Taxpayers, who had wages from employment in New Mexico, filed New Mexico PIT returns reporting zero income and requesting a refund of taxes withheld by their employers. The refund was denied and Taxpayers protested, claiming 1) they are not subject to federal income tax because they do not reside within a federal territory; 2) their wages are not taxable because wages are not derived from a taxable source; 3) they do not come within the definition of an “employee” set out in IRC § 3401(c); 4) the federal government does not have authority to impose tax on the wages of private individuals; 5) the federal income tax system is voluntary and they do not choose to volunteer; 6) they “inhabit” New Mexico but are not residents of New Mexico; 7) the Department is in default for failing to respond to Taxpayers’ demands for information. Taxpayers’ arguments are without merit. Taxpayers are liable for payment of New Mexico income tax and are not entitled to a refund of income taxes withheld by their employers. Protest denied.
Joseph and Toni Rene Salinas