DeWayne Maloy



Between 1982 and 1997, the Taxpayer was employed by a national company. During most of this 15-year period, the Taxpayer lived and worked in Texas. He also lived in Oklahoma for a brief period, and then moved to New Mexico in 1994. During his 15 years of employment, the Taxpayer made contributions to the company’s 401(k) plan. In 1997, the Taxpayer changed jobs and cashed out the money in the plan. When he filed his 1997 New Mexico income tax return, the Taxpayer reported only part of the 401(k) distribution because he believed he should not have to pay New Mexico income tax on the portion of the distribution attributable to contributions made during the period he lived and worked outside New Mexico. In 2000, following a limited scope audit, the Department assessed the Taxpayer additional personal income tax, penalty and interest on the unreported funds he received from his 401(k) plan.  The Taxpayer protested the assessment. Held: New Mexico has the right to require the Taxpayer to pay New Mexico income tax on the total amount of 401(k) distributions received while he was a resident of New Mexico, even when a portion of that income was attributable to contributions made to the 401(k) plan while the Taxpayer was a resident of another state.  Protest denied.