A. In response to a claim for refund, credit or rebate made as provided in Section 7-1-26 NMSA 1978, but before a court acquires jurisdiction of the matter, the secretary or the secretary's delegate may authorize payment to a person in the amount of the credit or rebate claimed or refund an overpayment of tax determined by the secretary or the secretary's delegate to have been erroneously made by the person, together with allowable interest. A payment of a credit rebate claimed or a refund of tax and interest erroneously paid amounting to twenty thousand dollars ($20,000) or more shall be made with the prior approval of the attorney general, except that the secretary or the secretary's delegate may make refunds with respect to the Oil and Gas Severance Tax Act [Chapter 7, Article 29 NMSA 1978], the Oil and Gas Conservation Tax Act [Chapter 7, Article 30 NMSA 1978], the Oil and Gas Emergency School Tax Act [Chapter 7, Article 31 NMSA 1978], the Oil and Gas Ad Valorem Production Tax Act [Chapter 7, Article 32 NMSA 1978], the Natural Gas Processors Tax Act [Chapter 7, Article 33 NMSA 1978] or the Oil and Gas Production Equipment Ad Valorem Tax Act [Chapter 7, Article 34 NMSA 1978], Section 7-13-17 NMSA 1978 and the Cigarette Tax Act [Chapter 7, Article 12 NMSA 1978] without the prior approval of the attorney general regardless of the amount.
B. Pursuant to the final order of the district court, the court of appeals, the supreme court of New Mexico or a federal court, from which order, appeal or review is not successfully taken, adjudging that a person has properly claimed a credit or rebate or made an overpayment of tax, the secretary shall authorize the payment to the person of the amount thereof.
C. In the discretion of the secretary, any amount of credit or rebate to be paid or tax to be refunded may be offset against any amount of tax for which the person due to receive the credit, rebate payment or refund is liable. The secretary or the secretary's delegate shall give notice to the taxpayer that the credit, rebate payment or refund will be made in this manner, and the taxpayer shall be entitled to interest pursuant to Section 7-1-68 NMSA 1978 until the tax liability is credited with the credit, rebate or refund amount.
D. In an audit by the department or a managed audit covering multiple reporting periods in which both underpayments and overpayments of a tax have been made in different reporting periods, the department shall credit the tax overpayments against the underpayments, provided that the taxpayer files a claim for refund of the overpayments. An overpayment shall be applied as a credit first to the earliest underpayment and then to succeeding underpayments. An underpayment of tax to which an overpayment is credited pursuant to this section shall be deemed paid in the period in which the overpayment was made or the period to which the overpayment was credited against an underpayment, whichever is later. If the overpayments credited pursuant to this section exceed the underpayments of a tax, the amount of the net overpayment for the periods covered in the audit shall be refunded to the taxpayer.
E. When a taxpayer makes a payment identified to a particular return or assessment, and the department determines that the payment exceeds the amount due pursuant to that return or assessment, the secretary may apply the excess to the taxpayer's other liabilities pursuant to the tax acts to which the return or assessment applies, without requiring the taxpayer to file a claim for a refund. The liability to which an overpayment is applied pursuant to this section shall be deemed paid in the period in which the overpayment was made or the period to which the overpayment was applied, whichever is later.
F. If the department determines, upon review of an original or amended income tax return, corporate income and franchise tax return, estate tax return, special fuels excise tax return or oil and gas tax return, that there has been an overpayment of tax for the taxable period to which the return or amended return relates in excess of the amount due to be refunded to the taxpayer pursuant to the provisions of Subsection K of Section 7-1-26 NMSA 1978, the department may refund that excess amount to the taxpayer without requiring the taxpayer to file a refund claim.
G. Records of refunds and credits made in excess of ten thousand dollars ($10,000) shall be available for inspection by the public. The department shall keep such records for a minimum of three years from the date of the refund or credit.
H. In response to a timely refund claim pursuant to Section 7-1-26 NMSA 1978 and notwithstanding any other provision of the Tax Administration Act, the secretary or the secretary's delegate may refund or credit a portion of an assessment of tax paid, including applicable penalties and interest representing the amount of tax previously paid by another person on behalf of the taxpayer on the same transaction, provided that the requirements of equitable recoupment are met. For purposes of this subsection, the refund claim may be filed by the taxpayer to whom the assessment was issued or by another person who claims to have previously paid the tax on behalf of the taxpayer. Prior to granting the refund or credit, the secretary may require a waiver of all rights to claim a refund or credit of the tax previously paid by another person paying a tax on behalf of the taxpayer.
History: 1953 Comp., § 72-13-43, enacted by Laws 1965, ch. 248, § 31; 1966, ch. 30, § 7; 1970, ch. 17, § 1; 1975, ch. 116, § 3; 1977, ch. 297, § 2; 1979, ch. 144, § 27; 1982, ch. 18, § 12; 1989, ch. 325, § 9; 1992, ch. 55, § 12; 2001, ch. 16, § 6; 2002, ch. 11, § 1; 2003, ch. 398, § 11; 2003, ch. 439, § 4; 2006, ch. 38, § 1; 2013, ch. 27, § 10; 2017, ch. 63, § 27.
ANNOTATIONSCross references. — For managed audits, see 7-1-11.1 NMSA 1978.
For compromises of taxes and closing agreements, see 7-1-20 NMSA 1978.
For interest on overpayments, see 7-1-68 NMSA 1978.
The 2017 amendment, effective June 16, 2017, in Subsection A, after "the amount of the", deleted "creditor" and added "credit"; and in Subsection F, after "Subsection", changed "I" to "K".
The 2013 amendment, effective July 1, 2013, increased the maximum amount of a refund or a credit that requires attorney general approval; provided for abatement of tax that was paid by a person on behalf of the taxpayer; in Subsection A, in the first sentence, after "claim for refund", added "credit or rebate", after "in the amount of", added "the creditor or rebate claimed or refund", and in the second sentence, after "A", added "payment of a credit rebate claimed or a", after "erroneously paid amounting to", deleted "more than ten thousand dollars ($10,000) may" and added "twenty thousand dollars ($20,000) or more shall"; deleted former Paragraph (2) of Subsection A, which required attorney general approval of abatements under the General Income and Franchise Tax Act of amounts of twenty thousand dollars or more; in Subsection B, after "adjudging that a person has" added "properly claimed a credit or rebate or"; in Subsection C, in the first sentence, after "any amount of", added "credit or rebate to be paid or" and after "due to receive the", added "credit, rebate payment or", and in the second sentence, after "notice to the taxpayer that the", added "credit, rebate payment or" and after "liability is credited with the", added "credit, rebate or"; and added Subsection H.
The 2006 amendment, effective July 1, 2006, provided in Subsection C that the secretary shall give notice to a taxpayer that a refund will be made and that the taxpayer is entitled to interest and provides in Subsection G that records of refunds and credits in excess of $10,000 shall be available for public inspection.
The 2003 amendment, effective July 1, 2003, added Subsection E and F and redesignated Subsection E as G.
The 2002 amendment, effective July 1, 2002, substituted "ten thousand dollars ($10,000)" for "five thousand dollars ($5,000)" in Subsections A and E.
The 2001 amendment, effective July 1, 2001, updated the internal reference in Paragraph A(1); added Subsection D and redesignated the remaining subsection accordingly.
The 1992 amendment, effective July 1, 1992, in Subsection A, substituted "Any refund" for "Refunds" and deleted "during any one calendar year" following "($5,000)" in the second sentence, inserted the colon and Paragraph (1) designation, and added Paragraph (2); and substituted "five thousand dollars ($5,000)" for "one thousand dollars ($1,000)" in the first sentence of Subsection D.
The 1989 amendment, effective June 16, 1989, in Subsection A, in the first sentence, substituted "secretary or the secretary's delegate" for "director or his delegate" in two places, deleted "with the written approval of the attorney general" preceding "authorize the refund", in the second sentence, deleted "Notwithstanding the above" from the beginning, substituted "more than five thousand dollars" for "less than five thousand dollars", "only with the prior approval" for "without the prior approval" and "through 7-13-15 NMSA 1978" for "through 7-13-16 NMSA 1978" and inserted the language beginning with "except that" and ending with "Oil and Gas Production Equipment Ad Valorem Tax Act"; in Subsections B and C, substituted "the secretary" for "the director or his delegate"; in Subsection D, substituted "department" for "division" in the second sentence; and made minor stylistic changes.
Secretary decides actions on refund claims. — Secretary of the taxation and revenue department has discretion to act or refuse to act on refund claims under Sections 7-1-26A and 7-1-29A NMSA 1978. Unisys Corp. v. N.M. Taxation & Revenue Dep't, 1994-NMCA-059, 117 N.M. 609, 874 P.2d 1273.
Director (secretary) was within his discretion in applying amount wrongfully paid to the amount he determined to be owing. G.M. Shupe, Inc. v. Bureau of Revenue, 1976-NMCA-040, 89 N.M. 265, 550 P.2d 277, cert. denied, 89 N.M. 321, 551 P.2d 1368.
No offset of overpayment against prior liability. — No statute expressly authorizes the taxation and revenue department to apply overpayments of taxes for one reporting period as offsets against underpayments for another prior reporting period. In fact, the legislature has granted the department only the specific authority to credit refunds or overpayments of gas production taxes against future tax payments. The department complied with this provision by allowing taxpayer to net out its overpayment against current tax liabilities on the estimated tax term form when taxpayer filed its amended form reporting an overpayment of taxes for a prior reporting period. Amoco Prod. Co. v. N.M. Taxation & Revenue Dep't, 1994-NMCA-086, 118 N.M. 72, 878 P.2d 1021.
Calculating interest on underpayment. — Interest on underpayment of taxes is calculated without regard to receipt by the taxation and revenue department of any overpayment of taxes. The department, once a claim for refund is made, is authorized only to allow a taxpayer claiming a refund for overpayment of gas production taxes to credit the refund against current or future tax liabilities. Amoco Prod. Co. v. N.M. Taxation & Revenue Dep't, 1994-NMCA-086, 118 N.M. 72, 878 P.2d 1021.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation §§ 549 to 552; 72 Am. Jur. 2d State and Local Taxation §§ 846, 1064 to 1076.
85 C.J.S. Taxation §§ 910 et seq., 1777 and 1778.