On January 16, 2014, the Department assessed the Taxpayer for personal income tax principal, penalty and interest for the tax years ending December 31, 2010, 2011 and 2012. The Taxpayer protested the assessments on February 12, 2014. During the tax years in question, the Taxpayer’s income was earned as a commissioned officer with the United States Public Health Service (PHS). The Taxpayer believed that her income from PHS was exempt from New Mexico personal income tax. This belief was based on earnings statements from PHS, and a tax software program that indicated that active military members were exempt from New Mexico personal income tax. Prior to the hearing, the Taxpayer realized that her earnings were taxable, as PHS is a uniformed, but not armed branch of the military, but requested that penalty and interest be abated. Failure to pay tax when it was due because of negligence is subject to penalty. A Taxpayer’s lack of knowledge, or erroneous belief that tax was not owed, is considered negligence. Penalty was properly assessed in this situation, as was interest, which is mandatory. The Taxpayers’ protest was denied.