Rio Rancho Physical Therapy

19-23

On July 5, 2018, the Department denied the Taxpayer’s application for refund seeking $10,643.10 in costs and fees arising from its 2016 protest. The Taxpayer and the Department had settled the protest when the Taxpayer provided additional support for its refund request. On October 3, 2018, the Taxpayer filed a protest of the Department’s denial through its CPA. As there was not any material dispute of the facts in the case, the Hearing Officer agreed to provide a summary judgement. The issue to be decided in the case was whether the Taxpayer could later be awarded costs and fees in a separate protest when the protest from where the costs and fees originated had already been resolved. The Taxpayer voluntarily withdrew the initial protest after the settlement, though it later argued that it had not withdrawn its request for costs and fees. There was nothing in the withdrawal to indicate, however, that the Taxpayer would continue to pursue other unresolved issues related to the case. The statute governing the awarding of costs and fees states that they arise in connection with the proceeding in which they incur. The Hearing Officer interpreted this to mean that costs and fees should not be the central issue in a separate, standalone protest, but should be considered as part of a hearing determining the collection or refund of tax. The Taxpayer cited a fiscal impact report which, in its analysis of the statute, suggested a separate protest hearing might be required for the determination of costs and fees. The Hearing Officer determined, however, that this did not mean that the hearing would be a separate protest but instead another hearing in the same protest to determine the costs and fees. The Hearing Officer referenced a case that conducted an additional hearing within the same protest for just this purpose. Another case concluded that, once a case has been determined or resolved, its jurisdiction to consider costs and fees in that protest ends. In the Taxpayer’s earlier protest it made no demand for costs or fees and should have been aware that when it withdrew its protest the proceedings were concluded. Because of these reasons, the Hearing Officer ordered the Department was correct in its denial of the application for refund and the protest was denied.