Was Desert Rose's quarterly CRS payment timely when the owner credibly testified she placed it in the Department's drop box on April 25, but the Department stamped it received May 21?

Plain-English summary

Desert Rose Landscape Maintenance timely filed and paid its first-quarter 2003 CRS taxes by placing the envelope in the Department's official drop box on April 25, 2003. The later May 21 received stamp did not overcome the owner's credible testimony and the business's detailed evidence of timely-payment practices.

Phillip and Elizabeth Madrid had operated the landscaping sole proprietorship since 1998. They tracked tax, loan, and bill deadlines on both a printed schedule and a large office wall calendar. Their tax history and credit report showed every prior obligation was timely.

The Department had encouraged drop-box use

Before April 2003, Elizabeth Madrid always carried the quarterly CRS return and payment into the Lujan Building, where an employee date-stamped it.

When she delivered the prior quarter, a Department employee told her she could instead use the white deposit box a few yards outside the building. Department staff collected the box daily and stamped its contents inside.

Following that advice, Madrid put the January-March 2003 return and payment into the box on April 25, 2003, the statutory due date.

The records showed a later internal receipt date

The Department's microfilm showed a May 21, 2003 received stamp—26 days after the due date. It assessed $64.98 of penalty and interest.

The decision identified two possibilities: Madrid was mistaken or untruthful about April 25, or the Department misplaced the envelope while moving it from the outside box into the building and found it later.

Credible evidence overcame the assessment presumption

The hearing officer found Madrid credible. The drop-box delivery was memorable because it departed from her normal practice of walking the payment to the front desk.

The tax history, credit report, printed payment schedule, and backup calendar corroborated that the Madrids took deadlines seriously. There was no pattern of late payments.

Taken together, that evidence made Department mishandling more likely than taxpayer delay and overcame the presumption of correctness under Section 7-1-17.

Timely drop-box delivery satisfied filing and payment duties

Section 7-1-13 required the return to be filed by the due date and the payment to precede or accompany it. Because the Department placed the box for taxpayers to deposit returns and payments, timely delivery into that box satisfied both requirements.

Result: protest GRANTED. No penalty or interest was due, and the $64.98 assessment was abated.

What this means for you

Taxpayers using an agency drop box

Document the date, time, location, and contents. A photo, witness, contemporaneous calendar entry, or retained payment record can help if internal stamping is delayed.

Businesses maintaining payment controls

Consistent records and a strong compliance history can corroborate testimony when an agency's received date is disputed.

Taxpayers facing a presumed-correct assessment

The presumption can be overcome with credible, specific, and corroborated evidence rather than a bare assertion.

Businesses changing filing methods

When switching from front-desk delivery to a drop box, preserve extra proof because the immediate date-stamped receipt disappears.

Common questions

Q: When was the CRS payment due?
A: April 25, 2003.

Q: When did the Department stamp it received?
A: May 21, 2003.

Q: Why did the hearing officer believe Madrid?
A: Her testimony was credible and supported by a perfect payment history, a printed schedule, and a backup wall calendar.

Q: What likely happened to the envelope?
A: The decision found it more likely that the Department misplaced it during transfer from the drop box than that Madrid delivered it late.

Q: How much was abated?
A: $64.98 of penalty and interest.

Citations and references

Statutes:

• NMSA 1978, § 7-1-13(B), (D) — timely filing and payment accompanying the return
• NMSA 1978, § 7-1-17 — presumption that a Department assessment is correct

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Desert Rose Landscaping
• Decision PDF: D&O 03-15

Original ruling text

BEFORE THE HEARING OFFICER
OF THE TAXATION AND REVENUE DEPARTMENT
OF THE STATE OF NEW MEXICO

IN THE MATTER OF THE PROTEST OF
DESERT ROSE LANDSCAPE MAINTENANCE No. 03-15
ID NO. 02-379211-00-6
ASSESSMENT NO. 4077713

DECISION AND ORDER

A formal hearing on the above-referenced protest was held July 22, 2003, before Margaret B.

Alcock, Hearing Officer. The Taxation and Revenue Department ("Department") was represented by

Peter Breen, Special Assistant Attorney General. Desert Rose Landscape Maintenance, a sole

proprietorship, was represented by Phillip and Elizabeth Madrid, its owners (“Taxpayers”). Based

on the evidence and arguments presented, IT IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. In 1998, the Taxpayers began a landscaping business under the name of Desert Rose

Landscaping Maintenance.

2. The Taxpayers registered their business with the Department for payment of gross

receipts, compensating, and withholding taxes, which the Taxpayers were required to pay quarterly

under the Department’s combined reporting system (“CRS”).

3. The Taxpayers created a printed schedule that they used to track payment due dates

for taxes, loans, and other bills. They also placed these due dates on a large wall calendar in their

office.

4. For periods prior to April 25, 2003, the Taxpayers’ credit report and tax reporting

history show that all of their tax and loan payments were made on time.

5. Prior to April 25, 2003, the Taxpayers always hand-delivered their quarterly CRS

return and payment to the Department’s offices at the Lujan Building in Santa Fe, New Mexico,

where the return was stamped with the date received.

6. When Elizabeth Madrid filed the Taxpayers’ CRS taxes for the last quarter of 2002,

the Department employee who took the payment told Ms. Madrid that it was not necessary for her to

come inside the Lujan Building, advising her that she could simply drop her CRS return and payment

into the white deposit box located a few yards in front of the Lujan Building.

7. The contents of the deposit box are collected by a Department employee once a day

and carried into the Lujan Building, where each item is stamped with that day’s date.

8. On April 25, 2003, Ms. Madrid went to the Department to make the Taxpayers’

payment of CRS taxes due for the first quarter of 2003. Instead of carrying the return and payment

into the Lujan Building to be stamped with the receipt date, Ms. Madrid followed the advice she had

been given by the Department’s employee and dropped the envelope into the white deposit box

located in front of the building.

9. The Department’s records indicate that the Taxpayers’ CRS return and payment for

the first quarter of 2003 were received by the Department on May 21, 2003.

10. On June 5, 2003, the Department issued Assessment No. 4077713 to the Taxpayers

in the total amount of $64.98, representing penalty and interest assessed on the late payment of their

CRS taxes for the period January-March 2003.

11. On June 9, 2003, the Taxpayers filed a written protest to Assessment No. 4077713.

DISCUSSION

The issue to be decided is whether the Taxpayers are liable for the penalty and interest

assessed on their payment of CRS taxes due for reporting period January-March 2003. The

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Taxpayers dispute the Department’s assessment and maintain that their payment was delivered to the

Department on April 25, 2003, the statutory due date. The Department responds that its records show a

received date of May 21, 2003, which is 26 days past the due date.

NMSA 1978, § 7-1-13(B) states that “[e]very taxpayer shall, on or before the date on which

payment of any tax is due, complete and file a tax return in a form prescribed and according to the

regulations issued by the secretary.” Section 7-1-13(D) requires payment of the taxes shown on the

return to “precede or accompany the return.” In this case, Elizabeth Madrid testified that she delivered

the Taxpayer’s CRS tax return and payment for the January-March 2003 reporting period to the

Department on April 25, 2003, the statutory due date. In accordance with advice she received from a

Department employee, Ms. Madrid put the return and payment into the white deposit box located

outside the Lujan Building in Santa Fe, New Mexico. Because the Department placed the box there for

the express purpose of encouraging taxpayers to use the box to deposit tax returns and payments, timely

delivery to the box would constitute timely filing.

The Department disputes that the Taxpayer’s payment was made on April 25, 2003. At the

administrative hearing, the Department introduced microfilmed copies of the Taxpayers’ return

showing a stamped received date of May 21, 2003. This evidence leads to one of two conclusions: (1)

Ms. Madrid is mistaken or lying about the date on which she delivered the Taxpayers’ payment to the

Department; or (2) the Taxpayers’ April 25, 2003 payment was misplaced in the process of removing it

from the deposit box and transferring it to the Lujan Building and was only discovered and date

stamped on May 21, 2003. Of these two alternatives, I find it more likely that the Department

misplaced the Taxpayers’ payment than that Ms. Madrid is mistaken or lying.

I found Ms. Madrid to be a credible witness and accept her testimony that she delivered the

Taxpayer’s CRS tax return and payment to the Department on April 25, 2003. It is not surprising that

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Ms. Madrid has a clear memory of making the April tax payment since it was a change from her usual

practice of hand-delivering the payment to the Department’s front desk. There is also evidence that the

Taxpayers take their financial obligations seriously. At the administrative hearing, they introduced a

copy of their tax reporting history and credit report. Both documents establish that the Taxpayers have

consistently made all of their tax, loan, and other payments in a timely manner. The Taxpayers also

introduced the printed schedule they use to insure that all payments are made when due and displayed

the large wall calendar that serves as a backup to their printed payment schedule.

Taken as a whole, the evidence presented is sufficient to overcome the presumption of

correctness that attaches to the Department’s assessment pursuant to NMSA 1978 § 7-1-17 and to

establish that the Taxpayers delivered their CRS tax payment to the Department by the statutory due

date.

CONCLUSIONS OF LAW

1. The Taxpayers filed a timely, written protest to Assessment No. 4077713, and

jurisdiction lies over the parties and the subject matter of this protest.

2. The Taxpayers delivered their return and payment of CRS taxes due for reporting

period January through March 2003 to the Department on the statutory due date and no interest or

penalty is due.

For the foregoing reasons, the Taxpayers’ protest IS GRANTED.

DATED July 24, 2003.

MARGARET B. ALCOCK
Hearing Officer
Taxation & Revenue Department
Post Office Box 630
Santa Fe, NM 87504-0630

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On July 24, 2003, a copy of the foregoing Decision and Order was mailed to Phillip and
Elizabeth Madrid, Desert Rose Landscape Maintenance, 1336 Acequia Borrada, Santa Fe, NM 87507,
and hand-delivered to Peter Breen, Special Assistant Attorney General, Taxation and Revenue
Department, Santa Fe, New Mexico.

MARGARET B. ALCOCK

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