Could New Mexico refund $828 of overwithheld 2001 income tax when the taxpayer did not file the refund return until December 2006?

Plain-English summary

Rose Bilat could not recover $828 of New Mexico income tax overwithheld from her 2001 wages because she filed the refund return after the statutory deadline. The Department and hearing officer lacked authority to extend that period based on personal hardship.

Bilat knew the withholding exceeded her liability and therefore did not feel urgency to file. Between 2002 and 2006, she and her California accountant experienced serious medical problems. She was also robbed three times and helped an out-of-state family member.

Her accountant eventually mailed a 2001 return for signature, but it was lost in the mail. Bilat obtained a replacement and filed in December 2006, claiming the $828 refund.

The deadline had expired a year earlier

Section 7-1-26(D)(1)(a) allowed a refund claim within three years after the end of the calendar year in which payment was originally due, or a later assessment-based date when applicable.

Bilat's 2001 income tax was due April 15, 2002. Her claim period therefore ended December 31, 2005. Filing in December 2006 made the claim one year late.

Hardship could not change the statute

The decision acknowledged Bilat's medical bills, limited resources, thefts, family obligations, and the difficulties experienced by her accountant. Those circumstances did not create administrative power to pay a refund after the legislative deadline.

The cited cases explained that refund deadlines prevent stale claims and help the Department manage public funds predictably. An administrative agency cannot extend a law beyond the authority granted by the Legislature.

Result: protest DENIED. The $828 refund remained barred.

Source-date note

The official decision post URL is dated October 11, 2007, but the PDF text ends after the order without a signed or “Dated” line. Because the decision itself supplies no issue date, the issued_date field remains blank.

What this means for you

Taxpayers expecting a refund

File even when no tax is owed. An overpayment generally cannot be recovered after the statutory claim period expires.

Taxpayers facing medical or personal hardship

Preserve the deadline by filing the return or claim while resolving supporting details later where the law permits. The hearing officer could not create a hardship exception here.

Taxpayers working through a preparer

Track filing independently and confirm receipt. A return lost between the accountant and taxpayer did not stop the statutory period.

Common questions

Q: How much was overwithheld?
A: $828.

Q: When did the refund deadline expire?
A: December 31, 2005.

Q: When did Bilat file?
A: December 2006, one year after the deadline.

Q: Why couldn't the Department consider her hardships?
A: The refund statute gave no authority to waive or extend the deadline for personal circumstances.

Q: Did she owe New Mexico income tax for 2001?
A: Her withholding exceeded her liability; the dispute was whether the late refund claim could be paid.

Citations and references

Statutes:

• NMSA 1978, § 7-1-26(D)(1)(a) — refund claim limitation period
• NMSA 1978, § 7-1-17 — Department assessments referenced in the limitation rule

Cases cited:

• Kilmer v. Goodwin, 2004-NMCA-122, 136 N.M. 440, 99 P.3d 690
• State ex rel. Taylor v. Johnson, 1998-NMSC-015, 961 P.2d 768

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Rose Bilat
• Decision PDF: D&O 07-17

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
ROSE BILAT TO DENIAL OF CLAIM FOR
REFUND OF 2001 PERSONAL INCOME TAX No. 07-17
ISSUED UNDER LETTER ID L026474776

DECISION AND ORDER

An administrative hearing on the above-referenced protest was held on October 9, 2007

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

(“Department”) was represented by Elizabeth K. Korsmo, Special Assistant Attorney General.

Rose Bilat (“Taxpayer”) represented herself. Based on the evidence and arguments presented, IT

IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. The Taxpayer is a senior citizen who supports herself on her social security

income and the income from her full-time job and the occasional sale of her art work.

2. During the 2001 tax year, the amount of New Mexico personal income tax

withheld from the Taxpayer’s wages exceeded her tax liability by $828.00.

3. Because the Taxpayer knew she did not owe any tax to the state, she did not feel

any urgency in filing her 2001 tax return.

4. Between 2002 and 2006, both the Taxpayer and her accountant in California

experienced a number of serious medical problems. In addition, the Taxpayer was robbed three

times and had to assist a family member located out-of-state.

5. At some point, the Taxpayer’s accountant mailed a 2001 New Mexico personal

income tax return to the Taxpayer for her review and signature.

6. The tax return was lost in the mail and it was not until December 2006 that the

Taxpayer obtained a replacement copy and filed her 2001 tax return showing a refund due in the

amount of $828.00.

7. On January 25, 2007, the Department denied the Taxpayer’s claim for refund

because it was filed beyond the limitations period set out in NMSA 1978, § 7-1-26.

8. On February 21, 2007, the Taxpayer filed a written protest to the denial of her

claim for refund.

DISCUSSION

The issue to be determined is whether the Department properly denied the Taxpayer’s

claim for refund of 2001 personal income taxes withheld from her 2001 wages. The Department

denied the refund claim because it was filed after 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, the time within which the Taxpayer could claim a refund of 2001 personal income

taxes, which were originally due on April 15, 2002, expired on December 31, 2005. The

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Taxpayer’s December 2006 refund claim was filed one year late. For this reason, it was properly

denied by the Department.

The Taxpayer’s failure to file a timely claim was attributable, at least in part, to a series of

personal misfortunes that she and her accountant suffered during the period 2002 through 2006.

The Taxpayer asks the Department to take this into consideration when ruling on her claim for

refund. The Taxpayer also asks the Department to recognize that she is a senior citizen who has

incurred substantial medical bills and that she has a real need for the $828.00 of taxes she

overpaid to the state. Unfortunately, these factors are not something the Department can consider.

In Kilmer v. Goodwin, 2004-NMCA-122, ¶ 16, 136 N.M. 440, 99 P.3d 690, the New Mexico

Court of Appeals noted that the purpose of the deadlines set out in § 7-1-26 “is to avoid stale

claims, which protects the Department's ability to stabilize and predict, with some degree of

certainty, the funds it collects and manages.” The court specifically rejected the taxpayer’s

argument that the Department had implied authority to grant a refund after the statutory deadline,

holding that an administrative agency may not exercise authority beyond the powers granted to it

by the state legislature. Id. at ¶ 24. This is consistent with the New Mexico Supreme Court’s

decision in State ex rel. Taylor v. Johnson, 1998-NMSC-015 ¶ 022, 961 P.2d 768, 774-775,

which made the following observation 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.

Neither the Department nor its hearing officer is authorized to ignore or modify the state’s tax

laws based on the personal circumstances of individual taxpayers. Pursuant to NMSA 1978, § 7-

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1-26, no refund may be granted beyond the specified limitations period, and the Department is

required to follow the directive of the statute.

CONCLUSIONS OF LAW

A. The Taxpayer filed a timely, written protest to the Department’s denial of her claim

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

B. The Taxpayer's December 2006 claim for refund of 2001 personal income taxes is

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

C. The Department does not have authority to override the provisions of New Mexico’s

tax laws and waive the statutory limitations period applicable to the Taxpayer’s claim.

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

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