SB0129

SENATE BILL 129

54th legislature - STATE OF NEW MEXICO - first session, 2019

INTRODUCED BY

Jacob R. Candelaria and Jason C. Harper and Daniel A. Ivey-Soto

FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE

AN ACT

RELATING TO TAX ADMINISTRATION; MODIFYING TERMS GOVERNING TAX-RELATED PROTESTS AND PROCEEDINGS AND THE ADMINISTRATIVE HEARINGS OFFICE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 7-1-16 NMSA 1978 (being Laws 1965, Chapter 248, Section 19, as amended) is amended to read:

"7-1-16. DELINQUENT TAXPAYER.--

A. Except as provided in Subsection D of this section, [any] a taxpayer to whom taxes have been assessed as provided [in] by Section 7-1-17 NMSA 1978 or upon whom demand for payment has been made as provided [in] by Section 7-1-63 NMSA 1978 who does not [within ninety days after the date of assessment or demand for payment] make payment, timely protest the assessment or demand for payment as provided by Section 7-1-24 NMSA 1978 or furnish security for payment as provided by Section 7-1-54 NMSA 1978 [becomes] is a delinquent taxpayer and remains such until:

(1) payment of the total amount of all such taxes is made;

(2) security is furnished for payment; or

(3) no part of the assessment remains unabated.

B. [Any] A taxpayer who fails to provide security as required by Subsection D of Section 7-1-54 NMSA 1978 [shall be deemed to be] is a delinquent taxpayer.

C. A taxpayer is a delinquent taxpayer if [a] the taxpayer files a protest as provided [in] by Section 7-1-24 NMSA 1978 [the taxpayer nevertheless becomes a delinquent taxpayer upon failure of the taxpayer to appear] and fails, in person or by authorized representative, to appear at the hearing set or [upon failure] fails to perfect an appeal from [any] a decision or part [thereof] of a decision adverse to the taxpayer to the next higher appellate level, as provided in that section, unless the taxpayer makes payment of the total amount of all taxes assessed and remaining unabated or furnishes security for payment.

D. A taxpayer [does] is not [become] a delinquent taxpayer if the taxpayer has been issued an assessment as a result of a managed audit but is still within the allowed time period to pay the tax due as specified in Paragraph (4) of Subsection A of Section 7-1-67 NMSA 1978."

SECTION 2. Section 7-1-17 NMSA 1978 (being Laws 1965, Chapter 248, Section 20, as amended) is amended to read:

"7-1-17. ASSESSMENT OF TAX--NOTICE--PRESUMPTION OF CORRECTNESS.--

A. If the secretary or the secretary's delegate determines that a taxpayer is liable for taxes in excess of twenty-five dollars ($25.00) that are due and that have not been previously assessed to the taxpayer, the secretary or the secretary's delegate shall promptly assess the amount thereof to the taxpayer.

[B. Assessments of tax are] Such an assessment is effective when:

(1) [when a return of] a taxpayer [is received by] files a return with the department showing a liability for taxes;

(2) [when a document denominated "notice of assessment of taxes", issued in the name of the secretary, is mailed or delivered in person] the department, by certified United States mail, mails to the taxpayer against whom the liability for tax is asserted [stating the nature and amount of the taxes assertedly owed by the taxpayer to the state, demanding of the taxpayer the immediate] a document titled "notice of assessment of taxes" and a demand for payment [of the taxes and briefly informing the taxpayer of the remedies available to the taxpayer]; or

(3) [when] an effective jeopardy assessment is made as provided in the Tax Administration Act.

B. In making a notice of assessment of taxes and demand for payment under Paragraphs (2) and (3) of Subsection A of this section, the department shall:

(1) issue the notice and demand in the name of the secretary to the taxpayer;

(2) state the type and amount of taxes the department asserts are owed by the taxpayer;

(3) demand that the taxpayer immediately pay the taxes;

(4) briefly inform the taxpayer of remedies available to the taxpayer; and

(5) state the grounds for assessments.

C. If, within twenty-five days after the department sends a notice of assessment of taxes and demand for payment under this section, a taxpayer fails to accept delivery of the mailing, a duplicate notice sent by first-class United States mail to the taxpayer's last known address constitutes sufficient notice to the taxpayer of the assessment.

[C. Any] D. An assessment of taxes or demand for payment made by the department is presumed to be correct.

[D. When taxes have been assessed to any taxpayer and remain unpaid] E. The secretary or the secretary's delegate may demand payment of unpaid taxes assessed to a taxpayer at any time except as provided otherwise by Section 7-1-19 NMSA 1978."

SECTION 3. Section 7-1-23 NMSA 1978 (being Laws 1965, Chapter 248, Section 25, as amended) is amended to read:

"7-1-23. DISPUTING LIABILITIES--ELECTION OF REMEDIES.-- [Any] A taxpayer [must elect to] may dispute the taxpayer's liability for [the payment of] taxes [either] only by protesting the assessment [thereof] of taxes as provided in Section 7-1-24 NMSA 1978 without making payment [of the disputed tax liability] or by claiming a refund [thereof] as provided in Section 7-1-26 NMSA 1978 after making payment of the [disputed tax liability] taxes the department asserts are owed. The pursuit of one of the two remedies [described herein] constitutes an unconditional waiver of the right to pursue the other."

SECTION 4. Section 7-1-24 NMSA 1978 (being Laws 1965, Chapter 248, Section 26, as amended) is amended to read:

"7-1-24. DISPUTING LIABILITIES--ADMINISTRATIVE PROTEST.--

A. A taxpayer may dispute:

(1) the assessment to the taxpayer of any amount of tax;

(2) the application to the taxpayer of any provision of the Tax Administration Act except the issuance of a subpoena or summons; or

(3) the denial of or failure either to allow or to deny a:

(a) tax credit [or rebate] application or claim;

(b) rebate; or

[(b)] (c) claim for refund made in accordance with Section 7-1-26 NMSA 1978.

B. The taxpayer may dispute a matter described in Subsection A of this section by filing with the secretary a written protest [Every protest shall identify] that:

(1) identifies the taxpayer and the tax credit, rebate, property or provision of the Tax Administration Act involved; [and state]

(2) states the grounds [for the taxpayer's protest and the affirmative relief requested. The statement of grounds for protest shall specify individual grounds upon] on which the protest is based and summarizes evidence supporting each ground asserted; [provided that the] and

(3) states the affirmative relief requested.

C. A taxpayer may supplement [the] a statement made by the taxpayer in accordance with Paragraphs (2) and (3) of Subsection B of this section at any time prior to ten days before the hearing conducted on the protest [pursuant to the provisions of] in accordance with the Administrative Hearings Office Act or, if a scheduling order has been issued, in accordance with the scheduling order. The secretary may, in appropriate cases, provide for an informal conference before a hearing of the protest is set by the administrative hearings office or before acting on a claim for refund.

[C.] D. In the case of an assessment of tax by the department, a taxpayer may file a protest [may be filed] of the assessment:

(1) without making payment of the amount assessed [provided that, if only a portion of the assessment is in dispute, any unprotested amounts of tax, interest or penalty shall be paid, or, if applicable, an installment agreement pursuant to Section 7-1-21 NMSA 1978 shall be entered into for the unprotested amounts, on or before the due date for the protest.

D. A protest by a taxpayer shall be filed]; and

(2) within ninety days [of] after:

(a) the date of the mailing to [or service upon] the taxpayer by the department of the notice of assessment [or] and demand for payment as provided in Paragraph (2) of Subsection A or in Subsection E of Section 7-1-17 NMSA 1978;

(b) the mailing of the other peremptory notice or demand [the date of mailing or filing a return];

(d) the date of denial of a claim pursuant to Section 7-1-26 NMSA 1978 or the last date upon which the department was required to take action on the claim but failed to take action.

E. If a taxpayer fails to timely protest [to a notice of] an assessment [is not filed within the time required] of tax, penalty or interest:

(1) the amount of tax [determined to be due] assessed and not protested becomes final;

(2) the taxpayer is deemed to have waived [and abandoned] the right to [question the amount of tax determined to be due] protest the assessment, unless the taxpayer pays the tax and claims a refund of the tax pursuant to Section

7-1-26 NMSA 1978; and

(3) the secretary may proceed to enforce collection of [any] the tax if the taxpayer is delinquent [within the meaning of] as defined by Section 7-1-16 NMSA 1978.

[F. The fact that the department did not mail the assessment or other peremptory notice or demand by certified or registered mail or otherwise demand and receive acknowledgment of receipt by the taxpayer shall not be deemed to demonstrate the taxpayer's inability to protest within the required time.

G. No proceedings] F. A proceeding other than [those] one to enforce collection of an amount assessed as tax and to protect the interest of the state by injunction, as provided [in] by Sections 7-1-31, 7-1-33, 7-1-34, 7-1-40, 7-1-53, 7-1-56 and 7-1-58 NMSA 1978, [are] is not stayed by timely filing of a protest [pursuant to the provisions of] in accordance with this section.

[H.] G. Nothing in this section shall be construed to authorize a criminal proceeding or to authorize an administrative protest of the issuance of a subpoena or summons."

SECTION 5. Section 7-1-26 NMSA 1978 (being Laws 1965, Chapter 248, Section 28, as amended) is amended to read:

"7-1-26. DISPUTING LIABILITIES--CLAIM FOR CREDIT, REBATE OR REFUND.--

A. A person who believes that an amount of tax has been paid by or withheld from that person in excess of that for which the person was liable, who has been denied [any] a credit or rebate claimed or who claims a prior right to property in the possession of the department pursuant to a levy made under authority of Sections 7-1-31 through 7-1-34 NMSA 1978 may claim a refund by directing to the secretary, within the time [limited by the provisions of] limitations provided by Subsections E and F [and G] of this section, a written claim for refund [At the time the written claim is submitted] that, except as provided in Subsection [K] J of this section, [a refund claim shall include] includes:

(1) the taxpayer's name, address and identification number;

(2) the type of tax for which a refund is being claimed, the credit or rebate denied or the property levied upon;

(3) the sum of money or other property being claimed;

(4) with respect to a refund, the period for which overpayment was made;

(5) a brief statement of the facts and the law on which the claim is based, which may be referred to as the "basis for the refund" [which shall include documentation that substantiates the written claim and supports the taxpayer's basis for the refund]; and

(6) if applicable, a copy of an amended return for each tax period for which the refund is claimed.

B. A claim for refund that meets the requirements of Subsection A of this section [shall be] and that is filed within the time limitations provided by Subsections E and F of this section is deemed to be properly before the department for consideration, regardless of whether the department requests additional documentation after receipt of the claim for refund. [provided that the claim for refund is filed within the time limitations provided in Subsections F and G of this section.

C. If the department requests additional relevant documentation from a taxpayer who has submitted a claim for refund, the claim for refund will not be considered complete until the taxpayer provides the requested documentation. The provisions of Paragraph (2) of Subsection D of this section and of Section 7-1-68 NMSA 1978 do not apply until a refund claim is complete.

D.] C. The secretary or the secretary's delegate may allow the claim in whole or in part or may deny the claim. If the:

(1) claim is denied in whole or in part in writing, [no] the person shall not refile the denied claim, [may be refiled with respect to that which was denied] but the person, within ninety days after either the mailing or delivery of the denial of all or any part of the claim, may elect to pursue only one [but not more than one] of the remedies provided in Subsection [E] D of this section; and

(2) department has neither granted nor denied any portion of a complete claim for refund within one hundred eighty days [of the date] after the claim was mailed or otherwise delivered to the department, the person may elect to treat the claim as denied and elect to pursue one [but not more than one] of the remedies provided in Subsection D of this section.

[E.] D. A person may elect to pursue [no more than] only one of the remedies provided in [Paragraphs (1) and (2) of] this subsection. A person who timely pursues more than one remedy [shall be] is deemed to have elected the first [remedy invoked]. The person may:

(1) direct to the secretary, pursuant to the provisions of Section 7-1-24 NMSA 1978, a written protest that [shall set] sets forth:

(a) the circumstances of: 1) an alleged overpayment; 2) a denied credit; 3) a denied rebate; or 4) a denial of a prior right to property levied upon by the department;

(b) an allegation that, because of that overpayment or denial, the state is indebted to the taxpayer for a specified amount, including any allowed interest, or for the property;

(d) [reciting] a recitation of the facts of the claim for refund; or

(2) commence a civil action in the district court for Santa Fe county by filing a complaint setting forth the circumstance of the claimed overpayment, denied credit or rebate or denial of a prior right to property levied upon by the department alleging that on account thereof the state is indebted to the plaintiff in the amount or property stated, together with any interest allowable, demanding the refund to the plaintiff of that amount or property and reciting the facts of the claim for refund. The plaintiff or the secretary may appeal from any final decision or order of the district court to the court of appeals.

[F.] E. Except as otherwise provided in Subsection [G] F of this section, [no] a credit or refund of any amount may be allowed or made to [any] a person [unless as the result of a claim made by that person as provided in this section]:

(1) only within three years [of] after the end of the calendar year in which:

(a) the payment was originally due or the overpayment resulted from an assessment by the department [pursuant to] as provided in Section 7-1-17 NMSA 1978, whichever is later;

(b) the final determination of value occurs with respect to any overpayment that resulted from a disapproval by any agency of the United States or the state of New Mexico or any court of increase in value of a product subject to taxation under the Oil and Gas Severance Tax Act, the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act or the Natural Gas Processors Tax Act;

(d) an overpayment of New Mexico tax resulted from: 1) an internal revenue service audit adjustment or a federal refund paid due to an adjustment of an audit by the internal revenue service or an amended federal return; or 2) [making a change] the amendment to a federal return for which federal approval is required by the Internal Revenue Code;

(2) [when an amount] in the case of a denial of a claim for credit under [the provisions of] the Investment Credit Act, Laboratory Partnership with Small Business Tax Credit Act or Technology Jobs and Research and Development Tax Credit Act or for the rural job tax credit [pursuant to] provided by Section 7-2E-1.1 NMSA 1978 or similar credit, [has been denied, the taxpayer may claim a refund of the credit no later than] only within one year after the date of the denial;

(3) [when] in the case of a taxpayer under audit by the department who has signed a waiver of the limitation on assessments on or after July 1, 1993 [pursuant to] under Subsection F of Section 7-1-18 NMSA 1978, [the taxpayer may file a claim] only for a refund of the same tax paid for the same period for which the waiver was given, and only until a date one year after the later of the date of the mailing of an assessment issued pursuant to the audit, the date of the mailing of final audit findings to the taxpayer or the date a proceeding is begun in court by the department with respect to the same tax and the same period;

(4) [if] in the case of a payment of an amount of tax [was] not made within three years of the end of the calendar year in which the original due date of the tax or date of the assessment of the department occurred, only for a claim for refund of that amount of tax [can be made] and only within one year of the date on which the tax was paid; or

(5) [when] in the case of a taxpayer who has been assessed a tax on or after July 1, 1993 under Subsection B, C or D of Section 7-1-18 NMSA 1978 and [when the] an assessment that applies to a period ending at least three years prior to the beginning of the year in which the assessment was made, [the taxpayer may claim] only for a refund for the same tax for the period of the assessment or for any period following that period within one year of the date of the assessment unless a longer period for claiming a refund is provided in this section.

[G. No] F. The department shall not allow or make a credit or refund [shall be allowed or made] to [any] a person claiming a refund of gasoline tax under Section 7-13-11 NMSA 1978 unless:

(1) notice of the destruction of the gasoline was given to the department within thirty days of the actual destruction; [and]

(2) the claim for refund is made within six months of the date of destruction; [No credit or refund shall be allowed or made to any person claiming a refund of gasoline tax under Section 7-13-17 NMSA 1978 unless]

(3) the refund is claimed within six months of the date of purchase of the gasoline; and

(4) the gasoline has been used at the time the claim for refund is made.

[H.] G. If, as a result of an audit by the department or a managed audit covering multiple periods, an overpayment of tax is found in any period under the audit and if the taxpayer files a claim for refund for the overpayments identified in the audit, that overpayment may be credited against an underpayment of the same tax found in another period under audit pursuant to Section 7-1-29 NMSA 1978. [provided that the taxpayer files a claim for refund for the overpayments identified in the audit

I. Any] H. A refund of tax paid under any tax or tax act administered under Subsection B of Section 7-1-2 NMSA 1978 may be made, at the discretion of the department, in the form of credit against future tax payments if future tax liabilities in an amount at least equal to the credit amount reasonably may be expected to become due.

[J.] I. For the purposes of this section, "oil and gas tax return" means a return reporting tax due with respect to oil, natural gas, liquid hydrocarbons, carbon dioxide, helium or nonhydrocarbon gas pursuant to the Oil and Gas Severance Tax Act, the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act, the Natural Gas Processors Tax Act or the Oil and Gas Production Equipment Ad Valorem Tax Act.

[K.] J. The filing of a fully completed original income tax return, corporate income tax return, corporate income and franchise tax return, estate tax return or special fuel excise tax return that shows a balance due the taxpayer or a fully completed amended income tax return, an amended corporate income tax return, an amended corporate income and franchise tax return, an amended estate tax return, an amended special fuel excise tax return or an amended oil and gas tax return that shows a lesser tax liability than the original return constitutes the filing of a claim for refund for the difference in tax due shown on the original and amended returns."

SECTION 6. Section 7-1-29 NMSA 1978 (being Laws 1965, Chapter 248, Section 31, as amended) is amended to read:

"7-1-29. AUTHORITY TO MAKE REFUNDS OR CREDITS.--

A. In response to a claim for refund, credit or rebate made as provided in Section 7-1-26 NMSA 1978, but before a court acquires jurisdiction of the matter, the secretary or the secretary's delegate may authorize payment to a person in the amount of the credit or rebate claimed or refund an overpayment of tax determined by the secretary or the secretary's delegate to have been erroneously made by the person, together with allowable interest. A payment of a credit rebate claimed or a refund of tax and interest erroneously paid amounting to twenty thousand dollars ($20,000) or more shall be made with the prior approval of the attorney general, except that the secretary or the secretary's delegate may make refunds with respect to the Oil and Gas Severance Tax Act, the Oil and Gas Conservation Tax Act, the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad Valorem Production Tax Act, the Natural Gas Processors Tax Act or the Oil and Gas Production Equipment Ad Valorem Tax Act, Section 7-13-17 NMSA 1978 and the Cigarette Tax Act without the prior approval of the attorney general regardless of the amount.

B. Pursuant to the final order of the district court, the court of appeals, the supreme court of New Mexico or a federal court, from which order, appeal or review is not successfully taken, adjudging that a person has properly claimed a credit or rebate or made an overpayment of tax, the secretary shall authorize the payment to the person of the amount thereof.

C. In the discretion of the secretary, any amount of credit or rebate to be paid or tax to be refunded may be offset against any amount of tax for which the person due to receive the credit, rebate payment or refund is liable. The secretary or the secretary's delegate shall give notice to the taxpayer that the credit, rebate payment or refund will be made in this manner, and the taxpayer shall be entitled to interest pursuant to Section 7-1-68 NMSA 1978 until the tax liability is credited with the credit, rebate or refund amount.

D. In an audit by the department or a managed audit covering multiple reporting periods in which both underpayments and overpayments of a tax have been made in different reporting periods, the department shall credit the tax overpayments against the underpayments, provided that the taxpayer files a claim for refund of the overpayments. An overpayment shall be applied as a credit first to the earliest underpayment and then to succeeding underpayments. An underpayment of tax to which an overpayment is credited pursuant to this section shall be deemed paid in the period in which the overpayment was made or the period to which the overpayment was credited against an underpayment, whichever is later. If the overpayments credited pursuant to this section exceed the underpayments of a tax, the amount of the net overpayment for the periods covered in the audit shall be refunded to the taxpayer.

E. When a taxpayer makes a payment identified to a particular return or assessment, and the department determines that the payment exceeds the amount due pursuant to that return or assessment, the secretary may apply the excess to the taxpayer's other liabilities pursuant to the tax acts to which the return or assessment applies, without requiring the taxpayer to file a claim for a refund. The liability to which an overpayment is applied pursuant to this section shall be deemed paid in the period in which the overpayment was made or the period to which the overpayment was applied, whichever is later.

F. If the department determines, upon review of an original or amended income tax return, corporate income and franchise tax return, estate tax return, special fuels excise tax return or oil and gas tax return, that there has been an overpayment of tax for the taxable period to which the return or amended return relates in excess of the amount due to be refunded to the taxpayer [pursuant to the provisions of] under Subsection [K] J of Section 7-1-26 NMSA 1978, the department may refund that excess amount to the taxpayer without requiring the taxpayer to file a refund claim.

G. Records of refunds and credits made in excess of ten thousand dollars ($10,000) shall be available for inspection by the public. The department shall keep such records for a minimum of three years from the date of the refund or credit.

H. In response to a timely refund claim pursuant to Section 7-1-26 NMSA 1978 and notwithstanding any other provision of the Tax Administration Act, the secretary or the secretary's delegate may refund or credit a portion of an assessment of tax paid, including applicable penalties and interest representing the amount of tax previously paid by another person on behalf of the taxpayer on the same transaction, provided that the requirements of equitable recoupment are met. For purposes of this subsection, the refund claim may be filed by the taxpayer to whom the assessment was issued or by another person who claims to have previously paid the tax on behalf of the taxpayer. Prior to granting the refund or credit, the secretary may require a waiver of all rights to claim a refund or credit of the tax previously paid by another person paying a tax on behalf of the taxpayer."

SECTION 7. Section 7-1-29.1 NMSA 1978 (being Laws 2003, Chapter 398, Section 12, as amended) is amended to read:

"7-1-29.1. AWARDING OF COSTS AND FEES.--

A. In [any] an administrative proceeding or court proceeding [that is] brought by or against [the] a taxpayer [on or after July 1, 2003] and conducted in connection with the determination, collection or refund of [any] a tax or the interest or penalty for a tax governed by [the provisions of] the Tax Administration Act, the taxpayer shall be awarded a judgment or a settlement for reasonable administrative costs or reasonable litigation costs incurred in connection with [an administrative] the proceeding [with the department or the administrative hearings office or reasonable litigation costs incurred in connection with a court proceeding] if the taxpayer is the prevailing party.

B. As used in this section:

(1) "administrative proceeding" means any procedure or other action before the department or the administrative hearings office;

(2) "court proceeding" means any civil action brought in state district court;

(3) "reasonable administrative costs" means:

(a) any administrative fees or similar charges imposed by the department or the administrative hearings office; and

(b) actual charges for: 1) filing fees, court reporter fees, service of process fees and similar expenses; 2) the services of expert witnesses; 3) any study, analysis, report, test or project reasonably necessary for the preparation of the party's case; and 4) fees and costs paid or incurred for the services in connection with the proceeding of attorneys or of certified public accountants who are authorized to practice in the context of an administrative proceeding; and

(4) "reasonable litigation costs" means:

(a) reasonable court costs; and

C. For purposes of this section:

(1) the taxpayer is the prevailing party if the taxpayer has:

(a) substantially prevailed with respect to the amount in controversy; or

(b) substantially prevailed with respect to most of the issues involved in the case or the most significant issue or set of issues involved in the case;

(2) the taxpayer [shall] is not [be treated as] the prevailing party if [prior to July 1, 2015, the department establishes or, on or after July 1, 2015] the [hearing officer] administrative hearings office finds that the position of the department in the proceeding was based upon a reasonable application of the law to the facts of the case. For purposes of this paragraph, the position of the department shall be presumed not to be based upon a reasonable application of the law to the facts of the case if:

(a) the department did not follow applicable published guidance in the proceeding; or

(b) the assessment giving rise to the proceeding is not supported by substantial evidence determined at the time of the issuance of the assessment;

(3) as used in Subparagraph (a) of Paragraph (2) of this subsection, "applicable published guidance" means:

(a) department or administrative hearings office regulations, information releases, instructions, notices, technical advice memoranda and announcements; and

(b) private letter rulings and letters issued by the department to the taxpayer; and

(4) the determination of whether the taxpayer is the prevailing party and the amount of reasonable litigation costs or reasonable administrative costs shall be made by agreement of the parties or:

(a) in the case [where the final determination with respect to the tax, interest or penalty is made in] of an administrative proceeding, by the hearing officer; or

(b) in the case [where the final determination is made by the] of a court proceeding, by the court.

D. An order granting or denying in whole or in part an award for:

(1) reasonable litigation costs [pursuant to Subsection A of] under this section in a court proceeding may be incorporated as a part of the court's decision or judgment [in the court proceeding] and [shall be] are subject to appeal in the same manner as the decision or judgment [A decision or order granting or denying in whole or in part an award for]; and

(2) reasonable administrative costs [pursuant to Subsection A of] under this section [by a hearing officer shall be] in an administrative proceeding are reviewable in the same manner as a decision of [a hearing officer] the administrative hearings office.

E. [No] An agreement for or award of reasonable administrative costs or reasonable litigation costs in any administrative proceeding or court proceeding [pursuant to Subsection A of] under this section shall not exceed the lesser of twenty percent of the amount of the settlement or judgment or [fifty thousand dollars ($50,000). A taxpayer awarded administrative litigation costs pursuant to this section may not receive an award of attorney fees pursuant to Subsection D of Section 7-1-25 NMSA 1978] seventy-five thousand dollars ($75,000).

F. The department shall annually report to the legislative finance committee and the revenue stabilization and tax policy committee on the costs it incurs under this section."

SECTION 8. Section 7-1-39 NMSA 1978 (being Laws 1965, Chapter 248, Section 41, as amended) is amended to read:

"7-1-39. RELEASE OR EXTINGUISHMENT OF LIEN--LIMITATION ON ACTIONS TO ENFORCE LIEN.--

A. When any substantial part of the amount of tax due from a taxpayer is paid, the department shall immediately file, in the same county in which a notice of lien was filed, and in the same records, a document completely or partially releasing the lien. The county clerk to whom such a document is presented shall record it without charge.

B. The department may file, in the same county as the notice of lien was filed, a document releasing or partially releasing any lien filed in accordance with Section 7-1-38 NMSA 1978 when the filing of the lien was premature or did not follow requirements of law or when release or partial release would facilitate collection of taxes due. The county clerk to whom the document is presented shall record it without charge.

C. [In all cases when] After the filing of a notice of lien for taxes, penalties and interest [has been filed] under Section 7-1-38 NMSA 1978 and [a period of] once ten years [has] have passed from the date of assessment of the last of the assessments of taxes, penalties and interest covered by the lien, [was filed] as shown on the notice of lien:

(1) the liened taxes, penalties and interest [for which the lien is claimed shall be] are conclusively presumed to have been paid; [and]

(2) the lien for those taxes is [thereby] extinguished;

(3) no action shall be brought to enforce [any lien extinguished in accordance with this subsection] the lien; and

(4) at the request of the liened taxpayer, the department shall immediately file a release of lien in the county in which the notice of lien was filed."

SECTION 9. Section 7-1-61 NMSA 1978 (being Laws 1965, Chapter 248, Section 62, as amended) is amended to read:

"7-1-61. DUTY OF SUCCESSOR IN BUSINESS.--

A. [As used in] For the purposes of Sections 7-1-61 through 7-1-63 NMSA 1978:

(1) a person liable for tax transfers a business if that person transfers all or substantially all of the tangible and intangible property used in the operation of that business to another person; and

(2) "tax" means the amount of tax due, including penalties and interest, [imposed by provisions of the taxes or] as provided by the tax acts set forth in Subsections A and B of Section 7-1-2 NMSA 1978, except the Income Tax Act.

B. The tangible and intangible property used in [any] a business remains subject to liability for payment of the tax due on account of that business to the extent stated [herein] in this section, even though the business changes hands.

C. If any person liable for any amount of tax from operating a business transfers that business to a successor, the successor shall place in a trust account sufficient money from the purchase price or other source to cover such amount of tax until the secretary or secretary's delegate issues a certificate stating that no amount is due, or the successor shall pay over the amount due to the department upon proper demand for, or assessment of, that amount due by the secretary."

SECTION 10. Section 7-1-63 NMSA 1978 (being Laws 1965, Chapter 248, Section 64, as amended) is amended to read:

"7-1-63. ASSESSMENT OF TAX DUE--APPLICATION OF PAYMENT.--

A. If, after [any] a business is transferred to a successor, any tax from operating the business for which the [former owner] transferor is liable remains due, the successor shall pay the amount due within thirty days after the transfer. If the successor fails to pay within thirty days of the date notice provided for in Section 7-1-62 NMSA 1978 was mailed or if a certificate was not requested, the department shall assess the successor the amount due.

B. Upon the payment of the amount due from the amount placed in a trust account as provided by Subsection C of Section 7-1-61 NMSA 1978, the balance, if any, remaining may be released to the [former owner] transferor or otherwise lawfully disposed of. The [former owner] transferor shall be credited with the payment of tax.

C. A successor may discharge an assessment made pursuant to this section by paying to the department the full value of the transferred tangible and intangible property. The successor shall remain liable for the amount assessed, however, until the amount is paid if:

(1) the business has been transferred to evade or defeat any tax;

(2) the transfer of the business amounts to a de facto merger, consolidation or mere continuation of the transferor's business; or

(3) the successor has assumed the tax liability."

SECTION 11. Section 7-1B-1 NMSA 1978 (being Laws 2015, Chapter 73, Section 1) is amended to read:

"7-1B-1. SHORT TITLE.--[Sections 1 through 9 of this act] Chapter 7, Article 1B NMSA 1978 may be cited as the "Administrative Hearings Office Act"."

SECTION 12. Section 7-1B-6 NMSA 1978 (being Laws 2015, Chapter 73, Section 6) is amended to read:

"7-1B-6. HEARING OFFICER CODE OF CONDUCT--INDEPENDENCE.--

A. The chief hearing officer shall:

(1) adopt and promulgate a hearing officer code of conduct; and

(2) [periodically] annually, evaluate each hearing officer's performance for competency, efficiency and professional demeanor in accord with relevant legal standards and the hearing officer code of conduct, including through the use of a survey of practitioners who appear before the hearing officer.

B. The chief hearing officer shall ensure that each hearing officer has decisional independence; however, the chief hearing officer may:

(1) consult with a hearing officer about a genuine question of law; and

(2) review with a hearing officer any issue on appeal addressed by a court of this state.

C. The administrative hearings office shall:

(1) hear all tax protests [pursuant to the provisions of] under the Tax Administration Act;

(2) hear property tax protests [pursuant to the provisions of] under the Property Tax Code;

(3) hear all certificate-denial protests [pursuant to the provisions of] under Section 13-1-22 NMSA 1978;

(4) conduct all adjudicatory hearings [pursuant to] under the Motor Vehicle Code;

(5) conduct all driver's license revocation hearings [pursuant to the provisions of] under the Implied Consent Act;

(6) make and preserve a complete record of all proceedings; and

(7) maintain confidentiality regarding taxpayer information as required by [the provisions of] Section 7-1-8 NMSA 1978.

D. In hearings conducted [pursuant to] in accordance with the Tax Administration Act, Section 13-1-22 NMSA 1978 and the Motor Vehicle Code:

(1) the Rules of Evidence do not apply. The hearing officer may require reasonable substantiation of statements or records tendered, the accuracy or truth of which is in reasonable doubt, to rule on the admissibility of evidence. A taxpayer or the taxation and revenue department may request a written ruling on a contested question of evidence in a matter in which the taxpayer has filed a written protest and for which that protest is pending. The administrative hearings office shall issue a copy of its written ruling to the [taxation and revenue] department at the time the ruling is issued to the taxpayer;

(2) the Rules of Civil Procedure for the District Courts do not apply. The hearing officer shall conduct a hearing to allow the ample and fair presentation of complaints and defenses. The hearing officer shall hear arguments, permit discovery, entertain and dispose of motions, require written expositions of the case as the circumstances justify and render a decision in accordance with the law and the evidence presented and admitted. A taxpayer or the taxation and revenue department may request a written ruling on a contested question of procedure in a matter in which the taxpayer has filed a written protest and for which that protest is pending. The administrative hearings office shall issue a copy of its written ruling to the [taxation and revenue] department at the time the ruling is issued to the taxpayer; and

(3) the hearing officer may administer oaths and issue subpoenas for the attendance of witnesses and the production of relevant books and papers, and for hearings conducted for a license suspension [pursuant to] under Section 66-5-30 NMSA 1978, the hearing officer may require a reexamination of the licensee."

SECTION 13. Section 7-1B-8 NMSA 1978 (being Laws 2015, Chapter 73, Section 8) is amended to read:

"7-1B-8. TAX PROTESTS--PROCEDURES.--

A. Upon timely receipt of a tax protest filed [pursuant to] in accordance with the provisions of Section 7-1-24 NMSA 1978, the taxation and revenue department shall promptly acknowledge the protest by letter to the protesting taxpayer or the taxpayer's representative. If the department determines that the protest [is] has not been filed in accordance with [the provisions of] that section [7-1-24 NMSA 1978], the department shall inform the taxpayer of the deficiency and provide the taxpayer, within twenty-one days of the taxpayer being informed, the opportunity to correct it. [Within forty-five days after receipt of a protest filed pursuant to the provisions of Section 7-1-24 NMSA 1978 that has not been resolved, the taxation and revenue department shall request from the administrative hearings office a hearing and shall send to the office a copy of the protest. The chief hearing officer shall promptly designate a hearing officer and shall set a date for a hearing to take place within ninety days after receipt of a protest filed pursuant to Section 7-1-24 NMSA 1978.] A determination by the department that a protest has not been filed in accordance with that section may be protested by the taxpayer.

B. Prior to the taxation and revenue department requesting a formal hearing, at the taxpayer's written request, the department shall meet with the taxpayer or the taxpayer's representative in an informal conference to attempt in good faith to resolve the disputed issues at protest. The department shall hold the informal conference within sixty days of the date the department received the taxpayer's written request for an informal conference. Within thirty days of the date of the informal conference, the department shall provide a written report to the taxpayer that discusses a response to the taxpayer's protest and the issues at the informal conference, including a detailed description of the legal and factual bases supporting the department's position beyond an assertion of the presumption of correctness and a summary of the good faith efforts made as part of the informal conference process, including any issues that were resolved and an articulation of the remaining disputed issues at protest. The department shall articulate its position in detail on the disputed matters.

C. Within one hundred eighty days after the receipt of a protest filed in accordance with Section 7-1-24 NMSA 1978 that has not been resolved, the taxation and revenue department shall request from the administrative hearings office a hearing and shall send to the office a copy of the protest, a detailed description of the legal and factual bases supporting the department's position beyond an assertion of the presumption of correctness and a summary of the good faith efforts made as part of the informal conference process, including any issues that were resolved and an articulation of the remaining disputed issues at protest. The department may amend its detailed statement of position up until ten days before the scheduled hearing or other deadline specified in a controlling scheduling order. The hearing shall be limited to the grounds provided in the taxpayer's protest letter and in the department's statement of position.

D. The chief hearing officer shall promptly designate a hearing officer and shall set a date for a hearing to take place within ninety days of receipt of the protest. The chief hearing officer shall not reassign a hearing officer to a case without giving the department and the taxpayer notice of that reassignment at least fourteen days before the hearing. If the chief hearing officer reassigns a hearing officer to a case, the taxpayer may, within seven days before the hearing, exercise once the peremptory right to disqualify the hearing officer; otherwise, the taxpayer may, at least thirty days before the hearing, exercise the peremptory right to disqualify the hearing officer designated to conduct the hearing.

E. The administrative hearings office shall rule on a dispositive motion, including a motion for summary judgment, a motion for partial summary judgment or a motion to dismiss, filed by the department or the taxpayer at least thirty days before the hearing.

[B.] F. A taxpayer may appear at the hearing on the taxpayer's own behalf or may be represented by a bona fide employee, an attorney, a certified public accountant, an employee of a law firm or certified public accounting firm whose authorization by the taxpayer to appear is evidenced in writing or [with respect only to tax imposed pursuant to the Income Tax Act, a person who is] an enrolled agent [for federal income tax purposes]. If the taxation and revenue department and the taxpayer agree, the hearing may be conducted via videoconference. At the beginning of the hearing, the hearing officer shall inform the taxpayer of the taxpayer's right to representation. The taxpayer shall decide which party presents its case first at the hearing and shall provide written notice to the department and the administrative hearings office of the taxpayer's decision no later than fifteen days prior to the hearing. If the taxpayer fails to provide written notice, the taxpayer shall present the taxpayer's case first. A hearing shall [not] be [open] closed to the public except upon request of the taxpayer. A hearing officer may postpone or continue a hearing at the hearing officer's discretion. As used in this subsection, "enrolled agent" means a federally licensed tax practitioner with unlimited rights to represent taxpayers before the internal revenue service.

[C.] G. Within thirty days after the hearing, the hearing officer shall inform the taxation and revenue department and the taxpayer in writing of the decision and, [pursuant to the provisions of] in accordance with Section

7-1-25 NMSA 1978, of the aggrieved party's right to, and the requirements for perfection of, an appeal from the decision to the court of appeals and of the consequences of a failure to appeal. The written decision shall embody:

(1) an order granting or denying the relief requested or granting or denying a part of the relief requested, as appropriate; and

(2) findings of fact and law and a thorough discussion of the reasoning used to support the order with citations to the record and applicable law.

[D.] H. A taxpayer with two or more protests containing related issues may request that the protests be combined and heard jointly. The hearing officer shall grant the request to combine protests unless it would create an unreasonable burden on the administrative hearings office or the taxation and revenue department.

[E.] I. Nothing in this section shall be construed to authorize a criminal proceeding or to authorize an administrative protest of the issuance of a subpoena or summons."

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