Henry & Krystyna Kalka

13-18

In 2007, the Taxpayers made $6000 in estimated payments for personal income tax.  When they filed their 2007 New Mexico Personal Income Tax return, they listed only $3000 in estimated payment.  The Taxpayers’ error resulted in an overpayment of their 2007 personal income taxes.  In 2011, the Department sent the Taxpayers a letter stating that there was an overpayment of tax, that they had until December 31, 2011 to file a claim for refund, and then the Department would issue a rebate check.  The December 31, 2011 deadline was three years from the end of the calendar year in which the taxes were due, the maximum period allowed by law for claiming a refund.  The Taxpayers timely submitted the application for refund and an amended 2007 return.  However, the Department did not approve or deny the application for refund within 120-days.  The Taxpayers did not file a protest or start any action in court challenging the failure to approve or deny the claim within the 210 day period allowed after the filing of their application, rendering their claim for refund stale.  The Taxpayers’ representative resubmitted the application for refund a year after the expiration of the stature of limitations on December 31, 2012.  The Department denied this second claim for refund because the statute of limitations had expired.  The Taxpayers protested this denial.  The protest was denied under controlling case law and the language of NMSA 1978, Section 7-1-26 on three grounds: 1) the Department lacked authority to consider the first claim for refund after 210-days had passed without the Taxpayers filing a protest of civil action; 2) the Taxpayer’s second claim for refund was filed after the expiration of the statute of limitations; and 3) although the Taxpayers’ believed denial of their claim for refund was unfair in light of the Department’s inaction on the initial claim, the Taxpayers did not overcome the high bar required to establish application of equitable estoppel against the Department.