School for Advanced Research

19-13

Between December 5, 2018, and December 10, 2018, the Department assessed the Taxpayer for withholding tax, penalty, and interest for three filing periods in 2016. On January 7, 2019, the Taxpayer filed a formal protest of the assessments. The majority the amounts owed were for penalty and interest due to the late filing of the returns in November of 2018. The main issue to be decided in the protest was whether the Taxpayer was liable for the penalty when the returns had been filed unintentionally late and due to what the Taxpayer perceived as confusing changes made to the website at the time. The Taxpayer had paid the tax due for each of the periods in question but had not filed the returns, explaining that an employee who made the payments was confused by changes made to the site and failed to click on the correct link. The Taxpayer argued that by changing the locations of the buttons for filing a return the Department had been affirmatively misleading and therefore the Taxpayer was not negligent. The Taxpayer also argued that the Department should have notified them immediately that it had made payment but not filed returns. The Hearing Officer, however, did not agree and pointed to the requirement of New Mexico’s self-reporting tax system that “every person is charged with the reasonable duty to ascertain the possible tax consequences” of his or her actions. Silence on the part of the Department never means that a return has been filed. Though the Taxpayer might have been confused by the website, the Hearing Officer concluded this is not the same as being affirmatively misled. The Taxpayer is ultimately responsible for its own oversight when using the online filing system. Though the mistake was inadvertent, it still meets the definition of negligence, described in regulation as “inadvertence” and “erroneous belief or inattention.” This having been decided, the Hearing Officer ordered that the late filed returns were subject to penalty.