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Christopher Roche & Nguyen H. Park



On November 21, 2016, the Department assessed the Taxpayers for penalty and interest owed for the 2015 personal income tax (PIT) period. The Taxpayer filed a timely written protest with the Department on December 23, 2016. The Taxpayers argued that they had originally filed their 2015 state PIT return on time and at the same time they filed there 2015 Federal income tax return. The Taxpayers testified that they mailed in their state return and payment by following the instructions provided by the state. The Taxpayers starting contacting the Department once they noticed that their check for their federal income tax due had cleared but their check for the state had not. Every time the Taxpayers had contacted the Department they would get an automated phone message response indicating that return processing times were taking up to six weeks. In the first or second week of October 2016, they were able to speak with a Department representative that informed them that there was not record of their 2015 PIT return and payment ever being received by the Department. Upon learning this information, the Taxpayers re-mailed their 2015 personal income tax return and payment. This time the payment cleared their account. Shortly after, the Taxpayers were assessed by the Department for penalty and interest for an untimely filed return. During the hearing, the Taxpayers provided evidence that their return and payment were mailed on April 16th or April 17th, 2017 which is in compliance with Section 7-1-9 NMSA 1978. However, per regulation (C) (2) NMAC if the mailed items are not received by the Department the contents are not considered timely. The Hearing Officer determined that the Taxpayers exercised reasonable care when mailing their 2015 personal income tax return and payment through the United States Postal Service and that the Taxpayers did not fail to act when they were required to file and submit payment to the Department. The Hearing Offer decided based on the information above that penalty could be abated. For the issue of interest, the Hearing Officer indicates that the use of “shall” makes the assessment of interest mandatory and not discretionary. As the tax was not paid when it was due, interest was properly assessed. For the reasons above, the Taxpayers protest is granted in part and denied in part.