On February 27, 2014, the Department assessed the Taxpayer for personal income tax, penalty and interest for the income tax reporting period ending on December 31, 2010. On March 25, 2014, the Taxpayer filed a protest to the Department’s assessment. During the period in question, the Taxpayer worked as an independent contractor for a case management agency the contracted with the State of New Mexico. The Taxpayer was a non-filer of 2010 federal and state personal income tax returns. In January 2014, after receiving information from the IRS, the Department sent the Taxpayer a notice regarding her unreported income. In response to the notice, the Taxpayer went to a tax service in California to assist her in preparing and filing her 2010 federal and state returns. The Department issued the assessment to the Taxpayer, based on the Form 1099-MISC that was issued by her employer. The Taxpayer argued that once her returns were filed, she would not owe the assessed amount. At the hearing, the Taxpayer was unable to provide any proof that her 2010 returns have ever been filed. Without the Taxpayer establishing a federal adjusted gross income in an amount different from the reported Form-1099 income, the Department had no basis to recalculate the Taxpayer’s state income tax liability. The Taxpayer’s protest was denied.
Melinda L. Schramm