If a business misses the 30-day deadline to protest a New Mexico tax assessment because the notice went to an old address of record, can it still challenge the assessment?

Plain-English summary

Pecos Valley Dairy Supply sold milking machines and dairy chemicals from a location in Dexter, New Mexico. In August 1995 it sold its business assets to Ken Romero and stopped operating, and its accountants filed a "Registration Update" form to cancel its tax ID number — but they left the address-change portion of that form blank. So the company's address of record with the Department stayed at the old Dexter location, even though the company's president, Mr. Brown, had moved to Texas.

The Department later audited the company and, on July 8, 1996, mailed Assessment No. 2046229 — about $60,495 in gross receipts tax, $900 in compensating tax, plus roughly $6,140 penalty and $20,697 interest — to the Dexter address of record. Mr. Brown never received the forwarded notice and only learned of the assessment later. The company's accountants tried to protest on September 27, 1996, well past the deadline. The Department said the protest was untimely, and the company protested that determination, leading to this decision.

The Hearing Officer denied the protest for lack of jurisdiction. Under § 7-1-24, a protest must be filed within 30 days of the mailing of an assessment (extendable only if the taxpayer makes a written request). Under § 7-1-9(A), a notice is effective when mailed to the taxpayer's last address of record — the statute authorizes mailing there and does not require the Department to mail to every address it might have. Even though the Roswell office knew Mr. Brown's Texas address and the accountants' involvement, assessments are computer-generated and sent to the address of record; the Department never agreed to send the assessment elsewhere and did nothing misleading. Regulation TA 9:4 makes keeping a current address the taxpayer's responsibility, and the company had failed to do so. The late September letter also protested the proposed audit adjustments, not the assessment, and contained no request for an extension. Because there was no timely protest, the forum had no jurisdiction to reach the merits.

Importantly, the Hearing Officer noted the company was not without a remedy: it could pay the assessment and file a claim for refund under § 7-1-26, then contest any denial administratively or in District Court.

What this means for you

Any business that moves, closes, or is sold

Keep your address of record with the Taxation and Revenue Department current — in writing, on the Department's form. New Mexico assessments and notices are legally effective when mailed to your address of record, even if you never actually receive them, and the clock to protest starts running from that mailing. When you close or sell a business, canceling your tax ID is not enough; if the responsible person is moving, file a formal change of address too. Here, one blank field on a form cost the company its chance to fight a $60,000-plus assessment.

Anyone facing a tax assessment deadline

The 30-day protest deadline is jurisdictional and strict. If you can't meet it, you must make a written request for an extension within the allowed window — the Department cannot simply treat a late letter as timely. And protest the assessment itself, not an earlier "audit report" or proposed adjustments, which don't yet affect your liability. Watch the exact wording and dates.

Accountants and tax professionals

This decision draws a bright line: § 7-1-9(A) proves the effectiveness of a notice mailed to the address of record and imposes no duty on the Department to mail to other known addresses; § 7-1-24's deadline and written-extension requirement are jurisdictional. Even actual knowledge of a better address at a district office does not change the result. When a client is losing the merits on timeliness, remember the fallback in § 7-1-26 — pay and claim a refund, preserving the substantive defenses for a forum that does have jurisdiction.

Common questions

Q: The company never received the assessment — how can it be "effective"?
A: Under § 7-1-9(A), a notice is effective when mailed to the taxpayer's last address of record, whether or not the taxpayer actually receives it. Because the assessment was properly mailed to the company's address of record, it was effective and the protest deadline began to run from the mailing date.

Q: The Department knew the president's new Texas address — why didn't it use that?
A: Because assessments are computer-generated and sent to the address of record, and the statute only authorizes (does not require) mailing to that or another address in the Department's files. The Department never agreed to send the assessment to the Texas address and did nothing misleading. Keeping the address of record current was the taxpayer's responsibility.

Q: Why didn't the September 27 letter count as a timely protest?
A: It was filed more than 30 days after the assessment was mailed, it protested the earlier proposed audit adjustments rather than the assessment itself, and it contained no written request for an extension of time. The Department is only authorized to extend the deadline upon a written request, so it could not treat the late letter as timely.

Q: Was the company completely out of options?
A: No. The Hearing Officer pointed out that the company could pay the assessment and file a claim for refund under § 7-1-26, then contest any denial administratively or by suit in District Court. Losing on timeliness closed the protest route but not the refund route.

Citations and references

Statutes and regulation:

• § 7-1-24 NMSA 1978 — a protest must be filed within 30 days of the mailing of an assessment; the Secretary may grant an extension only upon the taxpayer's written request
• § 7-1-9(A) NMSA 1978 — a notice required by the Tax Administration Act is effective if mailed to the taxpayer at the last address shown on its registration certificate or other Department record
• § 7-1-17(B)(2) NMSA 1978 — authorizes documents denominated a "notice of assessment of taxes" to be mailed to taxpayers
• § 7-1-16 NMSA 1978 — when a taxpayer is delinquent
• § 7-1-26 NMSA 1978 — claim for refund; denial may be contested administratively under § 7-1-24 or by suit in District Court
• Regulation TA 9:4 — taxpayers must include a correct mailing address and promptly advise the Department in writing of any change of address, using any prescribed form

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Pecos Valley Dairy Supply, Inc.
• Decision PDF: D&O 98-03

Original ruling text

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

IN THE MATTER OF THE PROTEST OF
PECOS VALLEY DAIRY SUPPLY, INC.
ID. NO. 02-100121-00 9, PROTEST TO NO. 98-03
DETERMINATION OF UNTIMELY PROTEST

DECISION AND ORDER

This matter came on for formal hearing on December 22, 1997 before Gerald B.

Richardson, Hearing Officer. Pecos Valley Dairy Supply, Inc., hereinafter, “Taxpayer”, was

represented by Phil Brewer, Esq. The Taxation and Revenue Department, hereinafter,

“Department”, was represented by Gail MacQuesten, Special Assistant Attorney General. Based

upon the evidence and the arguments submitted, IT IS DECIDED AND ORDERED AS

FOLLOWS:

FINDINGS OF FACT

1. Commencing in 1992, the Taxpayer operated a business which sold, installed and

serviced milking machines on dairy farms and sold various chemicals used in the dairy business,

such as pit dip and soap.

2. The Taxpayer’s business location and mailing address was 227 E. Darby Road,

Dexter, New Mexico 88230.

3. At all times pertinent hereto, the Taxpayer’s address of record with the

Department, as reflected in the Taxpayer’s original registration and any registration updates

submitted to the Department by the Taxpayer was 227 E. Darby Road, Dexter, New Mexico

88230.

4. As of the end of August, 1995, the Taxpayer sold its assets, such as its inventory,

tools, trucks and accounts receivable to Mr. Ken Romero. The corporation itself was not sold,

although it is no longer conducting business in New Mexico. Mr. Romero operates a business

called Pecos Valley Dairy Supply from the same business location, 227 E. Darby Road, Dexter,

New Mexico, as had formerly been occupied by the Taxpayer.

5. On September 28, 1995 the Taxpayer submitted a form entitled “Registration

Update” to the Department, requesting that the Department cancel the taxpayer identification

number it had previously operated under, effective August 31, 1995. The reason stated for the

cancellation was that the business had been sold to Kenny Romero, d/b/a Pecos Valley Dairy

Supply at 227 E. Darby Road, Dexter, New Mexico.

6. The Registration Update form submitted to the Department by the Taxpayer also

had a place on it for the Taxpayer to change its address in the records of the Department. That

part of the form was left blank.

7. The Registration Update form was prepared by the Taxpayer’s accountants, Ritter,

Barr & Company, a certified public accounting firm, and was signed by Mr. Keith Brown,

President of the Taxpayer.

8. In the Spring of 1996, the Department performed an audit on the Taxpayer for the

periods of January 1993 through August, 1995. Mr. Brown authorized Ritter, Barr & Company

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to be his authorized representatives to act on behalf of the Taxpayer with respect to the audit and

this fact was conveyed to the Department.

9. On May 3, 1996, Mr. R. Cameron Hull, Assistant Bureau Chief of the

Department’s Roswell, New Mexico office, wrote to Ms. Joni Barr, of Ritter, Barr & Co.

informing her that the audit of the Taxpayer was completed and enclosing copies of the

workpapers showing the results of the audit. The letter informed the Taxpayer that the audit

workpapers were not an assessment because the audit was subject to further review by the

Department’s Audit Services Offices prior to final assessment. Mr. Hull further informed Ms.

Barr that a conference at the district office in Roswell could be held if requested within ten days.

Finally, the letter enclosed copies of the Department’s publications informing taxpayers of their

administrative remedies to protests assessments of tax by the Department.

10. The first page of the Taxpayer’s audit narrative reflects that both Ms. Barr and Mr.

Brown were contact persons with respect to the audit. It also reflects the Taxpayer’s mailing

address to be 227 E Darby Road, Dexter, New Mexico.

11. On May 15, 1996 an informal district conference was held at the Department’s

Roswell office to discuss the Taxpayer’s audit. The Taxpayer was represented by Mr. Walter

Barr and Mr. David McKee of Ritter, Barr & Co. Attending the conference for the Department

were Mr. R. Cameron Hull, Mr. David Hecht, the auditor who conducted the audit, and Mr.

Raymond Anaya, the Audit Supervisor.

12. At the informal district conference the Taxpayer’s representatives and the

Department’s representatives discussed issues and disputes concerning the Department’s

proposed audit liability. There was no discussion as to where any assessment resulting from the

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audit should be mailed. Mr. McKee requested that the Department send its response to the

matters raised by the Taxpayer at the informal district conference to both Ritter, Barr & Co. and

the Taxpayer. There was also discussion about a Department ruling which was alleged to support

the Taxpayer’s arguments with respect to the audit. Because the Taxpayer’s representatives did

not have the ruling or its number with them, it was to be provided to the Department’s

representatives for their consideration within ten days.

13. On May 23, 1996 Mr. Hull and Mr. McKee had a telephone conversation as a

follow up to the informal district conference. In that conversation, Mr. McKee provided Mr.

Hull with the ruling number previously requested and he also provided Mr. Hull with Mr.

Brown’s address in Texas. The address provided by Mr. McKee was # 10 Beyers Center,

Dublin, Texas 76446.

14. On May 29, 1996 Mr. Hull wrote to Mr. Brown at the Texas address provided, to

inform him of the Department’s response to the issues raised at the informal district conference.

The letter rejected the arguments raised at the conference and advised the Taxpayer that the audit

would now be sent for its final review and assessment and advised that the Taxpayer would have

formal remedies once the assessment was made. Copies of this letter were provided to Mr. Barr

and Mr. McKee of Ritter, Barr & Co.

15. After either an informal district conference is conducted or if none is requested, it

is Department procedure that an audit is sent to the Department’s Audit Services Office in Santa

Fe for final review and assessment. The Audit Services Office encodes the information

concerning the amount assessed, the tax programs assessed, and the Taxpayer identification

number into the Department’s computer for purposes of generating the Department’s final

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assessment. The District office generating the audit never sees the assessment when it is issued

and does not have any control over when the assessment is actually generated or mailed to a

taxpayer, nor does it have any control over where the assessment is mailed. All assessments

resulting from audits are hand-stamped by the Audit Services Office, noting the day that the

assessment was mailed to a taxpayer for purposes of calculating the timeliness of any

administrative protest to the assessment.

16. All assessments are computer generated by the Department. The Department’s

computer is programmed to address all assessments to taxpayers at the taxpayer’s address of

record, as indicated in the Department’s registration records for a taxpayer. Because of this

programming, a taxpayer desiring that an assessment be mailed to an address other than its

present address of record would need to file a change of registration, indicating a new address of

record, so that the Department’s registration records can be changed.

17. It is the Department’s policy that there may be no changes made to a taxpayer’s

address of record as reflected in the Department’s registration records absent a written document,

signed by the taxpayer, requesting an address change on the registration records of the

department.

18. On July 5, 1996 the Department issued Assessment No. 2046229 to the Taxpayer,

assessing $60,495.56 in gross receipts tax, $899.64 in compensating tax, $6,139.55 in penalty

and $20,697.36 in interest. The assessment was hand-stamped by the Audit Services Office,

indicating that it was actually mailed to the Taxpayer on July 8, 1996. The assessment was

mailed to the Department’s address of record for the Taxpayer, 227 E Darby Rd., Dexter, NM

88230.

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19. Sometimes the Taxpayer receives mail which has been forwarded to it by Mr.

Romero, from the Taxpayer’s former business location in New Mexico, but apparently,

sometimes mail is not forwarded. Mr. Brown never received a forwarded copy of the

Department’s original assessment. He only became aware of the assessment sometime after

August of 1996.

20. Sometime in September, 1996, Ritter, Barr & Co. became aware of a “Billing

Notice” from the Department, billing the Taxpayer for the taxes, penalty and interest assessed by

Assessment No. 2046229.

21. On September 27, 1996, Ritter, Barr & Co. wrote a letter to the Department

purporting to protest “the adjustments in gross receipts tax liability set forth in your audit report

letter dated May 3, 1996” on behalf of the Taxpayer.

22. Taxpayers may make a written request for an extension of time in which to file a

protest to an assessment of tax for up to ninety days following the mailing of an assessment to a

taxpayer and the Secretary of the Department is authorized to grant as much as sixty additional

days in which to file a protest, when such a written request has been made.

23. Neither the Taxpayer, nor its representative, Ritter, Barr & Co., requested an

extension of time to file a protest to Assessment No. 2046229.

24. On October 4, 1996, the Department responded to the September 27, 1996 letter

from Ritter, Barr & Co. advising them that their September 27, 1996 letter cannot be considered

a timely protest to Assessment No. 2046229.

25. On October 31, 1996, Ritter, Barr & Co. wrote the Department a letter protesting

the Department’s determination that its September 27, 1996 letter was not a timely protest.

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DISCUSSION

The sole issue to be determined herein is whether a timely protest to the Department’s

assessment of tax was made under the facts and circumstances of this case. The determination of

this issue will determine whether there is jurisdiction in this administrative forum to decide the

matters in dispute between the parties with respect to the Department’s assessment of tax.

Section 7-1-24 NMSA 1978 (1995 Repl. Pamp.) sets out the matters and the manner by

which taxpayers may invoke the jurisdiction of the Department’s administrative hearing process.

Subsection A sets forth the matters which may be protested, and provides in pertinent part:

Any taxpayer may dispute the assessment to the taxpayer of any
amount of tax, the application to the taxpayer of any provision of
the Tax Administration Act or the denial of or failure to either
allow or deny a claim for refund made in accordance with Section
7-1-26 NMSA 1978 by filing with the Secretary a written protest
against the assessment or against the application to the taxpayer of
the provision or against the denial of or the failure to allow or deny
the amount claimed to have been erroneously paid as tax.

Subsection B sets forth the time restrictions within which a protest may be filed and provides a

mechanism by which a taxpayer can request an extension of time in which to file a protest. In

pertinent part it provides as follows:

Any protest by a taxpayer shall be filed within thirty days of the
date of the mailing to the taxpayer by the department of the notice
of assessment or mailing to, or service upon the taxpayer of other
peremptory notice or demand, or the date of mailing or filing a
return. Upon written request of the taxpayer made within the time
permitted for filing a protest, the secretary may grant an extension
of time, not to exceed sixty days, within which to file the protest.
If a protest is not filed within the time required for filing a protest
or, if an extension has not been granted within the extended time,
the secretary may proceed to enforce collection of any tax if the

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taxpayer is delinquent within the meaning of Section 7-1-16
NMSA 1978. Upon written request of the taxpayer made after the
time for filing a protest but not more than sixty days after the
expiration of the time for filing a protest, the secretary may grant a
retroactive extension of time, not to exceed sixty days, within
which to file the protest provided that the taxpayer demonstrates to
the secretary’s satisfaction that the taxpayer was not able to file a
protest or to request an extension within the time to file the protest
and that the grounds for the protest have substantial merit.
(emphasis added).

Thus, in order to be timely, a protest to an assessment of tax must be made within thirty days of

its mailing or within the amount of time, not to exceed an additional sixty days, that the secretary

has granted for filing a protest if an extension was requested and granted by the secretary of the

Department.

The Taxpayer argues that its protest should be considered timely because the Department

knew of Mr. Brown’s new address in Texas prior to the date the assessment was issued and

mailed, and the Department also knew how to contact the Taxpayer’s representatives, Ritter, Barr

& Co. and that the assessment should have been sent to either Mr. Brown’s new address or to

Ritter, Barr & Co. The Taxpayer also argued that the Department, at the informal district

conference prior to issuing the assessment, had agreed to send the assessment to Mr. Brown at

his Texas address and to Ritter, Barr & Co.

Although it is undisputed that the Department’s representatives in its Roswell office were

given Mr. Brown’s new Texas address and were aware of Ritter, Barr & Co.’s involvement on

behalf of the Taxpayer, I carefully reviewed the testimony of Mr. McKee who was at the

informal conference on behalf of the Taxpayer, as well as the Department’s employees who were

also present. There was no conflict in their testimony with respect to the critical fact of whether

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the Department had agreed to mail the assessment to Mr. Brown’s new address and to Ritter,

Barr & Co. Mr. McKee testified that at the informal conference he requested that the

Department’s “findings”, or response to the arguments and information presented at the informal

conference be mailed to Mr. Brown at his new address and to Ritter, Barr & Co. The evidence

reflected that this was done by Mr. Hull by his letter of May 29, 1996. Under cross-examination,

Mr. McKee also admitted that at that conference, there was no discussion of where the audit

assessment would be sent. Thus, the Department did nothing to mislead or misrepresent where

the assessment would be sent. Additionally, the Department’s representatives in Roswell would

have been careful not to misrepresent or mislead as to where the assessment would be sent. This

is because they knew that once they send the audit to the Department’s Audit Services Office in

Santa Fe, they have no control over when, where or even if the assessment is issued, nor do they

even receive a copy when it is issued. Thus, they would have no way to independently mail a

copy to the Taxpayer’s new address or to Ritter, Barr & Co. Additionally, the Department’s

representatives were well aware of the Department’s policy and procedure that assessments are

mailed to taxpayers at their address of record. They testified that had they been asked to mail the

assessment to an address other than the Taxpayer’s address of record, that they would have

informed the Taxpayer that the Taxpayer would need to complete and file the form which

formally requests that the Taxpayer’s address of record be changed.

In making its arguments, the Taxpayer relies upon certain language in Section 7-1-9

NMSA 1978 (1995 Repl. Pamp.). Specifically, it relies upon the language in Subsection A,

which provides in pertinent part:

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Any notice required or authorized by the Tax Administration Act
to be given by mail is effective if mailed or served by the secretary
or the secretary’s delegate to the taxpayer or person at the last
address shown on his registration certificate or other record of the
department. (emphasis added).

Although the statute authorizes1 the Department to mail notices, such as an assessment of tax, to

taxpayers at either their address of record as shown upon their registration record, or to another

address contained in the Department records, the statute, by its plain wording speaks only to the

effectiveness of such a notice. It in no way requires the Department to mail notices to all

addresses it may have and by its plain meaning, proves the effectiveness of the assessment at

issue herein, which was mailed to the Taxpayer’s address of record.

While it is most unfortunate that under the circumstances of this case, that the Taxpayer

did not actually receive the notice of assessment of taxes, the Taxpayer is attempting to shift the

blame for this occurrence onto the Department, when the responsibility for this occurrence

actually falls upon the Taxpayer itself. Regulation TA 9:4, interpreting and implementing

Section 7-1-9 provides as follows:

All notices, returns or applications required to be made by the
taxpayer must include the correct mailing address of the taxpayer
and the taxpayer must promptly advise the department in writing of
any change in mailing address. If the department has prescribed a
form or format for reporting a change of address, the form or
format must be followed. (emphasis added).

This regulation makes it clear that it is a taxpayer’s responsibility to ensure that the Department

has a correct and current address. This makes sense. It is the taxpayer who best knows their

current and best address to assure that it receives important notifications from the Department

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concerning its taxes. Also, as noted by the Department’s witness, Rick Salazar, it is not

uncommon for the Department’s records to contain a number of different addresses for a

Taxpayer. This is especially true for taxpayer who may have several business locations and for

taxpayers whose tax departments might be located at a different location than their place of

business in New Mexico. In such cases, while any of several addresses might ultimately reach

the taxpayer, obviously there are addresses which are better in terms of assuring that the tax

communication reaches the right parties within a taxpayer’s organization in a timely manner.

It is also noteworthy that the Taxpayer did file a registration change request with the

Department at the time it sold its business assets in New Mexico and ceased to do business here.

While that form canceled the Taxpayer’s registration number, the Taxpayer failed to fill out the

portion of the form which would have changed its address on the Department’s records. Having

failed to keep the Department informed in the manner required of its best and most current

address, the Taxpayer cannot now complain of the consequence of that failure, its failure to

receive the Department’s assessment in a timely manner.

The final argument made by the Taxpayer is that because its letter of September 27, 1996

came within the 90 days from the mailing of the assessment for filing a protest, providing that an

extension of time has been requested, that the letter should be treated as a timely protest. There

are at least two problems with this argument. In the first place, the letter does not protest the

assessment of tax. Rather, it protests “adjustments in gross receipts tax liability set forth in your

audit report letter dated May 3, 1996....” While the assessment was ultimately based upon the

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Section 7-1-17(B)(2) specifically authorizes documents denominated as a “notice of assessment of taxes” to be
mailed to taxpayers.

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audit report adjustments, those adjustments are only proposed adjustments and do not affect a

taxpayer’s liability unless and until they are finalized in the form of a notice of assessment of tax.

Even if this letter could be construed as a protest to the assessment however, it contains no

language which could be construed as requesting an extension of time in which to file such a

protest. The language of section 7-1-24 only authorizes the Department to grant an extension of

time to file a protest “upon written request of the taxpayer....” Because no such request was

made, the Department would not be authorized to treat the Taxpayer’s letter as a timely protest.

As a final observation, although there has not been a timely protest to the Department’s

assessment of tax such as to invoke the jurisdiction of this administrative forum to determine the

substance of the Taxpayer’s objection to the Department’s assessment of tax, the Taxpayer is not

left without a remedy. Although it may present a hardship because of the amount of tax in

dispute, the assessment may be paid and a refund claim submitted, asserting the Taxpayer’s

defenses to the assessment. If the Department denies any part of the claim for refund, the denial

may be contested either administratively, pursuant to Section 7-1-24 or by filing suit in District

Court, pursuant to Section 7-1-26.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely, written protest, pursuant to Section 7-1-24

NMSA 1978 to the Department’s determination that its letter of September 27, 1996 did

not constitute a timely protest to Assessment No. 2046229.

2. The Department’s Assessment No. 2046229 was effective when mailed on

July 8, 1996 to the Taxpayer at its address of record with the Department.

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3. The Taxpayer failed to make a written request for an extension of time in

which to protest Assessment No. 2046229.

4. The Taxpayer failed to file a timely protest, pursuant to Section 7-1-24

NMSA 1978 to Assessment No. 2046229.

5. This forum lacks jurisdiction to determine the issues which the Taxpayer has

raised with respect to Assessment No. 2046229.

For the foregoing reasons, the Taxpayer’s protest IS HEREBY DENIED.

DONE, this 20th day of January, 1998.

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