A. As provided in this section, interest shall be allowed and paid on the amount of tax overpaid by a person that is subsequently refunded or credited to that person.
B. Interest on overpayments of tax shall accrue and be paid at the underpayment rate established pursuant to Section 6621 of the Internal Revenue Code, computed on a daily basis; provided that if a different rate is specified by a compact or other interstate agreement to which New Mexico is a party, that rate shall apply to amounts due under the compact or other agreement.
C. Unless otherwise provided by this section, interest on an overpayment not arising from an assessment by the department shall be paid from the date of the claim for refund until a date preceding by not more than thirty days the date of the credit or refund to any person; and interest on an overpayment arising from an assessment by the department shall be paid from the date of overpayment until a date preceding by not more than thirty days the date of the credit or refund to any person.
D. No interest shall be allowed or paid with respect to an amount credited or refunded if:
(1) the amount of interest due is less than one dollar ($1.00);
(2) the credit or refund is made within:
(a) fifty-five days of the date of the complete claim for refund of income tax, pursuant to either the Income Tax Act [Chapter 7, Article 2 NMSA 1978] or the Corporate Income and Franchise Tax Act [Chapter 7, Article 2A NMSA 1978] for the tax year immediately preceding the tax year in which the claim is made;
(b) sixty days of the date of the complete claim for refund of any tax not provided for in this paragraph;
(c) seventy-five days of the date of the complete claim for refund of gasoline tax to users of gasoline off the highways;
(d) one hundred twenty days of the date of the complete claim for refund of tax imposed pursuant to the Resources Excise Tax Act [Chapter 7, Article 25 NMSA 1978], the Severance Tax Act [7-26-1 to 7-26-8 NMSA 1978], 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]; or
(e) one hundred twenty days of the date of the complete claim for refund of income tax, pursuant to the Income Tax Act or the Corporate Income and Franchise Tax Act, for any tax year more than one year prior to the year in which the claim is made;
(3) Sections 6611(f) and 6611(g) of the Internal Revenue Code, as those sections may be amended or renumbered, prohibit payment of interest for federal income tax purposes;
(4) the credit results from overpayments found in an audit of multiple reporting periods and applied to underpayments found in that audit or refunded as a net overpayment to the taxpayer pursuant to Section 7-1-29 NMSA 1978;
(5) the department applies the credit or refund to an intercept program, to the taxpayer's estimated payment prior to the due date for the estimated payment or to offset prior liabilities of the taxpayer pursuant to Subsection E of Section 7-1-29 NMSA 1978;
(6) the credit or refund results from overpayments the department finds pursuant to Subsection F of Section 7-1-29 NMSA 1978 that exceed the refund claimed by the taxpayer on the return; or
(7) the refund results from a tax credit pursuant to the Investment Credit Act [Chapter 7, Article 9A NMSA 1978], Laboratory Partnership with Small Business Tax Credit Act [Chapter 7, Article 9E NMSA 1978], Technology Jobs and Research and Development Tax Credit Act [Chapter 7, Article 9F NMSA 1978], Film Production Tax Credit Act [Chapter 7, Article 2F NMSA 1978], Affordable Housing Tax Credit Act [Chapter 7, Article 9I NMSA 1978] or a rural job tax credit or high-wage jobs tax credit.
E. Nothing in this section shall be construed to require the payment of interest upon interest.
History: 1953 Comp., § 72-13-81, enacted by Laws 1965, ch. 248, § 69; 1971, ch. 266, § 1; 1979, ch. 144, § 59; 1982, ch. 18, § 15; 1989, ch. 325, § 11; 1994, ch. 44, § 1; 1996, ch. 15, § 8; 2000, ch. 28, § 12; 2001, ch. 16, § 8; 2002, ch. 13, § 1; 2003, ch. 2, § 1; 2003, ch. 439, § 6; 2007, ch. 45, § 3; 2011, ch. 177, § 1; 2013, ch. 27, § 12; 2016 (2nd S.S.), ch. 3, § 2; 2017, ch. 63, § 29.
ANNOTATIONSCross references. — For the authority to make refunds or credits, see 7-1-29 NMSA 1978.
For Section 6611 of the United States Internal Revenue Code, see 26 U.S.C.S. § 6611.
The 2017 amendment, effective June 16, 2017, included additional tax credits to the current list of tax credits for which no interest is allowed or paid, and clarified certain language; in Subsection D, Paragraph D(2), added "complete" preceding each occurrence of "claim for refund" throughout the paragraph, and in Paragraph D(7), added "Investment Credit Act, Laboratory Partnership with Small Business Tax Credit Act, Technology Jobs and Research and Development Tax Credit Act", and "Affordable Housing Tax Credit Act", and after "or a", added "rural job tax credit or".
The 2016 (2nd S.S.) amendment, effective October 19, 2016, provided that no interest shall be allowed or paid with respect to an amount credited or refunded if the refund results from a tax credit pursuant to a high-wage jobs tax credit; in Paragraph D(7), after "refund results from a", deleted "film production", after "tax credit pursuant to", deleted "Section 7-2F-1 NMSA 1978" and added "the Film Production Tax Credit Act or a high-wage jobs tax credit".
The 2013 amendment, effective July 1, 2013, provided that interest shall be paid at the underpayment rate for individuals pursuant to the Internal Revenue Code; prohibits payment of interest on a refund of any tax that is not specifically provided for and that is made within sixty days after a claim for refund; in Subsection B, after "be paid at the", added "underpayment"; added Subparagraph (b) of Paragraph (2) of Subsection D; between Subparagraph (d) of Paragraph (2) of Subsection D and Subparagraph (e) of Paragraph (2) of Subsection D, deleted "(3) the credit or refund is made within"; and deleted former Paragraph (5) of Subsection D, which prohibited payment of interest if a credit or refund is made within sixty days of a claim of refund of any tax other than income tax.
The 2011 amendment, effective July 1, 2011, prohibited the payment of interest on refunds from a film production tax credit.
The 2007 amendment, effective January 1, 2008, in Subsection B, changed the interest rate from fifteen percent a year to the rate established for individuals pursuant to Section 6621 of the Internal Revenue Code and adds Subparagraph (c) of Paragraph (2) of Subsection D.
The 2003 amendments, effective July 1, 2003, in Subsection B, deleted "payable" following "interest" and inserted "accrue and" following "tax shall"; rewrote Paragraph D(2) and added Paragraphs D(7) and (8).
The 2002 amendment, effective May 15, 2002, added the Subparagraph designation D(2)(a), and added Subparagraph D(2)(b); deleted Paragraph D(6), which read: "gasoline tax is refunded or credited under the Gasoline Tax Act to users of gasoline off the highways"; and redesignated the following paragraph accordingly.
The 2001 amendment, effective July 1, 2001, added Paragraph D(7).
The 2000 amendment, effective January 1, 2001, substituted "on a daily basis" for "at the rate of one and one-fourth percent per month or fraction thereof;" in Subsection B; deleted "or the Banking and Financial Corporations Tax Act" following "Franchise Tax Act" in Subsection D(3); and added Subsection E.
The 1996 amendment, effective July 1, 1996, added the proviso at the end of Subsection B and deleted "the Corporate Income Tax Act" following "the Income Tax Act" in Paragraph D(3).
The 1994 amendment, effective July 1, 1994, substituted "sixty" for "one hundred twenty" in Paragraph D(5).
The 1989 amendment, effective June 16, 1989, rewrote the section to the extent that a detailed comparison would be impracticable.
No offset of overpayment against prior liability. — 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.
Refund requirement not state obligation which creates vested right. — Statutory requirement that the state pay interest on refunds of taxes judicially determined to have been illegally collected, cannot be said to create an obligation of the state to the taxpayer which gives rise to a vested right in the taxpayer within the meaning of N.M. Const., art. IV, § 34. Bradbury & Stamm Constr. Co. v. Bureau of Revenue, 1962-NMSC-078, 70 N.M. 226, 372 P.2d 808.
Requirement to pay interest statutory liability in nature of penalty. — The requirement that the state pay interest on protested taxes judicially determined to have been illegally collected is only a statutory liability and is in the nature of a penalty. Bradbury & Stamm Constr. Co. v. Bureau of Revenue, 1962-NMSC-078, 70 N.M. 226, 372 P.2d 808.
If interest rate changes, old rate before, new rate after. — If the statutory rate of interest on tax refunds is changed after the cause of action accrues, the interest should be allowed at the old rate before, and at the new rate after, the altering enactment takes effect. Bradbury & Stamm Constr. Co. v. Bureau of Revenue, 1962-NMSC-078, 70 N.M. 226, 372 P.2d 808.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 72 Am. Jur. 2d State and Local Taxation §§ 1068, 1069.
Right to interest on tax refunds, 57 A.L.R. 357, 76 A.L.R. 1012, 112 A.L.R. 1183, 88 A.L.R.2d 823.
Interest on tax refund or credit in absence of specific controlling statute, 88 A.L.R.2d 823.
Effect of delay in receipt or negotiation of refund check in determining right to interest under § 6611 of the Internal Revenue Code (26 USCA § 6611), 145 A.L.R. Fed. 437.