Could a taxpayer receive a 1997 refund claimed after the three-year deadline because divorce-related problems delayed access to tax records?

Plain-English summary

Eduardo Contreras could not receive a $615 refund because he filed his 1997 New Mexico income tax return after the statutory refund deadline. Divorce-related loss of access to tax records did not authorize the Department or hearing officer to extend the period.

Contreras and his wife experienced marital difficulties in 1997 and divorced in June 1999. She left the home with tax records and other information needed to prepare their federal and state returns.

Contreras said he could not obtain the information until 2002. In May of that year, he filed his 1997 New Mexico return showing a $615 refund.

The three-year period had expired

Section 7-1-26(D)(1)(a) barred a credit or refund unless the taxpayer filed a claim within three years after the end of the calendar year in which payment was originally due, subject to the provision stated in the decision.

The 1997 personal income tax was due April 15, 1998. The decision calculated the refund deadline as December 31, 2001. Contreras's May 2002 filing came too late.

Personal hardship did not permit an exception

The hearing officer recognized that the delay arose from personal difficulties during the divorce. But an administrative agency had to apply the law enacted by the Legislature and could not modify it for an individual taxpayer's financial or personal circumstances.

Neither the Department nor the hearing officer had authority to waive the Section 7-1-26 deadline.

Result: protest DENIED. The $615 refund claim remained barred.

What this means for you

Taxpayers expecting a refund

File within the statutory claim period even if the underlying return is late. Once the refund deadline expires, the Department may lack authority to pay an otherwise valid overpayment.

Taxpayers missing records

Reconstruct records, request transcripts or copies, and seek professional help before the limitation period closes. Personal difficulty did not extend the deadline in this decision.

Divorcing or separated taxpayers

Secure copies of joint tax records and track filing deadlines independently. A former spouse's possession of records did not create a statutory exception here.

Common questions

Q: How much refund did Contreras claim?
A: $615 for the 1997 tax year.

Q: When did he file the claim?
A: In May 2002.

Q: When did the decision say the deadline expired?
A: December 31, 2001.

Q: Why was the return late?
A: His former wife had taken records and information during their marital difficulties, and he said he could not obtain what he needed until 2002.

Q: Could the hearing officer make an equitable exception?
A: No. The decision said the statutory refund limitation could not be waived for personal circumstances.

Citations and references

Statute:

• NMSA 1978, § 7-1-26(D)(1)(a) — three-year refund-claim limitation

Cases cited:

• State ex rel. Taylor v. Johnson, 1998-NMSC-015, 961 P.2d 768
• State ex rel. State Park & Recreation Commission v. New Mexico State Authority, 76 N.M. 1, 411 P.2d 984 (1966)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Eduardo Contreras
• Decision PDF: D&O 06-05

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
EDUARDO CONTRERAS No. 06-05
TO DENIAL OF CLAIM FOR REFUND OF
1997 PERSONAL INCOME TAXES

DECISION AND ORDER

A formal hearing on the above-referenced protest was held on April 18, 2006,

before Margaret B. Alcock, Hearing Officer. The Taxation and Revenue Department

("Department") was represented by Peter Breen, Special Assistant Attorney General.

Eduardo Contreras represented himself. Based on the evidence and arguments presented,

IT IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. Eduardo Contreras was married to Blanca Contreras during 1997.

2. The Contrerases were having marital difficulties, which resulted in a final

decree of divorce being entered in June 1999.

3. Blanca Contreras left the couple’s home in 1997, taking various tax records

and other information needed to prepare their federal and state tax returns.

4. Mr. Contreras was unable to obtain the information he needed to file his tax

returns until 2002.

5. In May 2002, Mr. Contreras filed his New Mexico personal income tax

return, showing a refund due of $615.00.

6. On December 4, 2002, the Department denied Mr. Contreras’s claim for

refund because it was filed beyond the statute of limitations provided in NMSA 1978, § 7-

1-26.

7. On December 31, 2002, Mr. Contreras filed a written protest to the denial of

his claim for refund.

DISCUSSION

The issue to be determined is whether the Department properly denied Eduardo

Contreras’s claim for refund of personal income taxes paid during the 1997 tax year. The

Department’s reason for denying the taxpayer’s refund claim was the expiration of the

limitations period set out in NMSA 1978, § 7-1-26 (D)(1)(a), which provides, in pertinent

part:

[N]o credit or refund of any amount may be allowed or made to any person
unless as the result of a claim made by that person as provided in this
section:
(1) within three years of the end of the calendar year in which:
(a) the payment was originally due or the overpayment resulted from
an assessment by the department pursuant to Section 7-1-17 NMSA 1978,
whichever is later;

In this case, Mr. Contreras’s personal income taxes for 1997 were due on April 15, 1998.

The three-year period for claiming a refund of 1997 taxes ended on December 31, 2001.

The taxpayer’s May 2002 refund claim was not filed within the limitations period required

by NMSA 1978, § 7-1-26, and was properly denied by the Department.

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Mr. Contreras’s failure to file a timely claim for refund was due to personal

difficulties that arose between Mr. Contreras and his wife during their divorce, and Mr.

Contreras asks the Department to take this into consideration when ruling on his claim for

refund. This is not possible. In State ex rel. Taylor v. Johnson, 1998-NMSC-015 ¶ 022,

961 P.2d 768, 774-775, the New Mexico Supreme Court made the following observations

concerning the power of administrative agencies:

Generally, the Legislature, not the administrative agency, declares the
policy and establishes primary standards to which the agency must conform.
See State ex rel. State Park & Recreation Comm'n v. New Mexico State
Authority, 76 N.M. 1, 13, 411 P.2d 984, 993 (1966). The administrative
agency's discretion may not justify altering, modifying or extending the
reach of a law created by the Legislature.

The job of the Department’s hearing officer is to determine whether the Department has

properly applied the law as written. Neither the Department nor its hearing officer has

authority to question the wisdom of the laws passed by the legislature or modify the

application of those laws based on the financial or personal situations of individual

taxpayers. The law enacted by the legislature prohibits the Department from granting

refunds filed beyond the three-year limitations period set out in Section 7-1-26 NMSA

1978, and the Department must follow the directive of the statute.

CONCLUSIONS OF LAW

A. Eduardo Contreras filed a timely, written protest to the Department’s denial of

his claim for refund, and jurisdiction lies over the parties and the subject matter of this

protest.

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B. Mr. Contreras’s May 2002 claim for refund of 1997 personal income taxes is

barred by the limitations period set out in NMSA 1978, § 7-1-26.

C. The hearing officer does not have authority to override the provisions of New

Mexico’s tax laws and waive the limitations period set out in NMSA 1978, § 7-1-26.

For the foregoing reasons, the taxpayer's protest IS DENIED.

DATED April 19, 2006.

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