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Orders are written statements to implement a decision after a Department administrative hearing. 

A taxpayer may file an appeal with the New Mexico Court of Appeals within 30 days after the date of the decision. Appeals are decided based on the evidence and arguments presented at the administrative hearing. 

All Posts > 2020



PST Services Inc



Jackson Rock Springs Stages



Working Boy Productions



Dennis Miller



Four Corners Healthcare Corp



Bruce Winchell



Continental Land Resources



Distribution Management Corporation Inc

On September 25, 2018, the Department assessed the Taxpayer $36,110.92 in tax, penalty and interest as the result of an International Fuel Tax Agreement (IFTA) carrier audit for filing periods in 2015. On October 11, 2018, the Taxpayer protested the assessment. This protest involved the Taxpayer’s IFTA returns and the adequacy of records supplied upon audit and when contesting the assessment. The Taxpayer argued that it was able to replicate the fuel tax miles per gallon records using 2018 to support its 2015 reporting, which it believed to be comparable. The Taxpayer had explained that under its own internal records retention policy fuel purchase records were only kept for 90 days and so the required 2015 records had been destroyed. In order for tax to be correctly calculated the carrier needed to know precisely the miles traveled and the fuel used. IFTA requires carriers to retain supporting documents for four years. The records provided to the Department in the audit did not include many of the records that IFTA requires, including vehicle identification numbers, beginning and ending odometers, and origin and destination of trips. No original fuel receipts or fuel statements were kept. However, even though this was the case, the Department did come to the determination that the number miles reported was correct. Following the guidance of the IFTA audit manel the Department used the rate of 4 miles per gallon to calculate the tax on the estimated amount of fuel used. The Taxpayer argued that it was appropriate to use the 2018 reporting because the trucks being used had similar fuel mileage to the trucks used in 2018. The Taxpayer determined this to be 7.77 miles per gallon which would lower the amount of fuel used considerably. Though the Hearing Officer was willing to allow this as a possible method of reporting, and found the testimony of the Taxpayer’s witnesses credible, some of this testimony was directly contradicted by some of the documentary evidence and not enough support was presented to show that two tax years were similar. The burden on the Taxpayer is to overcome the presumption of correctness in the Department’s assessment. Ultimately, the lack of data made this difficult to achieve. Although the Department accepted the reported miles travelled in 2015, there remained variables unsupported by evidence. It was the Taxpayer’s responsibility to prove with substantial evidence that it properly reported the taxes owed and the Taxpayer kept no organized business records to support the fuel use taxes. Therefore, the Taxpayer failed to meet the burden to overcome the presumption of correctness in the Department’s assessment and so the Hearing Officer denied the protest and ordered the assessment paid.



Process Equipment & Service Company Inc

On February 3, 2017, and then on May 31, 2018, the Department denied the Taxpayer’s claim for a Technology Jobs and Research and Development Tax Credit for 2014 and 2016 respectively, which the Taxpayer later protested. The Department denied the claims because it determined that Taxpayer’s methodology of demonstrating qualified expenditures was inadequate under the statutory language and the evidence presented. The primary issue in this case was the meaning of qualified expenditures for the credit and whether the Taxpayer demonstrated adequate proof through its method. The Taxpayer argued since the New Mexico Technology Jobs and Research Development Credit is very similar to the federal research and development credit, the proof of the credit, routinely accepted by the IRS, should also be accepted by the state. Taxpayer contended that there is no requirement for project timekeeping system in order to claim the state credit, as that is not a requirement of federal law. The Department argued that if the legislature had intended the state credit requirements to be exactly the same as the federal credit, it would have stated so. Instead, the state required that a cost accounting method to support the credit must be the same as a methodology relied on in the Taxpayer’s other business activities. The Department contended that the methodology chosen by the Taxpayer was not relied on in any of its business activities and only used in this case to qualify for the New Mexico credit. The Taxpayer argued that the intent of the requirement in the statute was simply to prevent distortion and that it had consistently employed its method in order to demonstrate it qualified for the credit. The Taxpayer also stated that it did use the method in question for other business purposes. The Hearing Office agreed with the Department that the state credit intends different qualifications from the federal credit, however, found the Department applied the state provisions too narrowly and that, in determining qualification for a tax credit, the statute should be interpreted in a reasonable manner consistent with the legislative intent. Through testimony the Taxpayer was able to demonstrate that the system it used to track how much work was being committed to new research and development projects in its regular business activities was also used in its method to support the credit. Since the method employed supported the qualified expenditures, the Hearing Officer determined that the credit must be allowed and ordered the protest granted.



Star Paving Co

On July 27, 2018, Department assessed the Taxpayer for $23,155.27 in tax, penalty, and interest as the result of a Department audit. The Taxpayer paid the assessment but later submitted an application for refund for the amount, challenging the validity of the assessment. The Department denied the refund request on May 16, 2019, and the Taxpayer protested. The protest involved whether the Taxpayer adequately supplied records to support a one-way hauler weight distance tax rate. The Taxpayer owned and operated heavy trucks hauling materials to be used in construction projects. The Weight Distance Tax Act imposes a tax on all registered vehicles with a declared weight in excess of 26,000 pounds that travel on state highways. All the Taxpayer’s trucks met this qualification. The statute further establishes the base tax rates for all registered vehicles based on the declared gross weight and on the mileage traveled on state highways. The tax rate increases as a vehicle’s weight classification increases. There is, however, a reduced rate for a one-way haul. If the operator of the vehicle can satisfy the one-way haul rate criteria provided in regulation, the Taxpayer is allowed 33% less than the full tax rate. In this case, the Taxpayer needed to show that 45% or more of the mileage traveled was traveled empty of all load. During the timeframe at issue in the audit, the Taxpayer did not maintain records that separately recorded the mileage of its vehicles when driving from the vehicle storage yard, to the materials supplier, to the job site, and back to either the supplier or to the vehicle storage yard. Because of this, the Taxpayer’s records contained only total mileage for its trucks, which could be for miles when it was empty and miles when it was fully or partially loaded. Regulations describe exactly these requirements the records that must be kept to support the lower tax, but the Taxpayer argued that the records that were maintained showing only the total mileage traveled satisfied other record keeping regulations which it cited. However, the Hearing Officer disagreed, explaining that a plain reading of the statute clearly supported the requirements found in regulation that Taxpayers keep proper records to support that the lower one-way haul rate could be used. This having been determined the Hearing Officer denied the protest.

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