A. If the secretary or the secretary's delegate determines that a taxpayer is liable for taxes in excess of twenty-five dollars ($25.00) that are due and that have not been previously assessed to the taxpayer, the secretary or the secretary's delegate shall promptly assess the amount thereof to the taxpayer.
B. Assessments of tax are effective:
(1) when a return of a taxpayer is received by the department showing a liability for taxes;
(2) when a document denominated "notice of assessment of taxes", issued in the name of the secretary, is mailed or delivered in person to the taxpayer against whom the liability for tax is asserted, stating the nature and amount of the taxes assertedly owed by the taxpayer to the state, demanding of the taxpayer the immediate payment of the taxes and briefly informing the taxpayer of the remedies available to the taxpayer; or
(3) when an effective jeopardy assessment is made as provided in the Tax Administration Act.
C. Any assessment of taxes or demand for payment made by the department is presumed to be correct.
D. When taxes have been assessed to any taxpayer and remain unpaid, the secretary or the secretary's delegate may demand payment at any time except as provided otherwise by Section 7-1-19 NMSA 1978.
History: 1953 Comp., § 72-13-32, enacted by Laws 1965, ch. 248, § 20; 1969, ch. 32, § 1; 1979, ch. 144, § 16; 1992, ch. 55, § 11; 2007, ch. 45, § 1.
ANNOTATIONSThe 2007 amendment, effective January 1, 2008, in Subsection A, changed the minimum amount from $10.00 to $25.00.
The 1992 amendment, effective July 1, 1992, substituted "secretary" for "director" and "department" for "division" several times throughout the section, added "except as provided otherwise by Section 7-1-19 NMSA 1978" at the end of Subsection D, and made minor stylistic changes throughout the section.
Assessment of taxes effective when effective jeopardy assessment is made as provided in the Tax Administration Act. Regents of N.M. Coll. of Agric. & Mechanic Arts v. Academy of Aviation, Inc., 1971-NMSC-087, 83 N.M. 86, 488 P.2d 343.
Assessment upheld when statutes followed and no dispute of factual correctness. — Since the record showed the statutory provisions were followed and taxpayer presented no evidence tending to dispute the factual correctness of the assessments, assessment will be upheld. McConnell v. State ex rel. Bureau of Revenue, 1971-NMCA-181, 83 N.M. 386, 492 P.2d 1003.
Presumption of correctness applies when assessment delivered. — Once the notice of assessment of taxes is delivered to the taxpayer, the statutory presumption, of the correctness of the assessment, applies, and absent a showing of incorrectness by taxpayers, the audit and notice of assessment of taxes must stand. Torridge Corp. v. Commissioner of Revenue, 1972-NMCA-171, 84 N.M. 610, 506 P.2d 354, cert. denied, 84 N.M. 592, 506 P.2d 336 (1973).
Exemption strictly construed in favor of taxing authority. — There is a presumption that an assessment of gross receipts taxes is correct, and in order for the taxpayer to be successful, he must clearly overcome this presumption. Moreover, where an exemption is claimed, the exemption is strictly construed in favor of the taxing authority. Stohr v. N.M. Bureau of Revenue, 1976-NMCA-118, 90 N.M. 43, 559 P.2d 420, cert. denied, 90 N.M. 254, 561 P.2d 1347 (1977).
Presumption applicable to penalty statute. — Presumption of correctness of this section also applies to penalty section (7-1-69 NMSA 1978). Tiffany Constr. Co. v. Bureau of Revenue, 1976-NMCA-127, 90 N.M. 16, 558 P.2d 1155, cert. denied, 90 N.M. 255, 561 P.2d 1348 (1977).
Burden on protesting taxpayers to overcome presumption. — The burden is on taxpayers protesting assessment to overcome presumption that the bureau's (now department's) assessment is correct. Archuleta v. O'Cheskey, 1972-NMCA-165, 84 N.M. 428, 504 P.2d 638; Tipperary Corp. v. N.M. Bureau of Revenue, 1979-NMCA-031, 93 N.M. 22, 595 P.2d 1212, cert. denied, 92 N.M. 675, 593 P.2d 1078; Anaconda Co. v. Prop. Tax Dep't, 1979-NMCA-158, 94 N.M. 202, 608 P.2d 514, cert. denied, 94 N.M. 628, 614 P.2d 545 (1980); Hawthorne v. Director of Revenue Div. Taxation & Revenue Dep't, 1980-NMCA-071, 94 N.M. 480, 612 P.2d 710, Carlsberg Mgmt. Co. v. State Taxation & Revenue Dep't, 1993-NMCA-121, 116 N.M. 247, 861 P.2d 288; MPC Ltd. v. N.M. Taxation & Revenue Dep't, 2003-NMCA-021, 133 N.M. 217, 62 P.3d 308.
Presumption overcome when not supported by substantial evidence. — The assessment is presumed to be correct; the taxpayer may overcome the presumption of correctness of the assessment by presenting evidence and showing that the decision of the bureau (now department) is not supported by substantial evidence. Floyd & Berry Davis Co. v. Bureau of Revenue, 1975-NMCA-143, 88 N.M. 576, 544 P.2d 291.
Protesting taxpayer must dispute factual correctness to overcome presumption. — Since any assessment of taxes is presumed to be correct, the duty rested on the taxpayer to present evidence tending to dispute the factual correctness of the assessments and to overcome this presumption. Champion Int'l Corp. v. Bureau of Revenue, 1975-NMCA-106, 88 N.M. 411, 540 P.2d 1300, cert. denied, 89 N.M. 5, 548 P.2d 70.
Presumption may be overcome by disputing factual correctness. — The presumption of Subsection C need be overcome only by a taxpayer's disputing the factual correctness of an assessment. When the taxpayer challenged the interpretation of a county ordinance in its submitted memorandum of positions, the burden was properly shifted by the memorandum to the bureau (now department) to at least acknowledge the existence of the ordinance. Co-Con, Inc. v. Bureau of Revenue, 1974-NMCA-134, 87 N.M. 118, 529 P.2d 1239, cert. denied, 87 N.M. 111, 529 P.2d 1232.
Necessity of presenting evidence to rebut the presumption of correctness. — When the corporation contracted with an out-of-state buyer for the corporation to destroy munitions, it was entitled to the gross receipts deduction, and the hearing officer could not properly determine that use or delivery took place within the state without some affirmative evidence in the record to support that conclusion. TPL, Inc. v. N.M. Taxation & Revenue Dep't, 2003-NMSC-007, 133 N.M. 447, 64 P.3d 474.
No basis for overturning decision where taxpayer unprepared. — Since the record showed that hearing officer carefully advised taxpayer as to the statutory procedures and his rights in connection with hearing and it also showed the taxpayer did not come prepared for the hearing, taxpayer's claims that bureau (now department) should have given him opportunity to present his evidence at a later time and, although it was his burden to proceed, that he was denied the right to cross-examine a witness who was never called were based on taxpayer's lack of preparation and do not provide a basis for overturning the commissioner's (now secretary's) decision. McConnell v. State ex rel. Bureau of Revenue, 1971-NMCA-181, 83 N.M. 386, 492 P.2d 1003.
Presumption not overcome by contradictory evidence. — Evidence that the construction contract between the taxpayer, a contracting business and a corporation created a ceiling price was not compelling in view of the contradictory evidence as to the actual cost of the construction, and the presumption of correctness of the assessment of gross receipts tax was not overcome. Floyd & Berry Davis Co. v. Bureau of Revenue, 1975-NMCA-143, 88 N.M. 576, 544 P.2d 291.
Presumption not overcome since acceptable audit method used. — Since the "test months" method was used for audit of taxpayers whose records were destroyed by fire in order to determine gross receipts subject to tax, and since there was evidence that the "test months" method was acceptable practice, the presumption of correctness of the assessments was not overcome. Torridge Corp. v. Comm'r of Revenue, 1972-NMCA-171, 84 N.M. 610, 506 P.2d 354, cert. denied, 84 N.M. 592, 506 P.2d 336 (1973).
Evidence of entitlement to a manufacturing deduction. — A biotechnology company whose expertise was in the diagnosis of genetic disorders that could be detected through the appearance of chromosomes, and who produced tangible objects that were provided to its customers, such as a written report of its experts' diagnosis and a laminated karyotype, which consisted of photographs of chromosomes that were numbered and pasted onto a piece of laminated cardboard, did not establish its entitlement to a manufacturing deduction, since the company could not identify any out-of-state purchases that would be subject to the compensating tax of products incorporated into its reports or laminated karyotypes. The department, whose assessment is assumed correct, had identified as subject to the compensating tax such items as microscopes, sinks, and furniture, which undoubtedly were not incorporated into the documents or laminated karyotypes. Vivigen, Inc. v. Minzner, 1994-NMCA-027, 117 N.M. 224, 870 P.2d 1382.
Presumption overcome when no basis for assessments existed. — Since the undisputed evidence of no audit for a two-year period of no test for gross receipts for those years and of different under-reporting percentages for the audited period established an absence of any basis for the assessments for that period, such showing overcame the presumption that the assessments were correct. Torridge Corp. v. Commissioner of Revenue, 1972-NMCA-171, 84 N.M. 610, 506 P.2d 354, cert. denied, 84 N.M. 592, 506 P.2d 336 (1973).
Standard of review on appeal. — Department's gross receipts tax assessment can only be reversed by the court of appeals if arbitrary, capricious, or there is an abuse of discretion, such that the assessment's not supported by substantial evidence or it is otherwise not in accordance with law. ITT Educ. Serv. v. Taxation & Revenue Dep't, 1998-NMCA-078, 125 N.M. 244, 959 P.2d 969.
Standard of review on appeal. — Any assessment of taxes by the taxation and revenue department is presumed to be correct and in protesting the assessment of taxes the taxpayer has the burden of proving the deductions were proper. In reviewing, courts will reverse the department's decision only if it is arbitrary, capricious, an abuse of discretion, otherwise not in accordance with law, or not supported by substantial evidence. Arco Materials, Inc. v. State Taxation & Revenue Dep't, 1994-NMCA-062, 118 N.M. 12, 878 P.2d 330, rev'd on other grounds sub nom. Blaze Constr. Co. v. Taxation & Revenue Dep't, 1994-NMSC-110, 118 N.M. 647, 884 P.2d 803, cert. denied, 514 U.S. 1016, 115 S. Ct. 1359, 131 L. Ed. 2d 216 (1995).
Presumption overcome by showing that division (now department) failed to follow statutory provisions. — An assessment made by the bureau (now department) is presumptively correct. This presumption may be overcome by showing that the bureau (now department) failed to follow the statutory provisions contained in the Tax Administration Act. Regents of N.M. Coll. of Agric. & Mechanic Arts v. Academy of Aviation, Inc., 1971-NMSC-087, 83 N.M. 86, 488 P.2d 343.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation §§ 596 to 602; 72 Am. Jur. 2d State and Local Taxation §§ 704 to 738.
Who may complain of underassessment or nonassessment of property for taxation, 5 A.L.R.2d 576, 9 A.L.R.4th 428.
Judicial notice as to assessed valuations, 42 A.L.R.3d 1439.
Separate assessment and taxation of air rights, 56 A.L.R.3d 1300.
84 C.J.S. Taxation §§ 423 to 454, 478 to 531.