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Aileen and David Wong



In May 2013, the Department sent six assessments to the Taxpayers for personal income tax, penalty and interest.  The taxable years covered in the assessments were the years ending December 31, 2008 through December 31, 2011.  The Taxpayers filed a written protest to the assessment on May 31, 2013.  On June 22, 2013, the Taxpayers amended their protest and withdrew the protest with respect to the personal income tax.  They continued to protest the assessment of penalty and interest.   During the period at issue, one of the Taxpayer’s worked in New Mexico as an active officer for the Public Health Service (PHS).  PHS is part of the United States military’s Uniformed Services.  As a result, the Taxpayers claimed an exemption on their personal income tax for active duty military in the armed forces.  The Department’s instructions on the applicable forms specify that “armed forces” include the Army, Navy, Air Force, Marine Corps and Coast Guard.  On the 2011 form, the Department added that pay, wages or salaries paid by PHS do not qualify for the exemption.  On June 20, 2013, the Taxpayers paid the assessed personal income tax to stop further accrual of interest.  The language of the statute governing the exemption, as well as regulation, and the Department’s instructions on the forms, clearly state that the exemption is allowed only for the armed forces listed.  The Taxpayers failure to consult with the Department or a tax professional constitutes negligence for purposes of penalty imposition, and statute states that interest must be applied to delinquent taxes.  The Taxpayers’ protest was denied.