Rochelle B. Young



On January 8, 2014, the Department assessed the Taxpayer for personal income tax, penalty and interest for the income tax reporting periods ending on December 31, 2011, and December 31, 2012.  On February 26, 2014, the Taxpayer filed a protest to the Department’s assessments.  During the period in question, the Taxpayer worked as an officer for the Public Health Service (PHS).  As a member of PHS, the Taxpayer claimed an exemption from New Mexico personal income tax under Section 7-2-5.11 NMSA 1978, which provides an exemption for active duty military pay from the armed forces.  The instructions on the relevant personal income tax form specifically exclude wages paid by the U.S. Public Health Service from this exemption.  The Taxpayer was not entitled to the exemption, and is subject to New Mexico personal income tax.  Section 7-1-67 NMSA 1978 makes the imposition of interest mandatory and, the Taxpayer is also liable for penalty because her inaction in determining if she was eligible for the exemption.  The Taxpayer’s protest was denied.