Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports
if they are used for other purposes.
Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).
Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and
attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.
F I S C A L I M P A C T R E P O R T
SPONSOR
Beffort
DATE TYPED 3/4/05
HB
SHORT TITLE Release of Taxpayer Info to LFC
SB 524/aSCORC
ANALYST Rosen
APPROPRIATION
Appropriation Contained Estimated Additional Impact Recurring
or Non-Rec
Fund
Affected
FY05
FY06
FY05
FY06
NFI
NFI
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates HB572
SOURCES OF INFORMATION
LFC Files
Responses Received From
Attorney General’s Office (AGO)
No Responses Received From
Taxation and Revenue Department (TRD)
FOR THE LEGISLATIVE FINANCE COMMITTEE
SUMMARY
Synopsis of SCORC Amendment
Senate Corporations and Transportation Committee amendment to Senate Bill 524 addresses
technical issues, replacing “audit” with “review” (page 1, line 13), replacing “audit” with “re-
view of the operation and management” (page 13, line 18 and 19), and after “department” insert-
ing “pursuant to Section 2-5-4 NMSA 1978” (page 13, line 19).
AGO indicates this amendment clarifies that information in tax returns may be released to LFC
during a “review of the operation and management of the [taxation and revenue] department pur-
suant to Section 2-5-4 NMSA 1978”. That section gives LFC statutory authority to conduct an-
nual reviews of the operation and management of selected state agencies, and make appropriate
recommendations to the legislature.
pg_0002
Senate Bill 524/aSCORC -- Page 2
Synopsis of Original Bill
Senate Bill 524 amends the Tax Administration Act to allow release of information in tax returns
to LFC during an audit of TRD by LFC. It authorizes release of procedural or evidentiary rul-
ings by TRD hearing officers, as long as the name and identification number of the taxpayer re-
questing the ruling are redacted, and prohibits TRD from releasing information regarding
whether a person has filed a tax return, subject to certain exceptions listed in Section 7-1-8.
Significant Issues
The LFC audit unit reports that LFC access to taxpayer information has been restricted despite
LFC willingness to execute confidentiality agreements, hampering the extent of audit procedures
LFC performance auditors are able to perform. During LFC audit of the GenTax computer sys-
tem, LFC could not perform an adequate analysis of how the system is processing and distribut-
ing taxes because LFC was not allowed to review how individual tax information is received and
processed. In some cases tax collections placed into suspense due to processing errors are not
resolved until research is performed, affecting the distribution of revenues. LFC had to rely on
TRD staff to extract the individual information, delaying the audit for several months.
The legislature relies on timely and accurate analysis of tax collection and distribution informa-
tion to formulate state agency budgets and make appropriations. LFC performance review of the
tax collection and distribution process is frequently requested. Providing LFC performance audi-
tors access to this information will reduce delays in the audit process, allowing LFC to perform
more thorough and accurate analysis of tax collection and distribution processes and provide
timely feedback.
LFC audit staff will be bound by the same confidentiality requirements as those currently bind-
ing TRD employees and financial auditors.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Duplicates HB572
TECHNICAL ISSUES
According to AGO, the exception allowing release to the LFC refers to “information” and it is
assumed this means all information in taxpayer returns. It is also unclear as to the nature of the
audit mentioned, or whether this bill is intended to grant the LFC the right to audit TRD. The
LFC is authorized to examine the operation and management of selected state agencies pursuant
to NMSA Section 2-5-4, but TRD is not specifically mentioned and that examination is not re-
ferred to as an “audit”.
According to AGO, because of the reference to the “name and identification number of the tax-
payer requesting the ruling”, the bill might prohibit the release of procedural or evidentiary rul-
ings requested by TRD.
ALTERNATIVES
AGO indicates consideration should be given to defining the type of taxpayer return information
pg_0003
Senate Bill 524/aSCORC -- Page 3
that will be released to the LFC under this bill, along with the type of “audit” referred to and the
statutory basis for that audit.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.
LFC will not have the right to request and received taxpayer information and the legislature will
not be able to expect timely or accurate performance audits of the tax collection and distribution
systems of the state.
JR/njw:lg