NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

Taxation and Revenue Department

LFC Files

SUMMARY

Synopsis of Bill

The House Taxation and Revenue Committee Substitute for House Bill 879 creates the New Mexico Taxpayer Bill of Rights for the purposes of:

• •Guaranteeing the rights, privacy and property of New Mexico taxpayers;
• •Assuring that taxpayers are treated with dignity and respect; and
• •Compiling in one act, brief but comprehensive statements that explain in simple, nontechnical terms, the rights of taxpayers.

The rights included in the bill include:

1. The right to available information and prompt, courteous responses to questions and requests for assistance;
2. The right to be represented by counsel or other qualified representation in administrative interactions with the department;
3. The right to have audits, inspections of records and meetings at a reasonable time and place;
4. The right to have the department begin and complete its audits in a timely and expeditious manner;
5. The right to simple, nontechnical information that explains procedures, remedies and rights during audit, protest, appeals and collection proceedings;
6. The right to be provided an explanation for the denial of refunds and the basis for an audit or denial of refunds;
7. The right to seek review of any findings or adverse decisions;
8. The right to have tax information kept confidential unless specified by law;
9. The right to abatement of tax assessments that have been incorrectly, erroneously or illegally made;
10. The right to information that if tax assessments are not paid, secured, protested or otherwise provided for, the taxpayer will be a delinquent taxpayer
11. The right to timely notice of any collection actions that will require sale or seizure of taxpayers' property;
12. The right to at least five days to review a jeopardy assessment before paying the tax or furnishing security for the tax;
13. The right to procedures for retiring tax obligations by installment agreements, which recognize the taxpayer's financial condition and the best interests of the state;
14. The right to procedures that assure that individual department employees are not paid, evaluated or promoted on the basis of assessment or collection amounts.

The bill would require the taxation and revenue department to develop a brochure stating the taxpayer's bill or rights in simple, nontechnical language. The department would be required to distribute the brochure to taxpayers with the annual income and semiannual CRS tax forms.

The bill adds a definition for negligence to the Tax Administration Act. Negligence is defined as the failure to do what a reasonable and ordinarily prudent person would do under similar circumstances.

The bill allows a person seeking a refund claim to commence a civil action in state district court. Currently, the person must commence action in the district court for Santa Fe County.

The bill prohibits protests or civil action for refunds after a period of two years from the date of a certified mailing by the department of the claim denial.

The bill would allow a taxpayer who prevails in court proceedings covering the determination, collection or refund of any tax or penalty and interest on taxes governed by the provisions of the Tax Administration Act to be awarded a judgement or settlement for reasonable administrative costs.

The bill provides that a penalty against a taxpayer shall be abated if the failure to pay any amount of tax when due results from a mistake of law or fact made in good faith and on reasonable grounds.

FISCAL IMPLICATIONS

The Taxation and Revenue Department estimates that implementing the bill of rights will result in the loss of $1.2 million to the general fund in FY 2000 and $2.5 million on a full year basis. They attribute nearly all of the cost to the change in the negligence standard.

ADMINISTRATIVE IMPLICATIONS

The Taxation and Revenue Department has not yet issued an analysis estimating the administrative implications of the bill.

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