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F I S C A L I M P A C T R E P O R T

SPONSOR Arnold-Jones

ORIGINAL DATE

LAST UPDATED

2-4-2006

2-6-2006 HB 827

SHORT TITLE Penalty for Obstruction of Tax Investigations

SB

ANALYST Dearing

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$0.1*

Recurring General Fund

*Please See Narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance & Administration (DFA)

New Mexico Corrections Department (NMCD)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of Bill

Enactment of House Bill 827 makes it a 4

th

degree felony to knowingly provide false informa-

tion, or knowingly withhold information from any person authorized to investigate tax fraud.

The bill also makes it a 4

th

degree felony to knowingly alter, destroy, mutilate or conceal any re-

cord or document when the activity is intended to mislead a tax fraud investigation, and the bill

also makes it a 4

th

degree felony to knowingly prevent, obstruct, mislead or delay the communi-

cation of information or records relating to a tax fraud investigation.

FISCAL IMPLICATIONS

*Fiscal impacts would be variable and based on the actual number of tax fraud cases prosecuted,

with further increase where cases are prosecuted successfully, and subsequent punitive costs are

incurred. The intention of this bill is most likely to provide dissuasion from providing false in-

House Bill 827 – Page

2

formation, or withholding that information. Therefore, it is foreseeable that as a disincentive to

fraud, used to gain leverage in investigations, this bill could have neutral impact.

Further, it is conceivable that this bill could increase net tax fines and penalties, as people could

prove more truthful, exposing their tax improprieties incurring subsequent fines, when there ex-

ists potential punishment of this type.

Overall, there could be a minimal increase in prison and parole/probation caseloads as a result of

the new crime. Revenue from probation/parole fees may also minimally increase.

The contract/private prison annual costs of incarcerating an inmate is $23,160 per year for males.

The cost per client to house a female inmate at a privately operated facility is $24,961 per year.

Because state owned prisons are essentially at capacity, any net increase in inmate population

will be housed at a contract/private facility.

The cost per client in Probation and Parole for a standard supervision program is $1,527 per year.

The cost per client in Intensive Supervision programs is $4,256 per year. The cost per client in

department-operated Community Corrections programs is $4,495 per year. The cost per client in

privately-operated Community Corrections programs is $10,022 per year. The cost per year for

male and female residential Community Corrections programs is $22,019.

SIGNIFICANT ISSUES

The bill essentially makes it a crime to lie to an investigator in a tax fraud investigation or to oth-

erwise obstruct a tax fraud investigation. Currently there is no state criminal statute in New

Mexico to cover this activity. The only other context where lying is punishable with criminal

penalties is in the crime of perjury.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Duplicates Senate Bill 707

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Enactment of this bill should make it easier to investigate tax fraud. Once potential offender has

been caught in a lie about a tax investigation, a charge of obstructing an investigation can be

used as leverage to obtain additional information.

Failure to enact would leave the New Mexico Statutes Annotated intact, as currently written.

PD/nt