Wager Equipment Co



On July 11, 2018, the Department issued seven assessments to the Taxpayer totaling $47,047.19 of withholding penalty for the late filing of returns for periods ending November 30, 2017 to May 31, 2018. On August 2, 2018, the Taxpayer filed a timely protest of the Department’s assessments requesting abatement of penalty because a change in staff had caused the returns not to be filed. The main issue of this protest concerned whether the Taxpayer was negligent in not filing the withholding returns. The Taxpayer had made payments for each of the periods in question but had not filed the returns reporting the withholding. The Taxpayer explained the reason for this was that a veteran employee whose responsibility it was to file the returns had retired in November. When the Taxpayer recognized that more training would be required for the replacement employee, the Taxpayer decided to extend the veteran employee’s employment part-time so that she could train and be available for questions. This arrangement, the Taxpayer argued, was evidence of the good-faith attempts to responsibly meet their tax obligations. They also argued they had received nothing from the Department saying they had not filed. The Department responded by explaining that the online TAP system would show an overpayment in each period that had a payment but no return. The Department also argued that the Taxpayer had made no effort to contact the Department nor had it contacted a CPA for advice, which the Taxpayer admitted. The Hearing Office noted that Section 7-1-69 (B) NMSA 1978 provides an exception for penalty for “a mistake of law made in good faith and on reasonable grounds,” but there was no evidence to support a misunderstanding of the law as the Taxpayer did not try to consult with Department representatives. The Taxpayer did, however, meet the definitions of negligence under Regulation NMAC, particularly “inaction by taxpayer where action is required.” For these reasons, the Hearing Officer denied the protest request and ordered that the penalty was properly assessed.