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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
1-31-2006
HB 383
SHORT TITLE Mailing of Tax Dept. Assessments & Notices
SB
ANALYST Dearing
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY06
FY07
NFI*
Please See Narrative*
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of Bill
House Bill 383 creates a new section of the Tax Administration Act which requires the Taxation
and Revenue Department to mail assessments of taxes, interest, penalties and other payments to
the last known address of the person owing those liabilities.
Similarly, the act amends Section 7-1-26 § a.) NMSA 1978 such that the department is required
to respond to taxpayer refund claims of gross receipts tax, compensation tax, personal income tax
or corporate income tax, via mail, establishing both that the refund claim was received and the
completeness of the claim, as well as providing the ability for the taxpayer or Taxation and
Revenue Department to designate the claim as “protective.”
In general, these changes are proposed to tax administration statutes:
1. A new section of statute would require the Taxation and Revenue Department to mail as-
sessments of taxes to the last known mailing address of the person owing the taxes.
2. The Department would be required to notify taxpayers when it has received a claim for
refund of certain taxes. The notification would inform the taxpayer whether the Department
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House Bill 383 – Page
2
considers the claim to be complete. The Department and the taxpayer could agree to designate
the claim as a “protective claim.” A protective claim asserts that the entitlement to a refund will
be established by a pending court decision.
3. Rules governing refund claims would be modified. Under present law, TRD may not act
on a refund claim after 210 days unless the taxpayer has filed a protest. Under the proposal,
TRD could still act on the claim after 210 days, but no interest would be paid. TRD could not
act on a claim after one year. In the case of a protective claim, if the Department has not acted
within 120 days from the final decision on the case on which the claim is contingent, the remain-
ing claim is denied.
The effective date of the provisions of this act is July 1, 2006
FISCAL IMPLICATIONS
*The proposals would have no significant impacts on state and local revenues. Several of the
provisions are already being implemented as a matter of Department policy.
SIGNIFICANT ISSUES
Several other technical changes are made to sections 7-1-26 and 7-1-68 governing interest on
under- and over-payments of tax.
Within Section 7-1-26 § b.) (1) NMSA 1978, the enactment removes language which currently
specifies the pursuit of only one of the available remedies within Section 7-1-26 § c.) NMSA.
Within Section 7-1-26 § b.) (3) NMSA 1978, the enactment amends and creates language to
change the treatment of time-lines surrounding timeliness of taxpayer claims, and subsequent
Department activities such that the Taxation and Revenue Department may act on claims through
and including any time within the calendar year following that year of the date of the refund
claim, but not past Dec. 31
st
in the calendar year following the year in which the refund claim
was received.
Within Section 7-1-26 § b.) (4) NMSA 1978, the enactment establishes for protective claims a
120 day maximum, from either the date of the final decision in the lead case, from which appeal
may not be taken; or the last day on which appeal may be taken yet is not, whereby at this time,
those claims denied will remain so.
Subsections 7-1-26 § k. (1) & (2) NMSA 1978 are created to define “lead-case” and “protective
claim,” and subsection 7-1-26 § l.) (1) NMSA 1978 is created to stipulate that disposition of a
protective claim shall be postponed until a final decision is reached in the lead case.
7-1-68 § e.) (9) & (10) NMSA 1978 are created to stipulate that no interest shall be allowed or
paid with respect to an amount credited or refunded if; in section (9), the credit or refund is in
settlement of a protective claim, as defined in Section 7-1-26 § k. (1) & (2) NMSA 1978, pro-
vided that the interest paid with respect to the period from the date of the final unappealable de-
cision 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 section (10), the Taxation and Revenue Department
acts to grant the credit or refund pursuant to Section 7-1-26 § b. (3) NMSA 1978
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House Bill 383 – Page
3
Additionally, there are several linguistic changes proposed throughout the aforementioned stat-
utes.
The effective date of the provisions of this act is July 1, 2006
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Duplicates SB 321
TECHNICAL ISSUES
Section 3 of the bill contains amendments to Section 7-1-68 NMSA 1978. As the bill is cur-
rently drafted, it makes those amendments to a version of Section 7-1-68 that does not reflect
amendments to that section approved in 2003. To avoid confusion, this section should be re-
written to amend the current language in that section. No substantive changes in the proposal are
needed to achieve this.
Section 1, page 1, lines 22 through 24 should read: “The department shall mail notices of as-
sessment of taxes, interest and penalties and notices of other payments due to the department to
the last known mailing.”
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
Applicable sections of the New Mexico Statutes Annotated would remain intact, as currently
written.
PD/nt