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William & Diane Severns



The Taxpayers, who were residents of New Mexico beginning at least in 1977, filed joint New Mexico personal income tax returns for tax years 1977 through 2000.  For tax years 2001 through 2007, the Taxpayers did not file any personal income tax returns in New Mexico.  On June 13, 2008, the Department issued seven notices of assessment to the Taxpayers for unreported and unpaid personal income taxes, penalty and interest for those tax years.  The Taxpayers filed a written protest to the assessments, claiming that they had switched their place of residency from New Mexico to Nevada during the years in question.  During the hearing, the Taxpayers conceded that they were New Mexico residents in 2005, and withdrew their protest for that year.  The issue of whether the Taxpayers were residents for the other six years in question, and subject to New Mexico personal income tax for those years, remained to be decided at the hearing.  The Taxpayers had purchased a succession of RVs during the years in question, and spent time travelling the country and they purchased fixed RV lots in Nevada and Florida.  They also maintained their home in Albuquerque.  In 2000 and 2001, the Taxpayers consulted with a tax and estate-planning attorney about their desire to change their residency to Nevada.  He informed them that they could keep their Albuquerque home as a second home and still not be considered New Mexico residents.  Both Taxpayers had changed their voter registration from New Mexico to Nevada by 2004.  Taxpayers executed wills in which they testified that they were residents of Nevada.  One Taxpayer changed her driver’s license to Nevada, while the other Taxpayer renewed his license in New Mexico for 8-years.  However, the Taxpayers continued to spend the majority of each year in New Mexico, including holidays.  They also conducted their daily living activities in New Mexico, which included medical and vision appointments, shopping, vehicle registrations, and still had their mail delivered to their Albuquerque address.  This day-to-day business and the time spent in New Mexico strongly indicated that this is where the Taxpayers truly lived.   The hearing officer found that the Taxpayers were New Mexico residents during the tax years in question, and were required to pay the assessed personal income tax and interest.  The hearing officer also found that the Taxpayers were not negligent as they relied upon the advice of an attorney about the change of residency to Nevada.  Due to this, the penalty was to be abated.  The Taxpayer’s protest was granted in part and denied in part.