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Gene and Gail Mortensen



On April 15, 1999, the taxpayers mailed a check to the Department to cover their estimated 1998 New Mexico income tax liability.  The Department failed to credit the check to the taxpayers’ account.  The taxpayers did not file their 1998 New Mexico personal income tax return until April 12, 2002, three years after the statutory due date.  The 1998 return showed a refund due of $371, but the Department took no action on the refund request.  The taxpayers did not inquire as to why their refund had not been granted until July, 2003.  At that time, the Department corrected its records by applying the 1999 estimated payment to the taxpayers’ liability, but denied the refund request as untimely.  The taxpayers then protested the denial.  The hearing officer denied the protest because the taxpayers did not take action to challenge the Department’s failure to act on their refund claim within the time period provided in Section 7-1-26 NMSA 1978.