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Rachelle Shaw, DDS, PC



The Taxpayer was assessed for CRS taxes, penalty and interest due as a result of a dishonored check. The Taxpayer protested the penalty and interest, and the Department subsequently abated the penalty portion of the assessment. At the administrative hearing on the Taxpayer’s protest of interest, the only evidence the Taxpayer presented was the sworn affidavit of the Taxpayer’s office manager. The Department objected to admission of the affidavit. The objection was sustained, because admitting the office manager’s affidavit would deprive the Department of its right to cross examination and because New Mexico follows the legal residuum rule, which holds that an administrative decision based solely on inadmissible hearsay cannot stand. Even assuming the Taxpayer’s allegations concerning the Department’s failure to resubmit the dishonored check are true, Section 7-1-13.4 NMSA 1978 provides that neither the Department nor its fiscal agent is obligated to resubmit a dishonored check for payment. When a dishonor causes a tax payment to be late, interest is due on that payment. Held: The Taxpayer failed to meet its burden of proving that the Department’s assessment of interest was incorrect. Protest denied.