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  3. Victor and Bertha Chacon

Victor and Bertha Chacon



?In July 2002, the Internal Revenue Service notified the taxpayers that they had underreported the capital gain income on their 2000 return.  The taxpayers did not file an amended 2000 New Mexico personal income tax return and waited for the Department to contact them.  In April 2004, the Department assessed the taxpayers for additional income tax due as a result of the error on their 2000 federal return, plus interest of $598.93.  The taxpayers paid the assessed principal but protested the interest.  The taxpayers asked the Department to reduce the interest to $250.00, the amount of interest that had accrued as of the date the IRS notified the taxpayers of their underpayment of federal income tax.  The hearing officer denied the protest, finding that the taxpayers had a statutory obligation to amend their New Mexico return within 90 days after the adjustment to their federal return.  The taxpayers were not entitled to wait for the Department to find them before interest began to accrue on their underpayment of state tax.