On June 23, 2017 the Department denied the Taxpayer’s claim for the high-wage jobs tax credit for $324,214.83 for 21 employees over 42 qualifying periods. On September 17, 2017 the Taxpayer filed a formal protest letter. The issue to be decided in the case was whether the Taxpayer was eligible for the credit. The Department began by arguing that the credit was intended only for New Mexico businesses making the Taxpayer ineligible as it is incorporated and based in another state. But the Hearing Officer determined that this was a misreading of the statute. Section 7-9G-1 (B) NMSA 1978, which the Department sited in support of its argument, states “The purpose of the high-wage jobs tax credit is to provide an incentive for urban and rural businesses to create and fill new high-wage jobs in New Mexico.” The Hearing Officer concluded that this is not a restriction that only New Mexico businesses can claim the credit, but only a statement that the credit encourages job creation in the state. The Department then argued that the Taxpayer did not produce the substantial evidence to support the claim as required by statute. Here the Hearing Officer agreed with the Department. Section 7-9G-1 (M) NMSA 1978 states that the eligibility of the credit hinges on the percentage of sales to persons outside of New Mexico. But the Taxpayer, despite its assertions that most of its clients were located outside the state, could only produce one invoice and a revenue report that was created one week prior to the hearing as evidence. The Taxpayer also did not provide any further documentation on its employees, another necessary requirement to claim the credit. The Taxpayer having failed to provide the substantial evidence as required by statute to prove it was entitled to the credit, the Hearing Officer ordered the Taxpayer’s protest denied.
Old Dominion Freight Lines