn or to vacate it).
8
The Taxpayer’s motion for stay of proceedings also indicates only that his lawsuit “has contended that his civil
rights and taxpayer rights were violated in connection with the original action that resulted from the” plea
agreement.
9
The Department’s attorney argued that the Taxpayer’s plea agreement has been upheld by the court, but there was
not evidence presented on this issue. See State v. Jacobs, 1985-NMCA-054, 102 N.M. 801 (noting that allegations of
counsel are not evidence).
William Gardner
Case No. 24.01-006A
page 6 of 15
1 ¶ 32, 150 N.M. 389 (noting that district court orders are, in general, presumptively correct and barred

2 from collateral attack). See also State v. Tran, 2009-NMCA-010, 145 N.M. 487 (holding that a

3 collateral attack on prior guilty and no contest pleas was not successful because the defendant failed to

4 meet the burden). See also State v. Pacheco, 2008-NMCA-059, 144 N.M. 61 (holding that a collateral

5 attack on prior plea agreements was not successful because the errors in accepting the pleas did not

6 amount to fundamental errors). See also State v. Nash, 2007-NMCA-141, 142 N.M. 754 (holding that a

7 collateral attack on a prior guilty plea was successful because the defendant presented sufficient

8 evidence to prove fundamental error). As the assessment was based on the plea agreement, and there is

9 no clear indication whether or not the civil lawsuit will impact the validity of the plea agreement, the

10 Taxpayer failed to provide a compelling reason to stay these proceedings.

11 Ability to assess.

12 When the Department determines that a taxpayer is liable for unpaid taxes of more than $50, the

13 Department “shall promptly assess the amount thereof to the taxpayer.” NMSA 1978, § 7-1-17 (A).

14 The Department determined10 that the Taxpayer was liable for unpaid taxes of more than $50 based on

15 the plea agreement. [Exhibit A; Department’s motion]. The assessment must generally be within three

16 years of the end of the calendar year of the tax’s due date, but the time to assess may be extended for

17 various reasons, such as fraud. See NMSA 1978, § 7-1-18 (2021).

18 The Taxpayer presented no evidence to establish that the Department’s assessment was made

19 beyond the statute of limitations. See id. Consequently, the Taxpayer failed to overcome the

20 presumption that the assessment is correct. See NMSA 1978, § 7-1-17. See also Gemini Las Colinas,

21 LLC, 2023-NMCA-039. See also 22.600.1.18 and 22.600.3.24 NMAC.

10
The reasonableness of the Department’s determination is addressed in another section in this decision.
William Gardner
Case No. 24.01-006A
page 7 of 15
1 Effectiveness of an assessment.

2 The Department initially argued that the plea agreement was effective as an assessment because

3 it should be treated as a return. [Department’s motion]. See NMSA 1978, § 7-1-17 (B) (1) (indicating

4 that a taxpayer’s self-assessment is effective when the taxpayer files a return with the Department

5 showing a tax liability). The Taxpayer disputed that a plea agreement is a return. [Taxpayer’s

6 response]. At the hearing, the Department abandoned this argument and argued that a return is not

7 necessary for an effective assessment.

8 Both parties are correct. As the Taxpayer argued, the plea agreement is not a return filed with

9 the Department. See NMSA 1978, § 7-1-3 (T) (2019) (defining a return as a tax or information return,

10 application or form, a declaration, or a claim that is filed with the Department). As the Department

11 argued, a return is not required for an effective assessment. See NMSA 1978, § 7-1-17 (B).

12 Tax assessments are effective in three different instances. See id. One instance is when a

13 taxpayer files a return showing a liability. See NMSA 1978, § 7-1-17 (B) (1). The second instance is

14 when the Department issues “a document denominated ‘notice of assessment of taxes’,…to the taxpayer

15 against whom the liability for tax is asserted,” and the document states the nature and amount of tax,

16 demands payment, and briefly informs of the remedies available. NMSA 1978, § 7-1-17 (B) (2). The

17 third instance is when an effective jeopardy assessment is made. See NMSA 1978, § 7-1-17 (B) (3).

18 In this protest, the Department issued a notice of assessment and demand for payment. [Exhibit

19 B]. See NMSA 1978, § 7-1-17 (B) (2). The Taxpayer presented no evidence and did not argue that the

20 notice of assessment issued to the Taxpayer failed to meet these statutory requirements. See NMSA

21 1978, § 7-1-17 (B) (2). Consequently, the Taxpayer failed to overcome the presumption of correctness.

22 See NMSA 1978, § 7-1-17 (C). See also Gemini Las Colinas, LLC, 2023-NMCA-039. See also

23 22.600.1.18 and 22.600.3.24 NMAC.

William Gardner
Case No. 24.01-006A
page 8 of 15
1 Responsibility for the tax.

2 The Taxpayer argued that the Department originally assessed his business and that using the

3 plea agreement “is a back door attempt to collect tax that was not able to be collected from the

4 business.” [Taxpayer’s response]. The Taxpayer argued that he is not the one responsible for the tax.

5 [Taxpayer’s response]. There is, again, a paucity of evidence on this issue. [Taxpayer’s response]. See

6 also Jacobs, 1985-NMCA-054. However, assuming arguendo that the tax liability was incurred by the

7 Taxpayer’s business rather than by the Taxpayer, it is still possible for the Taxpayer to be liable.

8 Generally, the taxpayer who incurred the tax is one who is responsible for paying the tax. See

9 Severns v. N.M. Taxation and Revenue Dep’t, No. 31, 817, mem. op. at ¶ 28, N.M. Ct. App., April 1,

10 2013 (non-precedential) (holding that the wife was not assessed and was not a party to the protest

11 when the assessment for personal income tax named only the husband, even though they were filing

12 joint returns). See also Breen v. State Taxation and Revenue Dep’t, 2012-NMCA-101, ¶ 31 (holding

13 that a husband was not the taxpayer with respect to his wife’s business’s gross receipts taxes).

14 However, a taxpayer may admit responsibility for a tax obligation, and a formal admission is

15 binding on the taxpayer. See Casias v. N.M. Taxation & Revenue Dep’t, No. A-1-CA-36316, mem.

16 op. (NMCA, March 25, 2019) (non-precedential) (holding that the taxpayer signed an installment

17 agreement that was conclusive as to his personal liability to pay the tax even though the taxes were

18 incurred by his business). See also State v. Montano, 2004-NMCA-094, ¶ 7, 136 N.M. 144 (holding

19 that a plea agreement is binding on both parties unless it is found to be constitutionally or statutorily

20 invalid). By signing the plea agreement, the Taxpayer agreed to be personally liable for the tax

21 owed, regardless of whether he or his business incurred the tax. See Casias, No. A-1-CA-36316.

22 See also Montano, 2004-NMCA-094. The Taxpayer indicated that he has filed a civil lawsuit for the

23 violation of his rights related to the criminal case, but filing a civil lawsuit is not sufficient evidence to

24 establish that the plea agreement was constitutionally or statutorily invalid. Therefore, the Taxpayer

William Gardner
Case No. 24.01-006A
page 9 of 15
1 failed to overcome the presumption of correctness. See NMSA 1978, § 7-1-17 (C). See also Gemini

2 Las Colinas, LLC, 2023-NMCA-039. See also 22.600.1.18 and 22.600.3.24 NMAC.

3 Impact of restitution on assessment.

4 The Taxpayer argued the Department should not be the collection agency for the court-ordered

5 restitution. [Taxpayer’s response]. The Taxpayer argued that allowing two government entities, the

6 court and the Department, to enforce the restitution creates confusion and pointed to the Taxpayer’s

7 absence from the hearing due to his incarceration11 for support of this proposition. The Taxpayer cited

8 to no authority for the proposition that court-ordered restitution prohibits the Department from issuing an

9 assessment. In re Gelinas, 2020-NMCA-038, ¶ 6 (noting that when a party cites no authority, one may

10 presume that none exists).

11 There are limits on when the Department may assess. See NMSA 1978, § 7-1-18. However,

12 none of the statutory limitations mention or involve instances when the court has ordered restitution in

13 cases of tax fraud or evasion. See id. The Department argued that an assessment can arise from a

14 criminal conviction under the Whitener case. See N.M. Taxation & Revenue Dep’t v. Whitener, 1993-

15 NMCA-161, 117 N.M. 130, cert. dismissed 121 N.M. 299. The Whitener case held that the tax

16 assessment violated double jeopardy because it was a civil proceeding that was impermissibly punitive

17 as it was based on the drug possession conviction. See id.

18 In general, a civil proceeding is permissible involving the same set of circumstances as a

19 criminal case, even when the State is involved in both, as long as the civil proceeding is not punitive in

20 nature. See Marez v. State Taxation and Revenue Dep’t, 1995-NMCA-030, 119 NM 598 (holding that

21 a civil revocation hearing and a criminal prosecution are independent of each other, and one does not

22 necessarily affect the outcome of the other). See also State v. Bishop, 1992-NMCA-034, 113 NM 732

11
The Taxpayer’s counsel contends that the Taxpayer was incarcerated at the time of the hearing for failure to make
restitution payments. The Department’s counsel contends that the Taxpayer was incarcerated at the time of the
hearing for the failure to comply with multiple terms of his probation, not just failure to make restitution payments.
Neither party presented sufficient evidence on this issue. See Jacobs, 1985-NMCA-054.
William Gardner
Case No. 24.01-006A
page 10 of 15
1 (holding that a decision in a civil revocation proceeding is not binding on a subsequent criminal

2 proceeding). See also State v. Long, 1996-NMCA-011, ¶ 6, 121 N.M. 333 (holding that a tax

3 assessment was not required prior to a conviction for tax evasion). See also Whitener, 1993-NMCA-

4 161 (discussing when a civil assessment proceeding is impermissibly punitive in nature). The

5 Taxpayer did not argue that the tax assessment was issued in violation of his double jeopardy rights and

6 presented no evidence on that issue. Therefore, the Taxpayer failed to overcome the presumption of

7 correctness. See NMSA 1978, § 7-1-17 (C). See also Gemini Las Colinas, LLC, 2023-NMCA-039.

8 See also 22.600.1.18 and 22.600.3.24 NMAC. See also Whitener, 1993-NMCA-161.

9 There are few New Mexico cases dealing with the interplay between restitution ordered in a

10 criminal case for a tax crime and a civil assessment from the Department. See In re Cox, 1994-NMSC-

11 054, ¶ 3, 117 N.M. 575 (recognizing that there was a plea agreement in which the defendant agreed to

12 pay the Department a certain sum that constituted his unpaid taxes). See also State v. Bowie, 1990-

13 NMCA-068, 110 N.M. 283 (holding that a sentence to incarcerate was valid when no restitution had

14 been paid on a tax evasion plea). See also Long, 1996-NMCA-011.

15 Federal tax cases provide more guidance on the interplay between the restitution ordered in a

16 criminal case and the civil assessment for tax liability. See Morse v. Comm’r, 419 F.3d 829, 833-835

17 (8th Circ.) (2005) (holding that the amount of court-ordered restitution on a criminal conviction for a tax

18 crime could still be challenged in the civil assessment proceedings). Thus, a taxpayer may overcome

19 the presumption that the assessment is correct, even when the amount assessed is based on the ordered

20 restitution. See id. See also Barrington v. Comm’r of Internal Revenue, 124 T.C.M. (CCH) 1 (2022)

21 (holding that the commissioner’s civil assessment was valid when it was based on the amounts of

22 restitution ordered in the tax evasion plea agreement because the taxpayer no longer had records and

23 had presented insufficient evidence to overcome the presumption). Therefore, the Department’s

24 determination to assess was reasonable. See Barrington, 124 T.C.M. (CCH) 1. See NMSA 1978, 7-1-

25 17.
William Gardner
Case No. 24.01-006A
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1 The Taxpayer argued that “there is no support for the amount of the restitution.” [Taxpayer’s

2 response]. However, the Taxpayer presented no evidence as a substantive challenge to the amount of

3 the assessment. “Unsubstantiated statements that the assessment is incorrect cannot overcome the

4 presumption of correctness.” 3.1.6.12 (A) NMAC (2001). Therefore, the Taxpayer failed to

5 overcome the presumption of correctness as to the amount of the assessment. See NMSA 1978, § 7-1-

6 17 (C). See also Gemini Las Colinas, LLC, 2023-NMCA-039. See also 22.600.1.18 and 22.600.3.24

7 NMAC. See also Whitener, 1993-NMCA-161. See also Barrington, 124 T.C.M. (CCH) 1.

8 Ensuring that the tax is paid once.

9 Amounts can be ordered as restitution in a criminal case and in a civil assessment, but the

10 amounts paid against the restitution order must be applied to and must reduce the amount of the civil

11 assessment. See Creel v. Comm’r of Internal Revenue, 419 F.3d 1135 (11th Circ.) (2005) (holding that

12 IRS could assess for tax, penalty, and interest after the defendant pleaded to two counts of tax crime

13 and was ordered to pay restitution, but finding that, under the terms of the plea agreement, paperwork

14 indicating that the restitution was paid in full was binding on the tax amount to be paid). See U.S. v.

15 Tucker, 217 F.3d 960, 962 (8th Circ.) (2000) (noting that restitution paid for taxes owed will reduce the

16 tax liability that the government can collect). See also U.S. v. Helmsley, 941 F.2d 71, 102 (2nd Circ.)

17 (1991) (holding that amounts paid as restitution must be deducted from the civil judgment obtained to

18 collect on the same tax deficiency), cert. denied 502 U.S. 1091.

19 The Department intends to credit the Taxpayer’s assessment for any amounts paid against the

20 restitution order and has already done so. [Exhibit C and Exhibit D]. The Department’s approach is

21 consistent with the federal principles on civil assessment concurrent to restitution ordered in a criminal

22 case. See Morse, 419 F.3d 829. See also Creel, 419 F.3d 1135. See also Tucker, 217 F.3d 960. See

23 also Helmsley, 941 F.2d 71.

William Gardner
Case No. 24.01-006A
page 12 of 15
1 CONCLUSIONS OF LAW

2 A. The Taxpayer filed a timely written protest of the Department’s assessment, and

3 jurisdiction lies over the parties and the subject matter of this protest. See NMSA 1978, § 7-1B-8

4 (2019).

5 B. The first hearing was timely set and held within 90 days of the request for hearing. See

6 id. See also 22.600.3.8 NMAC (2020).

7 C. The Department was required to issue an assessment when it determined that the

8 Taxpayer was liable for more than $50.00 of unpaid taxes. See NMSA 1978, § 7-1-17 (A).

9 D. The statutory limitation on assessments does not prohibit assessment based on a

10 criminal conviction and restitution order. See NMSA 1978, § 7-1-18.

11 E. By signing the plea agreement, the Taxpayer agreed to be personally liable for the tax

12 owed, regardless of whether he or his business incurred the tax. See Casias, No. A-1-CA-36316.

13 See also Montano, 2004-NMCA-094. See also Barrington, 124 T.C.M. (CCH) 1.

14 F. Generally, a civil assessment is permitted after a criminal conviction with a

15 restitution order. See Morse, 419 F.3d 829. See also Barrington, 124 T.C.M. (CCH) 1.

16 G. A taxpayer may still challenge the civil assessment that is based on a criminal

17 conviction with a restitution order. See Morse, 419 F.3d 829. See also Barrington, 124 T.C.M.

18 (CCH) 1.

19 H. The burden is on the taxpayer challenging the assessment. See Morse, 419 F.3d 829.

20 See also Barrington, 124 T.C.M. (CCH) 1. See 22.600.3.24 (B) NMAC. See NMSA 1978, § 7-1-17.

21 See El Centro Villa Nursing Ctr., 1989-NMCA-070. See Archuleta, 1972-NMCA-165. See Casias

22 Trucking, 2014-NMCA-099. See 3.1.6.12 (A) NMAC. See Gemini Las Colinas, LLC, 2023-NMCA-

23 039. See 22.600.1.18 NMAC.

William Gardner
Case No. 24.01-006A
page 13 of 15
1 I. The Taxpayer failed to overcome the presumption of correctness as to the assessment.

2 See NMSA 1978, § 7-1-17 (C). See also Gemini Las Colinas, LLC, 2023-NMCA-039. See also

3 22.600.1.18 and 22.600.3.24 NMAC. See also Whitener, 1993-NMCA-161. See also Barrington, 124

4 T.C.M. (CCH) 1.

5 J. Amounts paid as restitution serve to reduce the civil assessment of liability. See

6 Morse, 419 F.3d 829. See also Creel, 419 F.3d 1135. See also Tucker, 217 F.3d 960. See also

7 Helmsley, 941 F.2d 71.

8 For the foregoing reasons, the Taxpayer’s protest IS DENIED. IT IS ORDERED that

9 Taxpayer is liable under the assessment and has a current12 outstanding liability of $161,934.06.

10 DATED: July 12, 2024.

11 Dee Dee Hoxie
12 Dee Dee Hoxie
13 Hearing Officer
14 Administrative Hearings Office
15 P.O. Box 6400
16 Santa Fe, NM 87502

17 NOTICE OF RIGHT TO APPEAL

18 Pursuant to NMSA 1978, Section 7-1-25 (2015), the parties have the right to appeal this

19 decision by filing a notice of appeal with the New Mexico Court of Appeals within 30 days of the

20 date shown above. If an appeal is not timely filed with the Court of Appeals within 30 days, this

21 Decision and Order will become final. Rule of Appellate Procedure 12-601 NMRA articulates the

22 requirements of perfecting an appeal of an administrative decision with the Court of Appeals. Either

23 party filing an appeal shall file a courtesy copy of the appeal with the Administrative Hearings Office

24 contemporaneous with the Court of Appeals filing so that the Administrative Hearings Office may

12
As of the date of the hearing.
William Gardner
Case No. 24.01-006A
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1 begin preparing the record proper. The parties will each be provided with a copy of the record proper

2 at the time of the filing of the record proper with the Court of Appeals, which occurs within 14 days

3 of the Administrative Hearings Office receipt of the docketing statement from the appealing party.

4 See Rule 12-209 NMRA.

5 CERTIFICATE OF SERVICE

6 On July 12, 2024, a copy of the foregoing Decision and Order was submitted to the parties listed

7 below in the following manner:

8 INTENTIONALLY BLANK

William Gardner
Case No. 24.01-006A
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