Senate Bill text for SB0321

SENATE BILL 321

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

John Arthur Smith

FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE

AN ACT

RELATING TO TAXATION; REQUIRING THE TAXATION AND REVENUE DEPARTMENT TO MAIL ASSESSMENTS OF TAXES, INTEREST, PENALTIES AND OTHER PAYMENTS TO THE LAST KNOWN MAILING ADDRESSES OF PERSONS OWING THOSE PAYMENTS; REQUIRING THE DEPARTMENT TO ISSUE NOTICES UPON RECEIPT OF CLAIMS FOR REFUND; PROVIDING FOR ESTABLISHMENT OF CERTAIN CLAIMS FOR REFUND AS PROTECTIVE CLAIMS.

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

Section 1. A new section of the Tax Administration Act is enacted to read:

"[NEW MATERIAL] MAILING OF ASSESSMENTS.--The department shall mail assessments of taxes, interest, penalties and other payments due to the department to the last known mailing address shown in department records of the person who owes those payments to the department."

Section 2. Section 7-1-26 NMSA 1978 (being Laws 1965, Chapter 248, Section 28, as amended) is amended to read:

"7-1-26. CLAIM FOR REFUND.--

A. [Any] 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 Subsections D, E and F of this section, a written claim for refund. Except as provided in Subsection J of this section, a refund claim shall include the taxpayer's name, address and identification number, the type of tax for which a refund is being claimed, the sum of money being claimed, the period for which overpayment was made and [the basis for the refund. As used in this subsection, "basis for the refund" means] a brief statement of the facts and the law on which the claim is based. Upon receipt of a claim for a refund of gross receipts tax, compensating tax, personal income tax or corporate income tax, other than a claim described in Subsection J of this section, the department shall promptly send a notice to the person filing the claim stating that it has received the claim and indicating whether it considers the claim to be complete. The department and the person filing the claim may agree to designate the claim as a protective claim.

B. The secretary or the secretary's delegate may allow the claim in whole or in part or may deny the claim.

(1) If the claim is denied in whole or in part in writing, [no] a claim may not 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 one [but not more than one] of the remedies in Subsection C of this section.

(2) For a claim other than a protective claim, if the department has neither granted nor denied any portion of a claim for refund within one hundred twenty days of the date the claim was mailed or delivered to the department, the person may refile it within the time limits set forth in Subsection [C] D of this section or may within ninety days elect to pursue one, but only one, of the remedies in Subsection C of this section.

(3) After the expiration of the two hundred ten days from the date the claim was mailed or delivered to the department, [the department may not approve or disapprove the claim unless the person has pursued one of the remedies under Subsection C of this section] if the person has failed to pursue one of the remedies pursuant to Subsection C of this section, the department may act on the claim; provided that the taxpayer establishes that the claim was filed in a timely manner and that the claim was complete. In the event that the department approves such a claim after the expiration of more than two hundred ten days from the date the claim was filed, interest shall not be allowed pursuant to Section 7-1-68 NMSA 1978. The department shall not act on that claim more than one year from the end of the calendar year in which the claim was filed.

(4) For a protective claim, if the department has not acted within one hundred twenty days from either the date of a final decision in the lead case from which appeal may not be taken or the last date on which appeal may be taken when no appeal is taken, any part of the claim not granted or denied is denied.

C. A person may elect to pursue one [but only one] of the remedies in Paragraphs (1) and (2) of this subsection. [In any case] If a person does timely pursue more than one remedy, the person shall be deemed to have elected the first remedy invoked. The remedies are as follows:

(1) the person may direct to the secretary a written protest against the denial of, or failure to either allow or deny the claim or portion [thereof] of the claim, which shall be set for hearing by a hearing officer designated by the secretary promptly after the receipt of the protest in accordance with the provisions of Section 7-1-24 NMSA 1978, and pursue the remedies of appeal from decisions adverse to the protestant as provided in Section 7-1-25 NMSA 1978; or

(2) the person may commence a civil action in the district court for Santa Fe county by filing a complaint setting forth the circumstance of the claimed overpayment, alleging that on account thereof the state is indebted to the plaintiff in the amount stated, together with any interest allowable, demanding the refund to the plaintiff of that amount 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.

D. Except as otherwise provided in Subsections E and F of this section, [no] a credit or refund of any amount [may] shall not be allowed or made to any person unless as the result of a claim made by that person as provided in this section:

(1) within three years of 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 Section 7-1-17 NMSA 1978, whichever is later;

(b) the final determination of value occurs with respect to [any] an overpayment that resulted from a disapproval by [any] an agency of the United States or the state of New Mexico or [any] a 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; or

(2) when an amount of a claim for credit under the provisions of the Investment Credit Act, Laboratory Partnership with Small Business Tax Credit Act, Technology Jobs Tax Credit Act, Capital Equipment Tax Credit Act or similar act or for the rural job tax credit pursuant to [Sections] Section 7-2E-1 [and 7-2E-2] NMSA 1978 or similar credit has been denied, the taxpayer may claim a refund of the credit no later than one year after the date of the denial;

(3) when a taxpayer under audit by the department has signed a waiver of the limitation on assessments [on or after July 1, 1993] pursuant to Subsection F of Section 7-1-18 NMSA 1978, the taxpayer may file a claim for refund of the same tax paid for the same period for which the waiver was given, 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 the 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, a claim for refund of that amount of tax can be made within one year of the date on which the tax was paid; or

(5) when a taxpayer has been assessed a tax [on or after July 1, 1993 under] pursuant to Subsection B, C or D of Section 7-1-18 NMSA 1978 and when the assessment 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 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.

E. [No] A credit or refund shall not be allowed or made to [any] a person claiming a refund of gasoline tax under Section 7-13-11 NMSA 1978 unless notice of the destruction of the gasoline was given the department within thirty days of the actual destruction and the claim for refund is made within six months of the date of destruction. [No] A credit or refund shall not be allowed or made to [any] a person claiming a refund of gasoline tax under Section 7-13-17 NMSA 1978 unless the refund is claimed within six months of the date of purchase of the gasoline and the gasoline has been used at the time the claim for refund is made.

F. If, as a result of an audit by the internal revenue service or the filing of an amended federal return changing a prior election or making any other change for which federal approval is required by the Internal Revenue Code, [any] an adjustment of federal tax is made with the result that there would have been an overpayment of tax if the adjustment to federal tax had been applied to the taxable period to which it relates, claim for credit or refund of only that amount based on the adjustment may be made as provided in this section within one year of the date of the internal revenue service audit adjustment or payment of the federal refund or within the period limited by Subsection D of this section, whichever expires later. Interest computed at the rate specified in Subsection B of Section 7-1-68 NMSA 1978 shall be allowed on any such claim for refund from the date one hundred twenty days after the claim is made until the date the final decision to grant the credit or refund is made.

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, 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.
H. [Any] A refund of tax paid under [any] a 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.

I. For the purposes of this section, the term "oil and gas tax return" means a return reporting tax due with respect to oil, natural gas, liquid hydrocarbons or carbon dioxide 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.

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.

K. For the purposes of this section:

(1) "lead case" means the previously filed claim or protest described in Paragraph (2) of this subsection; and

(2) "protective claim" means a claim for a refund filed by a person asserting that the person's entitlement to a refund will be established by a final decision of a New Mexico court of competent jurisdiction on a claim for a refund or protest previously filed by that person or another. L. Disposition of a protective claim shall be postponed until a final decision is reached in the lead case."

Section 3. Section 7-1-68 NMSA 1978 (being Laws 1965, Chapter 248, Section 69, as amended by Laws 2003, Chapter 2, Section 1 and by Laws 2003, Chapter 439, Section 6) 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 rate of fifteen percent a year, computed on a daily basis [provided that].

C. If a different rate than the rate established by Subsection B of this section is specified by a compact or other interstate agreement to which New Mexico is a party, [that] the rate specified by the compact or other agreement shall apply to amounts due under the compact or other agreement.

[C.] D. 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; 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.] E. 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);

(2) the credit or refund is made within:

(a) fifty-five days of the date of the 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; or

(b) seventy-five days of the date of the claim for refund of gasoline tax to users of gasoline off the highways;

(3) the credit or refund is made within one hundred twenty days of the date of the 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;

(4) 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;

(5) the credit or refund is made within sixty days of the date of the claim for refund of any tax other than income tax;

(6) 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;

(7) 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; [or]

(8) 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

(9) the credit or refund is in settlement of a protective claim, as defined in Section 7-1-26 NMSA 1978; provided that interest shall be paid with respect to the period from the date of the final unappealable decision in the lead case until a date preceding by not more than thirty days the date the credit or refund is paid on the protective claim; or

(10) the department acts to grant the credit or refund pursuant to Paragraph (3) of Subsection B of Section 7-1-26 NMSA 1978.

[E.] F. Nothing in this section shall be construed to require the payment of interest upon interest."

Section 4. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2006.

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