Rafael M. Romero



The Taxpayer protested the Department’s estimated assessments of personal income tax, interest and the fraud penalty as well as the filing of a lien to secure the assessments.  The Taxpayer failed to attend the hearing.  The Department had obtained copies of the Taxpayer’s W-2 forms for the tax years at issue and agreed to the adjustment of the assessments to reflect a smaller amount of tax, penalty and interest owing.  Having failed to attend the hearing to present evidence or argument to challenge the validity of the Department’s assessments as adjusted, the presumption of correctness applies to uphold the adjusted assessments of tax and interest.  Because Section 7-1-78 places the burden of proof on the Department in fraud cases, the Department must present evidence to prove by clear and convincing evidence that the Taxpayer failed to pay tax with the willful intention to evade or defeat the payment of tax to sustain the imposition of the 50% fraud penalty.  The Department met its burden of proof in this by proving that the Taxpayer had previously filed joint returns reporting and paying taxes on his income from wages, establishing that he knew such income was subject to New Mexico income tax.  In the first of the tax years at issue, the Taxpayer filed a New Mexico personal income tax return as a married person filing separately, reporting zero federal adjusted gross income even though he had income from wages and he requested a refund of the income tax withheld by his employer from his wages.  The Department denied his claim for refund.  The Taxpayer’s wife refused to participate in that return, and filed her separate return as a married individual filing separately and reported and paid income tax on her income from wages.  In the second tax year at issue, the Taxpayer simply failed to file a personal income tax return with the Department even though he had income from wages in New Mexico.  The Taxpayer’s wife again refused to participate in this tax avoidance and filed a return as a married individual filing separately and she reported and paid tax on her income from wages.  The Taxpayer failed to appear to present any evidence or legal arguments to rebut the reasonable inference that he knew he was subject to income tax and willfully evaded the payment of such tax.  Finally, because the Department’s tax lien secures the payment of the assessments which were upheld, and there was no evidence or argument presented to establish that the lien was improper in any respect, the Department’s lien was upheld.  Protest denied except insofar as the Department agreed to modify the assessments to reflect actual taxes owing on Taxpayer’s income from wages.