HOUSE BILL 198
57th legislature - STATE OF NEW MEXICO - first session, 2025
INTRODUCED BY
Derrick J. Lente
AN ACT
RELATING TO TAXATION; INCREASING THE AMOUNT OF INSTALLMENT AGREEMENTS THAT SHALL BE AVAILABLE FOR PUBLIC INSPECTION; AMENDING CERTAIN PROVISIONS ON INTEREST ON DEFICIENCIES; INCREASING THE MINIMUM AMOUNT OF INTEREST THE TAXATION AND REVENUE DEPARTMENT SHALL PAY FOR OVERPAYMENT OF TAX; INCREASING CERTAIN PENALTIES FOR FAILURE TO PAY A TAX OR FILE A RETURN, INTERFERING WITH ADMINISTRATION OF THE TAX ADMINISTRATION ACT, ASSAULTING TAXATION AND REVENUE DEPARTMENT EMPLOYEES AND REVEALING TAXPAYER RETURN INFORMATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-1-21 NMSA 1978 (being Laws 1965, Chapter 248, Section 23, as amended) is amended to read:
"7-1-21. INSTALLMENT PAYMENTS OF TAXES--INSTALLMENT AGREEMENTS.--
A. Whenever justified by the circumstances, the secretary or the secretary's delegate may enter into a written agreement with a taxpayer in which the taxpayer admits conclusive liability for the entire amount of taxes due and agrees to make monthly installment payments according to the terms of the agreement, but not for a period longer than seventy-two months. No installment agreement shall prevent the accrual of interest otherwise provided by law.
B. The agreement provided for in this section is to be known as an "installment agreement". If entered into after a court acquires jurisdiction over the matter, the agreement shall be part of a stipulated order or judgment disposing of the case.
C. At the time of entering into an installment agreement, the secretary shall require the affected taxpayer or person to furnish security for payment of the taxes admitted to be due according to the terms of the agreement, but if the taxpayer does not provide security, the secretary shall cause a notice of lien to be filed in accordance with the provisions of Section 7-1-38 NMSA 1978, and when so filed it shall constitute a lien upon all the property or rights to property of the taxpayer in that county in the same manner as in the case of the lien provided for in Section 7-1-37 NMSA 1978.
D. An installment agreement is conclusive as to liability for payment of the amount of taxes specified therein but does not preclude the assessment of any additional tax.
E. After entering into the agreement, except in unusual circumstances as require the secretary in the secretary's discretion to take further action to protect the interests of the state, no further attempts to enforce payment of the tax by levy or injunction shall be made; however, if installment payments are not made on or before the times specified in the agreement, if any other condition contained in the agreement is not met or if the taxpayer does not make payment of all other taxes for which the taxpayer becomes liable as they are due, the secretary may proceed to enforce collection of the tax as if the agreement had not been made or may proceed, as provided in Section 7-1-54 NMSA 1978, against the security furnished.
F. [Records of] Installment agreements in excess of [one thousand dollars ($1,000)] ten thousand dollars ($10,000) shall be available for inspection by the public. The department shall [keep the records] retain installment agreements for a minimum of three years from the date of the effective date of the installment agreement."
SECTION 2. Section 7-1-67 NMSA 1978 (being Laws 1965, Chapter 248, Section 68, as amended) is amended to read:
"7-1-67. INTEREST ON DEFICIENCIES.--
A. [If] In the case of failure due to negligence or disregard of department rules, a tax imposed is not paid on or before the day on which it becomes due, interest shall be paid to the state on that amount from the first day following the day on which the tax becomes due, without regard to any extension of time or installment agreement, until it is paid, except that:
(1) for income tax imposed on a member of the armed services of the United States serving in a combat zone under orders of the president of the United States, interest shall accrue only for the period beginning the day after any applicable extended due date if the tax is not paid;
(2) if the amount of interest due at the time payment is made is less than [one dollar ($1.00)] ten dollars ($10.00), then no interest shall be due;
(3) if demand is made for payment of a tax, including accrued interest, and if the tax is paid within ten days after the date of the demand, no interest on the amount paid shall be imposed for the period after the date of the demand;
(4) if a managed audit is completed by the taxpayer on or before the date required, as provided in the agreement for the managed audit, and payment of any tax found to be due is made in full within one hundred eighty days of the date the secretary has mailed or delivered an assessment for the tax to the taxpayer, no interest shall be due on the assessed tax;
(5) when, as the result of an audit or a managed audit, an overpayment of a tax is credited against an underpayment of tax pursuant to Section 7-1-29 NMSA 1978, interest shall accrue from the date the tax was due until the tax is deemed paid;
(6) if the department does not issue an assessment for the tax program and period within the time provided in Subsection D of Section 7-1-11.2 NMSA 1978, interest shall be paid from the first day following the day on which the tax becomes due until the tax is paid, excluding the period between either:
(a) the one hundred eightieth day after giving a notice of outstanding records or books of account and the date of the assessment of the tax; or
(b) the ninetieth day after the expiration of the additional time requested by the taxpayer to comply pursuant to Section 7-1-11.2 NMSA 1978, if such request was granted, and the date of the assessment of the tax; and
(7) if the taxpayer was not provided with proper notices as required in Section 7-1-11.2 NMSA 1978, interest shall be paid from the first day following the day on which the tax becomes due until the tax is paid, excluding the period between one hundred eighty days prior to the date of assessment and the date of assessment.
B. No interest shall be assessed against a taxpayer if the failure to pay an amount of tax when due results from a mistake of law made in good faith and on reasonable grounds.
[B.] C. Interest due to the state under Subsection A or [D] E of this section shall be at the underpayment rate established for individuals pursuant to Section 6621 of the Internal Revenue Code computed on a daily basis; provided that if a different rate is specified by a compact or other interstate agreement to which New Mexico is a party, that rate shall be applied to amounts due under the compact or other agreement.
[C.] D. Nothing in this section shall be construed to impose interest on interest or interest on the amount of any penalty.
[D.] E. If any tax required to be paid in accordance with Section 7-1-13.1 NMSA 1978 is not paid in the manner required by that section, interest shall be paid to the state on the amount required to be paid in accordance with Section 7-1-13.1 NMSA 1978. If interest is due under this subsection and is also due under Subsection A of this section, interest shall be due and collected only pursuant to Subsection A of this section."
SECTION 3. Section 7-1-68 NMSA 1978 (being Laws 1965, Chapter 248, Section 69, as amended) is amended to read:
"7-1-68. INTEREST ON OVERPAYMENTS.--
A. As provided in this section, interest shall be allowed and paid on the amount of tax overpaid by a person that is subsequently refunded or credited to that person.
B. Interest on overpayments of tax shall accrue and be paid at the underpayment rate established pursuant to Section 6621 of the Internal Revenue Code, computed on a daily basis; provided that if a different rate is specified by a compact or other interstate agreement to which New Mexico is a party, that rate shall apply to amounts due under the compact or other agreement.
C. Unless otherwise provided by this section, interest on an overpayment not arising from an assessment by the department shall be paid from the date of the claim for refund until a date preceding by not more than thirty days the date of the credit or refund to any person; and interest on an overpayment arising from an assessment by the department shall be paid from the date of overpayment until a date preceding by not more than thirty days the date of the credit or refund to any person.
D. No interest shall be allowed or paid with respect to an amount credited or refunded if:
(1) the amount of interest due is less than [one dollar ($1.00)] ten dollars ($10.00);
(2) the credit or refund is made within:
(a) fifty-five days of the date of the complete claim for refund of income tax, pursuant to either the Income Tax Act or the Corporate Income and Franchise Tax Act for the tax year immediately preceding the tax year in which the claim is made;
(b) sixty days of the date of the complete claim for refund of any tax not provided for in this paragraph;
(c) seventy-five days of the date of the complete claim for refund of gasoline tax to users of gasoline off the highways;
(d) one hundred twenty days of the date of the complete claim for refund of tax imposed pursuant to the Resources Excise Tax Act, the Severance Tax Act, 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; or
(e) one hundred twenty days of the date of the complete claim for refund of income tax, pursuant to the Income Tax Act or the Corporate Income and Franchise Tax Act, for any tax year more than one year prior to the year in which the claim is made;
(3) Sections 6611(f) and 6611(g) of the Internal Revenue Code, as those sections may be amended or renumbered, prohibit payment of interest for federal income tax purposes;
(4) the credit results from overpayments found in an audit of multiple reporting periods and applied to underpayments found in that audit or refunded as a net overpayment to the taxpayer pursuant to Section 7-1-29 NMSA 1978;
(5) the department applies the credit or refund to an intercept program, to the taxpayer's estimated payment prior to the due date for the estimated payment or to offset prior liabilities of the taxpayer pursuant to Subsection E of Section 7-1-29 NMSA 1978;
(6) the credit or refund results from overpayments the department finds pursuant to Subsection F of Section 7-1-29 NMSA 1978 that exceed the refund claimed by the taxpayer on the return; or
(7) the refund results from a tax credit pursuant to the Investment Credit Act, Laboratory Partnership with Small Business Tax Credit Act, Technology Jobs and Research and Development Tax Credit Act, Film Production Tax Credit Act, Affordable Housing Tax Credit Act or a rural job tax credit or high-wage jobs tax credit.
E. Nothing in this section shall be construed to require the payment of interest upon interest."
SECTION 4. Section 7-1-69 NMSA 1978 (being Laws 1965, Chapter 248, Section 70, as amended) is amended to read:
"7-1-69. CIVIL PENALTY FOR FAILURE TO PAY TAX OR FILE A RETURN.--
A. Except as provided in Subsection C of this section, in the case of failure due to negligence or disregard of department rules and regulations, but without intent to evade or defeat a tax, to pay when due the amount of tax required to be paid, to pay in accordance with the provisions of Section 7-1-13.1 NMSA 1978 when required to do so or to file by the date required a return regardless of whether a tax is due, there shall be added to the amount assessed a penalty in an amount equal to the greater of:
(1) two percent per month or any fraction of a month from the date the tax was due multiplied by the amount of tax due but not paid, not to exceed twenty percent of the tax due but not paid;
(2) two percent per month or any fraction of a month from the date the return was required to be filed multiplied by the tax liability established in the late return, not to exceed twenty percent of the tax liability established in the late return; or
(3) a minimum of [five dollars ($5.00)] fifteen dollars ($15.00), but the [five-dollar ($5.00)] minimum penalty shall not apply to taxes levied under the Income Tax Act, Corporate Income and Franchise Tax Act or taxes administered by the department pursuant to Subsection B of Section 7-1-2 NMSA 1978.
B. No penalty shall be assessed against a taxpayer if the failure to pay an amount of tax when due results from a mistake of law made in good faith and on reasonable grounds.
C. If a different penalty is specified in a compact or other interstate agreement to which New Mexico is a party, the penalty provided in the compact or other interstate agreement shall be applied to amounts due under the compact or other interstate agreement at the rate and in the manner prescribed by the compact or other interstate agreement.
D. In the case of failure, with willful intent to evade or defeat a tax, to pay when due the amount of tax required to be paid, there shall be added to the amount fifty percent of the tax or a minimum of [twenty-five dollars ($25.00), whichever is greater] seventy-five dollars ($75.00) as penalty.
E. If demand is made for payment of a tax, including penalty imposed pursuant to this section, and if the tax is paid within ten days after the date of such demand, no penalty shall be imposed for the period after the date of the demand with respect to the amount paid.
F. If a taxpayer makes electronic payment of a tax but the payment does not include all of the information required by the department pursuant to the provisions of Section 7-1-13.1 NMSA 1978 and if the department does not receive the required information within five business days from the later of the date a request by the department for that information is received by the taxpayer or the due date, the taxpayer shall be subject to a penalty of two percent per month or any fraction of a month from the fifth day following the date the request is received. If a penalty is imposed under Subsection A of this section with respect to the same transaction for the same period, no penalty shall be imposed under this subsection.
G. No penalty shall be imposed on:
(1) tax due in excess of tax paid in accordance with an approved estimated basis pursuant to Section 7-1-10 NMSA 1978;
(2) tax due as the result of a managed audit; or
(3) tax that is deemed paid by crediting overpayments found in an audit or managed audit of multiple periods pursuant to Section 7-1-29 NMSA 1978."
SECTION 5. Section 7-1-71.3 NMSA 1978 (being Laws 2005, Chapter 108, Section 4) is amended to read:
"7-1-71.3. WILLFUL FAILURE TO COLLECT AND PAY OVER TAXES.--
A. A person who is required to collect, account for and pay over a tax imposed by the state and who willfully, with the intent to defraud, fails to collect or truthfully account for and pay over the tax due to the state is guilty of a felony, and upon conviction thereof, shall be fined not more than [five thousand dollars ($5,000)] ten thousand dollars ($10,000) or imprisoned for a period of not less than six months and not more than three years, or both, together with the costs of prosecution.
B. As used in this section:
(1) "tax" does not include civil penalties or interest; and
(2) "willfully" means intentionally, deliberately or purposely, but not necessarily maliciously."
SECTION 6. Section 7-1-71.4 NMSA 1978 (being Laws 2007, Chapter 127, Section 2) is amended to read:
"7-1-71.4. TAX RETURN PREPARER--ELECTRONIC FILING REQUIREMENT--PENALTY.--
A. [In taxable years beginning on or after January 1, 2008] A tax return preparer who prepares over twenty-five personal income tax returns for a taxable year shall ensure that each return is submitted to the department by a department-approved electronic media, unless a person for whom the preparer files a return requests, in a form prescribed by the department, that the return be filed by other means in accordance with department rule.
B. A tax return preparer shall pay to the department a penalty not to exceed [five dollars ($5.00)] ten dollars ($10.00) for each tax return filed in violation of this section."
SECTION 7. Section 7-1-72 NMSA 1978 (being Laws 1965, Chapter 248, Section 73) is amended to read:
"7-1-72. ATTEMPTS TO EVADE OR DEFEAT TAX.--Any person who willfully attempts to evade or defeat any tax or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, shall be fined not less than [one thousand dollars ($1,000)] ten thousand dollars ($10,000) nor more than [ten thousand dollars ($10,000)] fifty thousand dollars ($50,000), or imprisoned not less than one year nor more than five years, or both such fine and imprisonment, together with the costs of prosecution."
SECTION 8. Section 7-1-73 NMSA 1978 (being Laws 1965, Chapter 248, Section 74, as amended) is amended to read:
"7-1-73. TAX FRAUD.--
A. A person is guilty of tax fraud if the person:
(1) willfully makes and subscribes any return, statement or other document that contains or is verified by a written declaration that it is true and correct as to every material matter and that the person does not believe it to be true and correct as to every material matter;
(2) willfully assists in, willfully procures, willfully advises or willfully provides counsel regarding the preparation or presentation of a return, affidavit, claim or other document pursuant to or in connection with any matter arising under the Tax Administration Act or a tax administered by the department, knowing that it is fraudulent or knowing that it is false as to a material matter, whether or not that fraud or falsity is with knowledge or consent of:
(a) the taxpayer or other person liable for taxes owed on the return; or
(b) a person who signs a document stating that the return, affidavit, claim or other document is true, correct and complete to the best of that person's knowledge;
(3) files any return electronically, knowing the information in the return is not true and correct as to every material matter;
(4) with intent to evade or defeat the payment or collection of any tax, or, knowing that the probable consequences of the person's act will be to evade or defeat the payment or collection of any tax, removes, conceals or releases any property on which levy is authorized or that is liable for payment of tax under the provisions of Section 7-1-61 NMSA 1978, or aids in accomplishing or causes the accomplishment of any of the foregoing;
(5) with intent to evade or defeat the payment or collection of any tax, or, knowing that the probable consequences of the person's act will be to evade or defeat the payment or collection of any tax, purchases, installs or uses any sales suppression software; or
(6) with the intent to evade or defeat the payment or collection of any tax, or, knowing that the probable consequences of the person's act will be to evade or defeat the payment or collection of any tax, sells, licenses, purchases, installs, transfers, sells as a service, manufactures, develops or possesses any sales suppression software with the purpose to defeat or evade the payment or collection of any tax.
B. Whoever commits tax fraud when the amount of the tax owed is [two hundred fifty dollars ($250)] five hundred dollars ($500) or less is guilty of a petty misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978.
C. Whoever commits tax fraud when the amount of the tax owed is over [two hundred fifty dollars ($250)] five hundred dollars ($500) but not more than [five hundred dollars ($500)] one thousand dollars ($1,000) is guilty of a misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978.
D. Whoever commits tax fraud when the amount of the tax owed is over [five hundred dollars ($500)] one thousand dollars ($1,000) but not more than [two thousand five hundred dollars ($2,500)] five thousand dollars ($5,000) is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.
E. Whoever commits tax fraud when the amount of the tax owed is over [two thousand five hundred dollars ($2,500)] five thousand dollars ($5,000) but not more than [twenty thousand dollars ($20,000)] fifty thousand dollars ($50,000) is guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.
F. Whoever commits tax fraud when the amount of the tax owed is over [twenty thousand dollars ($20,000)] fifty thousand dollars ($50,000) is guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.
G. In addition to the fines imposed pursuant to this section, a person who commits tax fraud shall pay the costs of the prosecution of the person's case.
H. As used in this section:
(1) "sales suppression software" means hidden or concealed computer software, also known as phantomware, for a point-of-sale system that can create a second set of records or eliminate or manipulate transaction records that may or may not be preserved in digital formats in order to misrepresent the existence or the true record of a transaction in the point-of-sale system. "Sales suppression software" includes an electronic device that carries or contains sales suppression software;
(2) "tax" does not include civil penalties or interest; and
(3) "willfully" means intentionally, deliberately or purposely, but not necessarily maliciously."
SECTION 9. Section 7-1-74 NMSA 1978 (being Laws 1965, Chapter 248, Section 75) is amended to read:
"7-1-74. INTERFERENCE OR ATTEMPTS CORRUPTLY, FORCIBLY OR BY THREAT TO INTERFERE WITH ADMINISTRATION OF REVENUE LAWS.--Whoever forcibly, or by bribe, threat or other corrupt practice obstructs or impedes or attempts to obstruct or impede the due administration of the provisions of the Tax Administration Act shall, upon conviction thereof, be fined not less than [two hundred fifty dollars ($250)] one thousand dollars ($1,000) nor more than [ten thousand dollars ($10,000)] twenty-five thousand dollars ($25,000) or imprisoned for not less than three months nor more than one year, or both, together with costs of prosecution."
SECTION 10. Section 7-1-75 NMSA 1978 (being Laws 1971, Chapter 276, Section 12, as amended) is amended to read:
"7-1-75. ASSAULT AND BATTERY OF A DEPARTMENT EMPLOYEE.--Whoever assaults and batters or attempts to assault and batter an employee of the department acting within the scope of [his] the employee's employment shall, upon conviction thereof, be fined not less than [one hundred dollars ($100)] one thousand dollars ($1,000) nor more than [five hundred dollars ($500)] five thousand dollars ($5,000) or be imprisoned for not less than three days nor more than six months, or both, together with costs of prosecution. Jurisdiction over actions brought under this section is hereby granted to magistrate courts."
SECTION 11. Section 7-1-76 NMSA 1978 (being Laws 1965, Chapter 248, Section 76, as amended) is amended to read:
"7-1-76. REVEALING INFORMATION CONCERNING TAXPAYERS.--A person who reveals to another person any return or return information that is prohibited from being revealed pursuant to Section 7-1-8 NMSA 1978 or who uses a return or return information for any purpose that is not authorized by Sections 7-1-8 through 7-1-8.11 NMSA 1978 is guilty of a [misdemeanor] fourth degree felony and shall, upon conviction thereof, be fined not more than [one thousand dollars ($1,000)] five thousand dollars ($5,000) or imprisoned up to one year, or both, together with costs of prosecution, and shall not be employed by the state for a period of five years after the date of the conviction."
SECTION 12. EFFECTIVE DATE.--
A. The effective date of the provisions of Section 1 of this act is July 1, 2025.
B. The effective date of the provisions of Sections 2 through 11 of this act is January 1, 2026.
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