The Department says I never paid, but I'm sure I mailed my return and a check — can I win with just my word?

Plain-English summary

Peter Grivas was a New Mexico resident. In July 1995 the Department assessed him $2,158.27 in personal income tax, $1,133.07 in interest, and $214.82 in penalty for the 1991 tax year, because its records showed no return and no payment for that year. (The Department calculated the tax from IRS information-sharing data.) Grivas protested — late at first, but the Department gave him a retroactive extension so his protest was accepted.

Grivas didn't dispute the amount. He said he had mailed his 1991 return along with a cashier's check for the tax. The problem was proof: he had thrown out the receipt for the cashier's check, his bank had deleted its 1991 records, and he produced no cancelled check, no bank withdrawal, no copy of the return — nothing to back up his account.

Hearing Officer Julia Belles denied the protest:

• The assessment is presumed correct. Under Section 7-1-17(C), an assessment carries a presumption of correctness, so the taxpayer has the burden of proving it wrong.
• Testimony alone wasn't enough. Grivas offered only his own recollection that he sent the return and payment, with nothing to corroborate it — no cancelled check or bank record — and nothing to rebut the Department's evidence that it never received payment.
• Keeping records is the taxpayer's job. Section 7-1-10 makes taxpayers responsible for maintaining adequate records, including of their tax payments.
• The assessment was timely. Section 7-1-18(A) lets the Department assess within three years from the end of the year the tax was due, and the 1995 assessment fell within that window.

The Department abated the penalty, so Grivas was left owing the tax and interest.

What this means for you

Keep proof of payment — for years

If you want to be able to show you paid, keep the evidence: cancelled checks, bank or card statements, electronic payment confirmations, and copies of the returns you filed. Grivas may well have paid, but with no receipt, no cancelled check, and purged bank records, he had no way to prove it — and the law put that burden on him.

The assessment starts out presumed correct

When the Department assesses you, the law assumes the assessment is right until you prove otherwise. That means the practical burden is on you to come forward with documentation. A sincere, detailed recollection is not the same as evidence.

"I mailed it" needs backup

Testimony that you mailed a return and a check, without anything to corroborate it, generally won't carry the day. Proof of mailing (certified mail receipts), a cancelled check, or a bank withdrawal matching the tax are the kinds of evidence that can actually rebut a no-payment assessment.

A penalty can be dropped even when the tax stands

The Department abated Grivas's penalty while still collecting the tax and interest. If you're assessed, penalty relief and the underlying tax are separate questions — losing on the tax doesn't necessarily mean you'll be stuck with the penalty, and vice versa.

Common questions

Q: I'm certain I paid, but I don't have any records. Isn't my testimony enough?
A: Generally no. An assessment is presumed correct, and you must prove it wrong. Uncorroborated testimony — without a cancelled check, bank record, or other documentation — typically doesn't meet that burden.

Q: My bank purged its old records. Doesn't that excuse me from proving payment?
A: No. The responsibility to keep adequate records of your tax payments is on you (Section 7-1-10). If your bank no longer has the records, that doesn't shift the burden back to the Department.

Q: The Department waited years to assess me. Isn't it too late?
A: Not here. Section 7-1-18(A) generally allows assessment within three years from the end of the year the tax was due, and this assessment was within that period.

Q: The Department dropped my penalty. Why do I still owe interest?
A: Penalty and interest are separate. The Department can abate a penalty while the tax and the interest on late-paid tax remain due.

Citations and references

Statutes:

• § 7-1-17(C) NMSA 1978 — any assessment of tax by the Department is presumed correct, and the taxpayer bears the burden of proving it incorrect
• § 7-1-10 NMSA 1978 — a taxpayer is responsible for maintaining adequate records, including records of tax payments
• § 7-1-18(A) NMSA 1978 — the Department may assess tax no later than three years from the end of the calendar year in which the tax was due

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Peter Grivas
• Decision PDF: D&O 95-10

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 PETER GRIVAS, No. 95-10
ASSESSMENT NO. 632022.

DECISION AND ORDER

This matter was heard on November 1, 1995 by Julia Belles, Hearing Officer. Mr.

Grivas (Taxpayer) represented himself and Frank D. Katz, Special Assistant Attorney General,

represented the Taxation and Revenue Department (Department). Based upon the evidence and

arguments presented, it is decided and ordered as follows:

FINDINGS OF FACT

1. The Taxpayer is a New Mexico resident who pays personal income tax.

2. On July 18, 1995, the Department mailed the Taxpayer a Notice of Assessment

No. 632022. The Taxpayer was assessed $2,158.27 in personal income tax, $1,133.07 in

interest and $214.82 penalty for the 1991 tax year.

3. The assessment was sent because the Department's records showed that the

Taxpayer had not filed a return or paid personal income tax for the 1991 tax year.

4. On August 22, 1995, the Taxpayer filed a written protest against the assessment.

5. The Department noticed that the protest was not timely filed and gave the

Taxpayer information on how to request a retroactive extension of sixty days to file the protest.

6. On August 31, 1995, the Taxpayer requested the retroactive extension of time to

file his protest and filed his original protest letter.

7. The Department granted the Taxpayer's request for an extension of time to file his

protest.

8. Although the Taxpayer testified that he mailed his 1991 personal income tax

return together with a cashier's check for his 1991 personal income tax liability, the Department

has no record of receiving either the return or payment of tax.

9. The Department agreed to abate the penalty assessed.

DISCUSSION
The Taxpayer disputes his liability for the 1991 personal income tax, penalty and interest.

At the outset, it should be noted that Section 7-1-17(C) NMSA 1978 (Repl. 1995) provides a

presumption of correctness which attaches to any assessment of tax by the Department. This

means that the taxpayer carries the burden of proving that the assessment is incorrect.

The assessment was issued because the Department could not find any records to indicate

that the Taxpayer had reported or paid personal income tax (PIT) for 1991. The Department

based the amount of its assessment upon information it received from the Internal Revenue

Service pursuant to the information sharing agreement between the Department and the IRS.

The Taxpayer does not dispute the amount assessed as his 1991 personal income tax liability, but

contends that the tax has already been paid.

The Taxpayer testified that he recalled getting a cashier's check for his 1991 taxes and he

recalled sending the check and PIT forms to the Department. The Taxpayer threw out his

receipt for the cashier's check and, when he contacted his bank, was told that the records for 1991

had been deleted. The Taxpayer did not produce a copy of his payment, a copy of his original

1991 return or any evidence to show that the Department received his 1991 personal income tax

form and tax payment. The Taxpayer argued that he provided sufficient evidence to show he

had paid the tax and the assessment should be abated. The Taxpayer also argued that the

Department was at fault for waiting so long to issue the assessment.

The Taxpayer did not meet his burden. The Taxpayer only provided testimony that he

sent the return and payment. This testimony was not corroborated with any evidence, such as a

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cancelled check, or bank records showing a withdrawal to correspond to the Taxpayer's liability.

He did not provide any evidence to rebut the evidence presented by the Department that it never

received payment of his 1991 PIT. The Taxpayer is responsible for adequately maintaining

records of his tax payments. Section 7-1-10 NMSA 1978 (Repl. 1995). Further, Section

7-1-18(A) NMSA 1978 (Repl. 1995) allows the Department to assess taxes no later than three

years from the end of the year that the tax was due. Since the 1991 personal income tax was due

on April 15, 1991, the assessment was issued with the statute of limitations and is therefore

timely.

CONCLUSIONS OF LAW

1. The Taxpayer timely filed a written protest over the Department's assessment of

his 1991 PIT and jurisdiction lies over the parties and the subject matter of this protest.

2. Assessment No. 632022 was issued within the statutory time limit of Section

7-1-18(A) NMSA 1978 (Repl. 1995).

3. The Taxpayer failed to maintain adequate records to show that he paid his 1991

PIT and therefore the Taxpayer has failed to meet his burden of proving the assessment to be

incorrect.

4. The penalty assessed by Assessment No. 632022 should be abated.

For these reasons, the Taxpayer's protest is hereby denied.

Done this 22nd day of November, 1995.

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