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Val Kilmer & JoAnne Whalley



The Taxpayers filed a joint New Mexico personal income tax (“PIT”) return as New Mexico residents for the 1995 tax year.  On December 21, 1999, the Taxpayers mailed an amended 1995 PIT return to the Department claiming a refund.  The stated basis for the refund was that one of the Taxpayers had been found to be a California resident and not a New Mexico resident as of the end of 1995.  After receiving the amended return, the Department asked the Taxpayers’ CPA for a copy of their 1995 California return and told the CPA that it would be some time before action was taken on the refund.  In July 2000, the CPA inquired as to the status of the refund.  The Department subsequently sent the CPA a letter informing her that the Taxpayers’ claim for refund had been denied pursuant to Section 7-1-26 NMSA 1978 because the claim was stale and could no longer be acted on by the Department.  The Taxpayers protested the Department’s determination, raising the following arguments: 1) the Department’s letter denying the refund opened up a new protest period, even though the denial was made after the Department lost its statutory authority to act on the claim; 2) the Department’s denial was made within the statutory limitations period if that period is calculated from the date the Post Office delivered the refund claim rather than from the date of mailing; and 3) the Department is equitably estopped from denying the Taxpayer’s refund claim.  Held: 1) because the period of limitations set out in 7-1-26 had expired, the Department’s denial letter was ultra vires and did not open up a new protest period; 2) the statutory period for acting on a claim for refund runs from the date of mailing and not from the date the Post Office delivers the claim to the Department; and 3) the Taxpayers failed to establish that the Department should be equitably estopped from refusing to take action on their refund claim.  Protest denied.