Tax & Rev v. Southwest Abatement

This memorandum opinion was not selected for publication in the New Mexico Reports. Please see
Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please
also note that this electronic memorandum opinion may contain computer-generated errors or other
deviations from the official paper version filed by the Court of Appeals and does not include the
filing date.
1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 STATE OF NEW MEXICO TAXATION
3 AND REVENUE DEPARTMENT,
4 Plaintiff-Appellant,
5 v. NO. 31,117
6 SOUTHWEST ABATEMENT, INC.,
7 Defendant-Appellee.
8 APPEAL FROM THE TAXATION AND REVENUE DEPARTMENT
9 Dee Dee Hoxie, Hearing Officer
10 Gary K. King, Attorney General
11 Amy Chavez-Romero, Special Assistant Attorney General
12 Santa Fe, NM
13 for Appellant
14 The Waggoner Legal Group
15 Robert M. Strumor
16 William J. Waggoner
17 Santa Fe, NM
18 for Appellee
19 MEMORANDUM OPINION
20 VANZI, Judge.
1 The State of New Mexico Taxation and Revenue Department (the Department)
2 appeals from the decision and order of its hearing officer concerning penalties due
3 from Southwest Abatement, Inc. (Taxpayer), in connection with gross receipts tax for
4 the tax year 2007. We reverse.
5 Prior to January 1, 2008, NMSA 1978, Section 7-1-69(A) (2003) (amended
6 2007), provided that a penalty of two percent per month or any fraction of a month
7 would be added to the amount of an assessment if a taxpayer failed to file a tax return
8 or to pay taxes when due because of negligence or disregard of Department rules or
9 regulations, but without intent to evade or defeat a tax. The statute then provided a
10 maximum penalty of ten percent. Section 7-1-69(A)(1). In 2007, the Legislature
11 amended Section 7-1-69 to increase the maximum penalty to twenty percent, effective
12 January 1, 2008. 2007 N.M. Laws, ch. 45, §§ 4, 16; NMSA 1978, § 7-1-69(A) (2007).
13 On November 4, 2008, the Department issued an assessment to Taxpayer for
14 gross receipts tax due for various tax periods in 2007, including compensating tax,
15 interest, and a twenty percent penalty. On December 3, 2008, the Department issued
16 another assessment for gross receipts tax due for three different tax periods in 2007,
17 including compensating tax, interest, and a twenty percent penalty. Taxpayer
18 protested the assessments. The hearing officer denied the protest but reduced the
19 penalty to ten percent based upon the 2003 version of Section 7-1-69. The
2
1 Department appeals the hearing officer’s decision and order, and Taxpayer has timely
2 responded.
3 This Court has addressed the same issue raised in this appeal in GEA Integrated
4 Cooling Technology v. New Mexico Taxation & Revenue Department, 2012-NMCA-
5 010, ___ N.M. ___, ___ P.3d ___ (No. 30,790, Dec. 8, 2011). In GEA, we held that
6 the date of the assessment under Section 7-1-69 determines the maximum penalty that
7 the Department is to apply. GEA, 2012-NMCA-010, ¶ 10. In that case, the
8 department issued an assessment in 2009 for gross receipts tax due in 2006 and 2007.
9 Id. ¶ 2. Thus, we held that the 2007 amendment and the twenty percent maximum
10 penalty applied to the assessment. Id. ¶ 15. Based on GEA, we reach the same result
11 in this case for Taxpayer’s 2007 tax year. We reverse the hearing officer’s decision,
12 and we hold that the Department’s imposition of the twenty percent maximum penalty
13 was the correct amount to apply in this case.
14 CONCLUSION
15 We reverse the decision of the hearing officer regarding the assessments for the
16 tax year 2007 to the extent that the hearing officer imposed the ten percent maximum
17 penalty. The 2007 amendment to Section 7-1-69 was in effect at the time the
18 Department issued its assessments on November 4, 2008, and December 3, 2008, and
3
1 the Department could impose a twenty percent maximum penalty for the assessments
2 made for these tax years.
3 IT IS SO ORDERED.
4 __________________________________
5 LINDA M. VANZI, Judge
6 WE CONCUR:
7 _________________________________
8 CELIA FOY CASTILLO, Chief Judge
9 _________________________________
10 JONATHAN B. SUTIN, Judge
4