New Mexico took over a year to refund my approved manufacturing investment credit — does the state owe me interest for the delay?

Plain-English summary

General Mills ran a manufacturing operation in New Mexico and, in February 1994, the Department approved a manufacturing investment credit of $3,522,634 under the Investment Credit Act. That Act lets a manufacturer that buys qualifying equipment either apply the credit against its gross receipts, compensating, or withholding tax, or claim a refund — where it can show that part of the equipment's price (or of related construction services) was paid as gross receipts tax, or that it paid compensating tax on the equipment.

General Mills filed several claims to have portions of the approved credit refunded. The Department first denied them — on a basis the Hearing Officer flatly called "erroneous" and one denial letter that "doesn't even make sense" — and only after General Mills protested did it relent. Ultimately it refunded roughly $594,324, $1,119,952, and $5,062 of investment credit (plus a separate $54,120 of compensating tax paid in error). But in every case, a year or more elapsed between the claim and the refund, and the Department paid no interest on the credit refunds.

The only issue was whether the state owed interest — a total of $272,855.45 — for those delays. The Department's position was textual: § 7-1-68 allows interest only on an overpayment of tax that is later refunded, and an approved investment credit is neither a "tax" nor an "overpayment" as those terms are defined (§ 7-1-3(U); § 7-1-2(J)). Hearing Officer Gerald B. Richardson acknowledged that argument was "very persuasive" on the literal words — but granted General Mills' protests:

• A literal reading would make the interest statute meaningless. "Tax" means an amount "imposed and required to be paid," while an "overpayment" is an amount paid "in excess of tax due." Taken literally together, an "overpayment of tax" could never exist — an absurd result courts must avoid (Michaels; Los Alamos v. Johnson; State v. Nance). So the Hearing Officer looked to legislative intent, not the bare definitions.
• The two Acts must be read together (in pari materia). The Investment Credit Act was brought under the Tax Administration Act in 1982, and its refund provisions were added in 1988 and 1990. Both Acts should be harmonized to further their goals — the Tax Administration Act's goal of uniform administration, and the Investment Credit Act's goal of a favorable tax climate for manufacturing (§ 7-9A-2).
• Credit refunds are administered exactly like tax refunds. Every refund claim — for a tax or for a credit — is made and processed under the same statute, § 7-1-26, which since 1982 has expressly covered a person "denied any credit or rebate." Interest under § 7-1-68 has always been the paired incentive that keeps the Department from sitting on refund claims (Unisys). Treating credit refunds the same as tax refunds serves uniformity; the Legislature's failure to separately amend § 7-1-68 reflects that no amendment was needed, not an intent to deny interest.
• Interest furthers the manufacturing incentive. The value of the credit is undermined if the state has no incentive to pay refunds promptly and manufacturers must rely on the Department's goodwill — especially where, as here, the delay followed a clearly erroneous denial. The credit is itself measured by taxes actually paid, so paying interest on its refund is consistent with the Act's own framework.

The Hearing Officer ordered the Department to pay General Mills $272,855.45 in interest on its refund claims.

What this means for you

The state can owe you interest when it's slow to pay a refund — including a credit refund

New Mexico's § 7-1-68 requires the Department to pay interest (then 15% per year) when it holds a refund past the statutory grace period. This decision confirms that the obligation isn't limited to refunds of overpaid tax in the narrowest sense: an approved investment-credit refund measured by taxes you paid carries interest too. If the Department takes many months to pay a refund it owes you, interest may be part of what you're due.

Watch the grace period — interest starts accruing after it runs

Interest doesn't run from day one. Section 7-1-68 gives the Department a grace period (shortened in 1994 from 120 to 60 days for non-income-tax refunds) to pay a claim before interest accrues. Here every claim sat far beyond that window, so interest ran for the full delay. Track the date you filed and when the grace period ends so you know whether interest should be added.

Protest the missing interest specifically — and on time

General Mills didn't fight the Department's reductions to its refund amounts; its wins were solely on the failure to pay interest, which it protested separately each time within the deadline. If a refund arrives without interest you believe is owed, file a timely protest directed at the interest itself — it's a distinct issue from the size of the refund.

Courts won't read a tax statute to reach an absurd result

The decision is a useful reminder that literal definitions don't always control. Where a strict reading would make a statute self-cancelling or defeat its evident purpose, New Mexico authorities look to legislative intent and read related statutes together. That principle can cut in a taxpayer's favor, as it did here.

Common questions

Q: Does New Mexico pay interest if it's slow to send my refund?
A: Yes. Under § 7-1-68 the Department must pay interest on a refund it holds past the statutory grace period. This decision applies that rule even to a refund of an approved investment credit, not just to a refund of overpaid tax.

Q: The Department says an investment credit isn't a "tax," so no interest is owed. Is that right?
A: The Hearing Officer rejected that argument. Although a credit isn't literally a "tax," credit refunds are made and administered under the same refund statute (§ 7-1-26) as tax refunds, and reading the statutes together, the same interest rule (§ 7-1-68) applies.

Q: When does the interest start running?
A: After the statutory grace period in § 7-1-68 — 60 days for non-income-tax refunds since a 1994 amendment (previously 120 days). If the Department pays within that window, no interest is owed; beyond it, interest accrues until shortly before payment.

Q: My refund came without interest. What should I do?
A: File a timely, separate protest challenging the failure to pay interest, as General Mills did. The amount of the refund and the entitlement to interest are distinct issues, and you can win on interest even if you accept the refund figure.

Citations and references

Statutes and regulations:

• § 7-1-68 NMSA 1978 — interest (then 15% per year, or 1.25% per month) is allowed and paid on tax overpaid and later refunded; § 7-1-68(D)(5) sets the grace period (shortened from 120 to 60 days in 1994) after which interest accrues
• § 7-1-26 NMSA 1978 — the uniform procedure for making and administering all claims for refund, including claims by a person denied a credit or rebate
• § 7-9A-1 et seq. NMSA 1978 (Investment Credit Act) — allows a manufacturer to earn a credit for qualified equipment; § 7-9A-8 lets an approved credit be applied against gross receipts, compensating, or withholding tax, or refunded; § 7-9A-2 states the goal of a favorable tax climate for manufacturing and increased employment
• § 7-1-3(U) NMSA 1978 — definition of "tax"; § 7-1-2(J) NMSA 1978 — definition of "overpayment"

Cases cited:

• Michaels v. Anglo American Auto Auctions, Inc., 117 N.M. 91, 869 P.2d 279 (1994) — courts presume the Legislature did not intend to enact useless or meaningless statutes
• Incorporated County of Los Alamos v. Johnson, 108 N.M. 633, 776 P.2d 1252 (1989) — statutes on the same subject are read in pari materia and harmonized to further their goals; a definition is not followed where it yields an unreasonable classification
• State v. Nance, 77 N.M. 39, 419 P.2d 242 (1966) — a statute is construed to avoid an absurd or unreasonable application; look to legislative intent over a precise definition
• State ex rel. Quintana v. Schnedar, 115 N.M. 573, 855 P.2d 562 (1993) — two statutes covering the same subject should be harmonized and construed together
• Unisys Corp. v. New Mexico Taxation & Revenue Dept., 117 N.M. 609, 874 P.2d 1273 (Ct. App. 1994) — the requirement that the Department pay interest is an integral part of the refund-claim process
• United States v. New Mexico, 581 F.2d 803 (10th Cir. 1978) — the legal incidence of the gross receipts tax is on the seller, not the purchaser

Source

• Listing: New Mexico Decisions & Orders
• Decision post: General Mills, Inc.
• Decision PDF: D&O 97-03

Original ruling text

BEFORE THE HEARING OFFICER
OF THE TAXATION AND REVENUE DEPARTMENT
OF THE STATE OF NEW MEXICO

IN THE MATTER OF THE PROTESTS OF
GENERAL MILLS, INC., NO. 97-03
N.M. TAX ID. NOS. 01-780931-00 2
AND 01-406793-00 3

DECISION AND ORDER

This matter comes on for determination before Gerald B. Richardson, Hearing Officer,

upon the Motion for Summary Judgment filed herein by General Mills, Inc., hereinafter, "General

Mills." General Mills was represented by Mary E. McDonald, Esq. of Sutin, Thayer & Browne,

P.C. The Taxation and Revenue Department, hereinafter, "Department," was represented by

Margaret B. Alcock, Special Assistant Attorney General. The Department filed a response

concurring with General Mills' Statement of Material Facts but denying that General Mills was

entitled to Summary Judgment. The parties filed excellent memoranda in support of their

positions. Based upon the undisputed facts and the arguments of the parties IT IS DECIDED

AND ORDERED as follows:

FINDINGS OF FACT

1. On December 21, 1993, General Mills submitted to the Department an Application

for Investment Credit in the amount of $3,525,027. The Application was partially approved by the

Department on February 7, 1994, in the amount of $3,522,634.

2. On May 18, 1994 General Mills filed two claims for refund of the approved

investment credit: one measured by gross receipts tax paid to vendors and contractors by General

Mills in the amount of $601,174.43 and the other by compensating tax paid to the Department by

General Mills in the amount of $59,588.01.

3. Both claims for refund were denied by the Department by letter dated June 20,

1994 for the stated reasons that:
The claim was denied because approval has been granted under the investment tax credit
claim number 94-10. Submitting amended CRS-1 reports for the report periods
June 1991 through April 1994 and reducing your tax liability due will also decrease
your investment tax credit as New Mexico gross receipts and/or compensating tax
must be paid to be eligible for claiming the investment tax credit. Also, the periods
in which the investment tax credit was approved differ from the periods that refunds
are being claimed (an investment credit must be claimed within one year from the
time the equipment is introduced into New Mexico).

4. By letter dated July 8, 1994, received by the Department July 14, 1994, General

Mills timely protested the Department's denial of the two claims for refund.

5. On October 10, 1994, General Mills amended the May 18, 1994 claim for refund

of compensating tax, separating the claim into one for $54,120.21 in compensating tax which had

been paid by General Mills in error and for which General Mills sought a refund without regard to

the approved investment credit and another for compensating tax paid by General Mills in the

amount of $5,467.80, for which General Mills sought a refund of an amount of approved

investment credit.

6. The May 18, 1994 claim for refund of investment credit measured by gross receipts

tax paid by General Mills was partially granted by the Department in the amount of $594,324.24.

That amount was refunded to General Mills by check dated July 19, 1995. The amount refunded

by the Department did not include any interest on General Mills' claim for refund of investment

credit.

7. The amended claim for refund of compensating tax in the amount of $54,120.21

was granted in full and refunded to General Mills by check dated July 19, 1995. The amended

claim for refund of investment credit measured by compensating tax paid by General Mills was

partially granted in the amount of $5,062.30 and refunded to General Mills by check dated July 19,

1995. The amounts refunded by the Department did not include any interest on General Mills'

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claims for refund of compensating tax or the refund of investment credit.

8. General Mills timely protested the failure of the Department to include interest with

the July 19, 1995 refunds by letter delivered to the Secretary of the Department on July 28, 1995.

9. In response to the protest, on or after September 30, 1995, the Department

approved the payment of interest in the amount of $6,088.50 on that portion of General Mills'

claim for refund of compensating tax, refunded on July 19, 1995, which was not related to its claim

for refund of investment credit measured by compensating tax.

10. Remaining at issue with respect to the two claims for refund of the approved

investment credit filed by General Mills on May 18, 1994, one of which was amended on October

10, 1994, is the Department's failure to pay interest on the $5,062.30 of investment credit refunded

measured by the compensating tax paid by General Mills, and interest on the $595,324.24 in

investment credit refunded measured by the gross receipts tax paid by General Mills to its vendors

and contractors. If interest at the statutory rate of one and one-quarter percent per month were to

accrue on these amounts for the fourteen months which lapsed between the filing of the claims for

refund and the granting of said refunds, the accrued interest would total $104,892.64.

11. On October 27, 1994, General Mills filed a claim for refund of investment credit

measured by gross receipts tax paid to contractors by General Mills in the amount of $1,127,049.81.

12. By letter dated November 22, 1994, the Department denied the October 27, 1994

claim for refund.

13. By letter dated December 13, 1994, General Mills timely protested the

Department's denial of the October 27, 1994 claim for refund.

14. In response to the protest, the Department partially granted the October 27, 1994

claim for refund of investment credit in the amount of $1,119,952.09, paid to General Mills by

check dated October 25, 1995. The amount refunded did not include any interest on General

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Mills' claim for refund of investment credit.

15. General Mills timely protested the failure of the Department to include interest with

the October 27, 1994 refunds by letter delivered to the Secretary of Taxation and Revenue on

November 20, 1995.

16. Remaining at issue in this second protest for failure to pay interest is interest at 15%

per year on $1,119,952.09 of refunded investment credit, paid October 25, 1995 on the claim for

refund submitted October 27, 1994. If interest at the statutory rate of one and one-quarter percent

per month were to accrue on these amounts for one year which lapsed between the filing of the

claim for refund and the granting of said refund, the accrued interest would total $167,992.81.

DISCUSSION
In February, 1994, the Department approved an investment credit for General Mills in the

amount of $3,522,634 pursuant to the Investment Credit Act, NMSA 1978, § 7-9A-1, et seq. (1995

Repl. Pamp.) The Investment Credit Act allows a taxpayer carrying on a manufacturing operation

in New Mexico who purchases qualified equipment for use in a New Mexico manufacturing

operation to earn a credit in the amount of 5% 1 of the adjusted basis of the equipment as

determined for federal income tax purpose. § 7-9A-5. The amount of the credit a manufacturer

is eligible to claim is linked to the number of new full-time employees employed by the

manufacturer in its business operation. § 7-9A-7.1. The manufacturer must apply to the

Department for approval of an investment credit within one year following the end of the calendar

year in which the qualified equipment is purchased or introduced into New Mexico, and once

approved, the manufacturer may claim the credit by applying it against any gross receipts,

compensating or withholding tax due the Department or it may apply for a refund from the

Department. § 7-9A-8. In order to claim a refund, the manufacturer must provide evidence
1
The 5% credit amount is based upon the compensating tax rate provided in the Gross
Receipts and Compensating Tax Act at NMSA 1978, § 7-9-7(A) (1995 Repl. Pamp.). The 5%
compensating tax rate is identical to the state gross receipts tax rate. NMSA 1978, § 7-9-4 (1995
Repl. Pamp.).

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satisfactory to the Department that a portion of the purchase price of the equipment was

denominated a gross receipts tax, or a portion of the price paid to purchase construction services

used in connection with the qualified equipment was denominated a gross receipts tax, or that

compensating tax was paid and not refunded on the value of the equipment for which a credit was

approved. § 7-9A-8(B).

On May 18, 1994 General Mills submitted two claims for refund of the approved

investment credit. The first one, in the amount of $601,174.43 was measured by gross receipts tax

paid to vendors and contractors of General Mills. The second one, in the amount of $59,588.01

was for compensating tax paid by General Mills. On June 20, 1994, the Department denied both

claims. The Department's denial letter doesn't even make sense, but suffice it to say that it appears

to be undisputed that the basis for the Department's denial was erroneous. General Mills promptly

protested both denials. In October, 1994, General Mills amended its claim for refund of

compensating tax, breaking it down into two claims, one of which was just for compensating tax

erroneously paid, and the second of which was for compensating tax paid by General Mills for

which it sought refund on the basis of the approved investment credit. As a result of General Mills'

protests, on July 19, 1995, the Department granted or partially granted General Mills' claims and

made payment of those claims. It reduced the claim measured by gross receipts tax to

$594,324.24. It refunded the entire claim for erroneously paid compensating tax, and it reduced

and paid $5,062.30 of the claim for compensating tax for which an investment credit had been

approved. General Mills did not dispute the reductions made by the Department to its claims, but

it did file a protest to the Department's failure to pay interest on any of the amounts refunded. As a

result of General Mills's protest, the Department subsequently refunded an additional $6,088.50,

representing the payment of interest on the portion of General Mills' claim for refund of

erroneously paid compensating tax which was not related to its approved investment credit.

In October, 1994 General Mills filed a claim for refund of investment credit measured by

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gross receipts tax paid to contractors by General Mills in the amount of $1,127,049.81. In

November, 1994, the Department denied the claim on the basis that the construction services

(presumably those upon which gross receipts tax was paid) were not used in connection with the

qualified equipment. General Mills promptly protested the denial. In response to the protest, in

October, 1995, the Department partially granted the claim, reducing it to $1,119,952.09 and paying

that amount to General Mills. General Mills filed a protest, contesting the Department's failure to

pay interest on the amount of its claim which it refunded.

With each claim for refund, a year or more elapsed between the time the claim for refund

was made and when the Department refunded any part of the claim. The sole issue to be

determined herein is whether General Mills is entitled to interest on the amount it was ultimately

refunded by the Department. The amount of interest General Mills claims it is owed totals

$272,885.45. The Department does not contest the calculation of the amount of interest but it

disputes that any interest is owed.

The Investment Credit Act was first enacted in 1979 by Laws 1979, ch. 347. The

administration and enforcement of the Investment Credit Act was brought under the Tax

Administration Act in 1982 by Laws 1982, ch. 18, § 1. Originally, there was no provision in the

Investment Credit Act which allowed a person to obtain a refund of an investment credit. The

person claiming a credit could only apply the credit against his compensating tax, gross receipts tax

or withholding tax due the Department. The refund provision was added by Laws 1988, ch. 123, §

1 and was originally limited to cases where the taxpayer could demonstrate that an element of the

purchase price it paid for the qualified equipment was designated a gross receipts tax. The refund

provision was amended again by Laws 1990, ch. 3, § 9 to also allow a refund where a taxpayer could

demonstrate that an element of the price paid on the purchase of construction services used in

connection with the qualified equipment was denominated a gross receipts tax or where the

taxpayer could demonstrate that it paid compensating tax on the value of the qualified equipment

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and it had not been refunded the compensating tax.

General Mills claims that it is entitled to interest on its claim for refund under the provisions

of NMSA 1978, § 7-1-68 (1995 Repl. Pamp.), the provision in the Tax Administration Act which

addresses the payment of interest upon refunds. It provides in pertinent part as follows:
A. As provided in this section, interest shall be allowed and paid on the amount
of tax overpaid by a person which is subsequently refunded or credited to that
person. (emphasis added).
B. Interest payable on overpayments of tax shall be paid at the rate of fifteen
percent a year, computed at the rate of one and one-fourth percent per month or
fraction thereof.
C. Unless otherwise provided by this section, interest on an overpayment not
arising from an assessment by the department shall be paid from the date the claim
for refund was made until a date preceding by not more than thirty days the date on
which the amount thereof is credited or refunded to any person;....
D. No interest shall be allowed or paid with respect to an amount credited or
refunded if:

• • *

(5) the credit or refund is made within sixty days2 of the date of claim for refund of
any tax other than income tax;....

The Department bases its refusal to pay interest upon General Mills claim for refund on the

basis that Section 7-1-68 does not apply in this case because Section 7-1-68 only applies to a refund

of overpaid tax, and not to a refund of investment credit. The Department argues that an

investment credit fits neither the definition of a "tax" nor of an"overpayment." Thus, in the absence

of any statutory authorization for the payment of interest on General Mills' refund, the Department

may not pay interest.

At first blush, the Department's arguments are very persuasive. Section 7-9A-8(B) provides

that a manufacturer holding an approved investment credit "may claim a refund of an amount of
2
The time period within which the Department could pay a claim for refund and avoid the
accrual of interest was shortened by Laws 1994, ch. 44, § 1 from 120 days to 60 days, effective July
1, 1994. In this case, since none of the three claims for refund were honored within either time
frame, the determination of General Mills' protests will be governed by the applicability of Section
7-1-68 and not by the time frame within which the Department acted on the claims.

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available credit...." Section 7-1-68 makes no provision for payment of interest on refunds of

credits of any kind. It speaks only of refunds of tax which was overpaid, or of overpayments of tax.

"Tax" is defined at Section 7-1-3(U) of the Tax Administration Act as follows:
"tax" means the total amount of each tax imposed and required to be paid, withheld and
paid or collected and paid under provision of any law made subject to
administration and enforcement according to the provisions of the Tax
Administration Act and, unless the context otherwise requires, includes the amount
of any interest or civil penalty relating thereto; "tax" also means any amount of any
credit, rebate or refund paid or credited by the department under any law subject to
administration and enforcement under the provisions of the Tax Administration Act
to any person contrary to law and includes, unless the context requires otherwise,
the amount of any interest or civil penalty relating thereto;....(emphasis added).

The first portion of the definition speaks to taxes "imposed and required to be paid". The

investment credit is not a tax which was imposed or required to be paid, however, it is a credit

measured by a tax. The definition of tax does include credits, but only those paid or credited by

the department "contrary to law." This provision allows the Department to treat an improperly

granted credit as a tax so that it can be assessed and collected as any other tax administered by the

Department. It clearly has no applicability to the investment credits at issue in this matter.

When the definition of tax is read in pari materia with the definition of "overpayment," the

Department's argument gains further weight. "Overpayment" is defined at NMSA 1978, § 7-1-2(J)

(1995 Repl. Pamp.) as follows:
"overpayment" means any amount paid, pursuant to any law subject to administration and
enforcement under the provisions of the Tax Administration Act, by any person to
the department, or withheld from the person, in excess of tax due from the person
to the state at the time of the payment or at the time the amount withheld is credited
against tax due. (Emphasis added.)

This definition makes it clear that to be an overpayment, it must have been a payment by the

person to the department. This would eliminate from consideration the gross receipts tax which
General Mills paid to its supplier of qualified equipment or to its construction contractor, since the

supplier or the contractor is the taxpayer upon whom the gross receipts tax is imposed and who was

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required to make the payment of tax to the Department. This is because it is well established that

the legal incidence of the gross receipts tax is upon the person selling goods, services or leasing

property in New Mexico and not upon the purchaser or lessee. United States v. New Mexico, 581

F. 2d 803 (10th Cir. 1978). Even with respect to General Mills' claim for refund of investment

credit measured by compensating tax actually paid by General Mills, it would not meet the latter

part of the definition of an overpayment, because it would not qualify as an amount paid "in excess

of tax due...at the time of the payment," since General Mills does not claim that the compensating
tax was never due, it is only claiming that it is entitled to a refund of investment credit measured by

the compensating tax which it paid.

Although the statutory definitions support the Department's arguments, General Mills

points out that the definitions of tax and overpayment, when read together, are internally consistent,

as well. This is because tax is defined to mean the amount of tax "imposed and required to be

paid..." and an overpayment is defined to be an amount paid "in excess of tax due...." If a taxpayer
has paid more tax than was due, then that tax was never imposed and required to be paid under any

provision of law. We are thus presented with a situation where strict application of the statutory

definitions of an "overpayment of tax" or a "tax overpayment" as that term us used in Section 7-1-68

results in there being no such thing, rendering the statute meaningless. Such a construction would

be unreasonable because in construing statutes, courts must assume that the legislature was well

informed and acted reasonably and that it did not intend to enact useless or meaningless statutes.

Michaels v. Anglo American Auto Auctions, Inc., 117 N.M. 91, 869 P.2d 279 (1994). We are
thus presented with the question of determining the intention of the legislature in interpreting the

meaning of which refunds will be subject to the imposition of interest under Section 7-1-68. This is

because:
While normally bound to follow legislative definitions, we are not so bound when a
particular definition would result in an unreasonable classification. 1A, N. Singer,
Sutherland Statutory Construction, § 20.08 (4th ed. 1985). In such a case, we look
to the intent of the language employed by the legislature rather than to the precise
definition of the words themselves. State v. Nance, 77 N.M. 39, 45-6, 419 P.2d

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242, 248-9 (1966) cert. denied, 386 U.S. 1039, 87 S.Ct. 1495, 18 L.Ed.2d 605
(1967). Finally, we seek to adopt a construction which will not render an
application of the statute absurd or unreasonable. State v. Nance, 77 N.M. at 46,
419 P.2d at 249.

Incorporated County of Los Alamos v. Johnson, 108 N.M. 633, 634, 776 P.2d 1252, 1253 (1989).

As noted above, the administration and enforcement of the Investment Credit Act was

brought under the Tax Administration Act in 1982. Section 7-9A-8 of the Investment Credit Act

was amended in both 1988 and 1990 to allow for the refunds at issue herein. Thus, the legislature

contemplated that the administration of the refunds of investment credits would be administered

pursuant to the provisions of the Tax Administration Act, and these statutes should be construed in

pari materia.
In ascertaining legislative intent, the provisions of a statute must be read together with other
statutes in pari materia under the presumption that the legislature acted with full
knowledge of relevant statutory and common law. Incorporated County of Los
Alamos v. Johnson, 108 N.M. 633, 634, 776 P.2d 1252, 1253 (1989). ....Thus, two
statutes covering the same subject matter should be harmonized and construed
together when possible, Johnson, 108 N.M. at 634, 776 P.2d at 1253, in a way that
facilitates their operation and the achievement of their goals, Miller v. New Mexico
Dep't of Transp., 106 N.M. 253, 255, 741 P.2d 1374, 1376 (1987).

State ex rel. Quintana v. Schnedar, 115 N.M. 573, 575-576, 855 P.2d 562 (1993). In order to
harmonize the Investment Credit Act and the Tax Administration Act, we should first identify their

goals so that they may be construed in a manner that facilitates the achievement of those goals and

the operation of both statutes.

The goal of the Tax Administration Act was stated in the title of its original enactment as

follows:
An Act Relating to Taxation; Recognizing the Bureau of Revenue [Department] and
defining its powers and duties, providing uniform methods for administration and
enforcement of certain taxes, providing for civil and criminal penalties and
repealing...[certain provisions of prior law] and providing an appropriation.
(Emphasis added.)

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  Thus, the general goal of the Tax Administration Act is to provide a uniform method for the

administration and enforcement of the taxes, tax acts and other statutory provisions that the

legislature has brought under the authority of the act.

The stated goal of the Investment Credit Act is "to provide a favorable tax climate for

manufacturing businesses and to promote increased employment in New Mexico." NMSA 1978,

Section 7-9A-2 (1995 Repl. Pamp.) Given these express goals of the two acts, the interpretation

which would best further these two goals would be to interpret Section 7-1-68 more broadly, to

include not only claims for refund of taxes within its ambit, but also to include claims for refund

measured by taxes, which claims have been approved for refund in the form of an investment credit

authorized under the Investment Credit Act. The goal of uniformity of administration would be

furthered by allowing such refunds of investment credits to be administered the same as the

administration of refunds of taxes. The Tax Administration Act provides a uniform procedure by

which claims for refund are applied for and administered, because all refund claims are claimed

and administered pursuant to Section 7-1-26. The refund at issue herein was applied for by

General Mills and the Department administered the refund claim by applying the procedures and

statutory guidelines of Section 7-1-26. Since the inception of the Tax Administration Act there has

been both a provision for making claims for refund, and the provision providing for the payment of

interest to refund claimants whose claims were not acted upon in a reasonably short amount of

time. Those provisions are the predecessors to present day Sections 7-1-26 and 7-1-68. Thus, it

has always been part of the legislative scheme for all tax acts administered under the Tax

Administration Act that there would be provision for claiming refunds and a provision requiring the

Department to pay interest on refund claims not handled expeditiously. The requirement that the

Department pay interest on claims for refund was recognized as an integral part of the refund claim

process, which process gives the taxpayer, as well as the Department, an element of control over

delays in processing claims for refund. Unisys Corporation v. New Mexico Taxation and

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  Revenue Department, 117 N.M. 609, 612, 874 P.2d 1273 (Ct. App. 1994). The inclusion of a
  provision requiring the Department to pay interest is indicative of a legislative intent that both

taxpayers and the Department are treated fairly by the manner in which claims for refund are

administered. The importance to the legislature that the Department treat taxpayers fairly by

expeditiously acting upon their claims for refund has been most recently evidenced by the 1994

amendments to Section 7-1-68(D)(5) which shortened the grace period in which the Department

could act to avoid the payment of interest from 120 days to 60 days.

It is also noteworthy that as originally enacted by Laws 1965, ch. 248, § 28, the provision for

claiming refunds, now codified at Section 7-1-26, only applied to refunds of "tax which has been

paid by or withheld from" the person claiming the refund. This provision was amended, however,

in 1982 to also allow a person "who has been denied any credit or rebate claimed...." to make a

claim for refund. Laws 1982, ch. 18, § 11. This amendment was enacted long before the

Investment Credit Act was amended to allow for the refund of investment credits. Clearly, the

Legislature contemplated that there would be refunds of tax credits which the Department would be

making even before the Investment Credit Act was amended to allow the refunds at issue. The

language of Section 7-1-68, which requires the payment of interest on refund claims which are not

acted upon promptly by the Department, has remained unchanged since enactment in 1965 with

respect to its references to overpayments of tax, however. While it can be argued that the

legislature's failure to amend Section 7-1-68 is evidence of its intent not to include refunds of tax

credits within the provisions of Section 7-1-68, it can just as easily be regarded as a legislative

statement that no amendment was required to cover refunds in the form of approved tax credits, all

of which are handled under the provisions of Section 7-1-26. At the very least, the fact that Section

7-1-26 was amended to administer refunds of tax credits identically with other claims for tax refund

and that this was done long before refunds of investment credits were authorized is indicative that

there was no legislative intent to treat investment credit refunds any differently than any other type

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  of tax credit refunds. Given the goal of the Tax Administration Act to provide uniformity in the

administration of the tax laws and given the longstanding coupling of the tax refund provisions with

the provisions requiring the payment of interest on tax refunds, I believe that it is far more likely that

the legislature's failure to amend Section 7-1-68 to explicitly reference claims for refund of tax

credits is indicative of the legislature's understanding that no amendment was necessary to for there

to be identical treatment of both claims for refund of tax and claims for refund of investment credits

by the Department.

The goals of the Investment Credit Act of providing a favorable tax climate for

manufacturing businesses would also be furthered by an interpretation requiring interest to be paid

in this case. The primary incentive of the Investment Credit Act, of course, is the granting of a

credit itself. That benefit is substantially undermined, however, if there is no incentive for the state

to act upon claims for refund of such credits in a prompt and efficient manner and taxpayers must

depend solely upon the good will of the Department to act expeditiously upon their claims. There

was no explanation given as to why it took the Department so long to act upon the protests filed by

General Mills when the Department denied its claims, especially given the fact that at least the first

claim was denied on a clearly erroneous basis, but it is hard to ignore the fact that it took the

Department at least a year in all cases to act upon those protests and grant the refunds. It thus

appears that the statutory remedy provided which allowed General Mills to file its protests, by itself,

was insufficient to ensure that the Department act expeditiously in reviewing those protests for their

propriety. This simply does not comport with the general operation of the provisions governing

the administration of claims for refund which evidence the legislature's intent to treat both taxpayers

and the Department fairly and with an even hand.

Finally, construing refunds of tax overpayments to include refunds of investment credits

measured by taxes paid is also wholly consistent with the concepts underlying the Investment Credit

Act, itself. The entire framework of the investment credit is closely tied to the payment of taxes.

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  The investment credit itself is directly measured by taxes. It is either measured by compensating

taxes which the claimant of the credit paid directly to the Department itself, or it is measured by

gross receipts taxes which the claimant paid as an element of the price of the qualified equipment or

construction services performed in connection with the qualified equipment. While we do not

always have the same identity between the taxpayer claiming the refund and the taxpayer upon

whom the tax was statutorily imposed as we normally have in refund situations, the legislature was

clearly aware of the common business practice whereby the cost of gross receipts tax imposed upon

the seller is passed on in the purchase price to the purchaser. It specifically authorized the refund

of the credit when the manufacturer can demonstrate "upon evidence satisfactory to the secretary of

taxation and revenue that an element of the price denominated a gross receipts tax has been paid...."

Section 7-9A-8(B). Nothing in this language changes the legal incidence of the gross receipts tax.

The legislature has simply recognized that the tax is often an element of the cost of equipment used

in a manufacturing operation, or the construction of facilities in which such equipment is housed,

and it is allowing the credit to be claimed if a taxpayer can demonstrate that fact. Allowing a claim

for refund of an investment credit measured by taxes actually paid to be treated identically to a

claim for a refund of the tax itself is wholly consistent with the legislative recognition in the

Investment Credit Act itself that tax burdens may be both directly and indirectly imposed.

CONCLUSIONS OF LAW

1. General Mills filed timely protests in each instance that the Department failed to pay

interest upon the claims for refund which it granted to General Mills, and jurisdiction lies over both

the parties and the subject matter of General Mills' protests.

2. General Mills' claims for refund of investment credits are claims for refund of taxes

which are subject to the accrual of interest pursuant to NMSA 1978, Section 7-1-68.

3. The Department improperly failed to pay interest on General Mills' claims for

refund at issue herein.

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  For the foregoing reasons, General Mills' protests are HEREBY GRANTED.

THE DEPARTMENT IS HEREBY ORDERED TO PAY GENERAL MILLS

$272,855.45 INTEREST UPON ITS CLAIMS FOR REFUND.

DONE, this 27th day of January, 1997.

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