Hal M. Dean



From 1991 through April 1999, Dean/Krueger & Associates, Inc. (“DKA”) was engaged in the business of providing architectural services in New Mexico. Hal Dean and Eugene Baker were the sole shareholders and officers of DKA and were the only persons who had signature authority on DKA’s bank accounts. Beginning in 1991, DKA stopped reporting and paying New Mexico CRS taxes, including withholding taxes that had been deducted from the wages of DKA’s employees. In February 2000, the Department assessed DKA for gross receipts and withholding taxes due for tax periods January 1993 through April 1999. At the same time, the Department issued separate assessments to Mr. Baker and Mr. Dean, as corporate officers, for the withholding tax portion of the assessment issued to DKA. Mr. Dean protested his individual assessment on the following grounds:  (1) he had reasonable cause for failing to pay the withholding tax due to the state and should be excused from liability pursuant to Section 7-3-5(B); (2) the assessment was not valid because it used the same assessment number assigned to DKA and did not have a unique number that the Department’s computer system could identify to Mr. Dean; (3) Section 7-1-18 limits the period for which Mr. Dean could be assessed to three years because he only became a “taxpayer” after he was assessed by the Department; and (3) the Department’s estimate of withholding tax due should be adjusted to reflect the actual withholding tax shown on business records introduced at the hearing.  Held:  (1) The “reasonable cause” exception does not apply to the facts of this case and does not excuse Mr. Dean from withholding tax liability.  (2) The assessment issued to Mr. Dean met all the requirements of Section 7-1-17 NMSA 1978 and was a valid assessment. (3) Pursuant to Sections 7-1-3(W) and 7-3-5 NMSA 1978, Mr. Dean was a taxpayer personally liable for payment of withholding tax deducted from the paychecks of DKA’s employees, and the Department correctly assessed Mr. Dean under the seven-year limitation period in Section 7-1-18.  (4) The additional withholding tax records introduced at the administrative hearing were sufficient to overcome the presumption of correctness of the Department’s estimate of taxes due and provided a reasonable basis for adjusting the Department’s assessment.  Protest granted in part and denied in part.