Phillips 66 Company



On July 16, 2018, the Department assessed the Taxpayer for penalty in the amount of $9,369.03 for late payment of Oil and Gas Severance Tax. On July 20, 2018, the Taxpayer filed a protest explaining that the payment had been late because of delay by the Department. The Taxpayer acknowledged that its payment arrived one day after the due date, June 25, 2018, but asserted the payment was late because of information provided by the Department. The Taxpayer first notified the Department of an error when trying to file their return electronically on June 18, 2018. In response to this notification they received an email from the Department explaining that the problem was being worked on and implying it would be resolved sometime the next day. The Taxpayer was later told to submit an incomplete return omitting the lines causing the error and make the complete payment. The Taxpayer was about to do this on June 22, 2018, when they were contacted by the Department and told to wait on the submission because the problem was close to being solved. At 3:04 pm on that same day the Department sent a message that the Taxpayer could submit the entire correct return, but because the Taxpayer used an ACH payment the funds were not deposited into the Department’s account by the due date. If the payment had been processed before 3 pm, it would have been on time. The Department argued that there were ways of making payment other than the one chosen by the Taxpayer. But the Hearing Officer determined that the actions of the Taxpayer did not meet the definition of negligence, described in Regulation NMAC as “inaction by the taxpayer where action is required.” The Hearing Officer found Regulation NMAC also applicable, which provides for abatement when a taxpayer proves they were “affirmatively misled by a department employee.” The Hearing Officer ordered the Department to abate the penalty and the protest was granted.