Benny Nevarez



The Taxpayer worked for ten years as a plumber for Pronto Plumbers, Inc., in Las Cruces/Mesilla Park, New Mexico.  The Taxpayer vested in Pronto Plumbers Profit Sharing Plan during his employment.  In 2001, the Taxpayer’s employment with Pronto Plumbers was terminated.  In 2003, the Taxpayer contacted the owner of Pronto Plumbers about withdrawing from the Profit Sharing Plan.  The owner provided the Taxpayer with a packet of materials that he needed to complete to get his distribution.  The Taxpayer took the packet to Jackson Hewitt Tax Service to be completed.  Pronto Plumbers informed the Taxpayer that federal withholding of 20% from the distribution was required.  The Taxpayer returned the completed packet to Pronto Plumbers and was issued a check from the Profit Sharing Plan, less the 20% for federal withholding.  None of the materials the Taxpayer presented indicate that Pronto Plumbers would withhold any amount for New Mexico personal income tax.  On April 9, 2004, the Taxpayer filed his New Mexico personal income tax return listing a federal adjusted gross income that did not include the distribution from the Profit Sharing Plan.  As a result of this filing, the Taxpayer received a New Mexico income tax refund.  At some later time, the IRS made a correction to the Taxpayer’s adjusted gross income as a result of the distribution from the profit sharing plan and another amount of unreported work income.  The Taxpayer did not amend his New Mexico return to account for this correction.  As a result of the tape match program with the IRS, the Department learned of this discrepancy and sent the Taxpayer a notice of limited scope audit.  At the conclusion of this audit, the Department sent the Taxpayer a notice of assessment for personal income tax, penalty and interest for the 2003 tax year.  The Taxpayer protested this assessment arguing that his former employer was responsible for making the proper withholdings.  The Taxpayer provided no evidence that he requested any New Mexico withholdings be made from his profit sharing distribution, and New Mexico’s self-reporting tax system dictates that the responsibility for correctly reporting and filing a personal income tax return rests on the Taxpayer.  The Taxpayer’s protest was denied.?