The Taxpayers are a married couple who live together in Gallup, New Mexico. Mrs. Yearley is an enrolled tribal member of the Navajo Nation, a member of the Teesto Chapter in Arizona. In tax years 1999 through 2002, Mrs. Yearley earned her income working at a coal mine near Window Rock, Arizona, on the Navajo Nation. She retired on December 21, 2002, and received retirement income stemming from her work on the Navajo Nation in tax years 2003 and 2004. Beginning in 1999 and continuing through 2004, Mrs. Yearley moved in with her ailing father in Teesto to care for him. Mrs. Yearley did not pay personal income tax on her income during this period. On September 18, 2006, the department assessed the Taxpayers for Mrs. Yearley’s unpaid personal income tax, penalty and interest for tax years 1999 through 2004. Mr. Yearley did pay New Mexico personal income taxes on all of his income. The Taxpayer’s filed a written protest to the assessment and a hearing was set on the matter. The issue to be decided was whether Mrs. Yearley’s personal income for the tax years in question was exempt from New Mexico personal income tax pursuant to Section 7-2-5.5 NMSA 1978. The hearing officer determined that Mrs. Yearley’s income was exempt during tax years 1999-2004 because she was an enrolled member of the Navajo Nation, earned income from working on the Navajo Nation, and lived within the boundaries of the Navajo Nation during the time period in question. The Taxpayer’s protest was granted.?
John & Bonnie Yearley