Could incarceration excuse personal-income-tax refund claims filed after New Mexico's three-year statutory deadline?

Plain-English summary

Mark Serros could not obtain personal income tax refunds for 2004, 2005, and 2006 because he filed the claims after New Mexico's three-year deadline. His incarceration when the deadlines passed did not establish an exception.

Serros was incarcerated sometime in 2007 and remained in custody until sometime in 2011. After his release, he filed New Mexico personal income tax returns for 2004 through 2006 on or about September 17, 2011. Each return claimed a refund.

The Department denied all three claims on October 4, 2011. Serros timely protested those denials eight days later.

Each refund claim arrived after its deadline

Section 7-1-26(D) required a refund claim to be filed within three years after the end of the calendar year in which the payment was originally due. Applying that rule, the decision identified these deadlines:

• the 2004 claim was due by the end of 2008;
• the 2005 claim was due by the end of 2009; and
• the 2006 claim was due by the end of 2010.

All three claims were filed in 2011.

Serros argued that his incarceration prevented timely filing and that the unusual circumstances should excuse the delay. The Department agreed that his situation was unfortunate but maintained that the statutory deadline was strict.

The decision cited Kilmer v. Goodwin for the purpose of limitations periods: preventing stale claims and placing responsibility on taxpayers to pursue refund claims because they can more readily track them. It found no exception to the three-year limitation in Section 7-1-26.

Result: protest denied. The Department properly denied all three refund claims as time-barred. The decision did not determine whether Serros otherwise would have been entitled to the claimed refunds or state their amounts.

What this means for you

Individuals seeking old income-tax refunds

Track the statutory claim deadline separately from the merits of the refund. In this decision, filing returns that showed refunds did not preserve claims submitted after the three-year period.

Taxpayers facing personal hardship

The hearing officer acknowledged the circumstances but applied the deadline because the cited statute established no exception for Serros's incarceration.

Accountants and tax professionals

Before reconstructing an old return or refund amount, confirm that the refund-claim period remains open. A substantively correct refund calculation cannot produce a refund if the claim itself is barred.

Common questions

Q: When did Serros file the refund claims?
A: On or about September 17, 2011, through personal income tax returns for 2004, 2005, and 2006.

Q: What were the three deadlines?
A: The decision said the claims were due by the ends of 2008, 2009, and 2010, respectively.

Q: Why did Serros file late?
A: He explained that he had been incarcerated from sometime in 2007 until sometime in 2011 and could not file while the deadlines passed.

Q: Did incarceration extend the deadline?
A: Not in this decision. The hearing officer found no exception to the three-year limitation established by Section 7-1-26.

Q: Did the decision decide the refund amounts or whether the returns were otherwise correct?
A: No. It resolved only whether the Department properly denied the claims as untimely.

Citations and references

Statute:

• NMSA 1978, § 7-1-26(D) — three-year limitation for filing refund claims

Case:

• Kilmer v. Goodwin, 2004-NMCA-122, ¶ 16, 136 N.M. 440, 99 P.3d 690 — purpose and operation of the refund-claim limitation

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Mark Serros
• Decision PDF: D&O 12-10

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
MARK SERROS, No. 12-10
TO DENIAL OF REFUNDS ISSUED UNDER
ID NOS. L0562804288, L1904981568, and L0177272384

DECISION AND ORDER

A formal hearing on the above-referenced protest was held March 8, 2012, before Dee Dee

Hoxie, Hearing Officer. The Taxation and Revenue Department (Department) was represented by Mr.

Nelson Goodin, Chief Legal Counsel. Ms. J. Amanda Carlisle, Auditor, also appeared on behalf of the

Department. Mr. Mark Serros (Taxpayer) appeared for the hearing and represented himself. The

Hearing Officer took notice of all documents in the administrative file. Taxpayer #1 and TRD #1, #2, and

3 were admitted into the record at the hearing. Based on the evidence and arguments presented, IT IS

DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. The Taxpayer was incarcerated sometime in 2007 and remained in custody until sometime in

2011.

2. After his release, the Taxpayer filed Personal Income Tax (PIT) returns with the Department for

the tax years of 2004, 2005, and 2006.

3. Each of the returns was filed on or about September 17, 2011, and each claimed a refund.

4. On October 4, 2011, the Department issued letters denying each of the claims for refunds for

2004, 2005, and 2006 based upon the statute of limitations.

5. On October 12, 2011, the Taxpayer filed a formal protest letter.

6. On November 4, 2011, the Department filed a Request for Hearing asking that the Taxpayer’s

protest be scheduled for a formal administrative hearing.

7. The Taxpayer’s claims for refund are barred by the statute of limitations.
   DISCUSSION

The issue to be decided is whether the Department properly denied the claims for refund for the

tax years of 2004, 2005, and 2006.

Statute of Limitations for Filing a Claim.

All claims for refund must be filed within three years of the end of the calendar year in which the

payment was originally due. See NMSA 1978, § 7-1-26 (D). Therefore, the 2004 claim was required to

be filed by the end of 2008, the 2005 claim was required to be filed by the end of 2009, and the 2006

claim was required to be filed by the end of 2010. All three claims were filed in 2011, so each claim was

beyond its three-year statute of limitations.

The Taxpayer explained that he could not file the claims for refund in a timely manner because

he was incarcerated when the deadlines passed. The Taxpayer argued that the unique circumstances of

his case should excuse his late filing. The Department argued that the statute of limitations is a strict

deadline, and that the Taxpayer’s circumstances, although unfortunate, do not excuse late filing under the

statute.

The statute of limitations prevents stale claims and effectively places the onus on the taxpayer to

pursue their claim in a timely manner because the taxpayer is the one who can more easily keep track of

their claims for refund. See Kilmer v. Goodwin, 2004-NMCA-122, ¶ 16, 136 N.M. 440, 99 P.3d 690. If

the claim is not filed within the three-year statute of limitations, the claim is barred by the statute. See

NMSA 1978, § 7-1-26. See also Kilmer, 2004-NMCA-122. No exception to the three-year limitation

was established. See NMSA 1978, § 7-1-26.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely written protest to the denials of refund for the 2004, 2005, and

2006 tax years issued under Letter ID numbers L0562804288, L1904981568, and L0177272384, and

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

In the Matter of Mark Serros, page 2 of 3

2. The claims for refund were properly denied as they were barred by the statute of

limitations. See NMSA 1978, § 7-1-26.

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

DATED: March 30, 2012.

DEE DEE HOXIE
Hearing Officer
Taxation & Revenue Department
Post Office Box 630
Santa Fe, NM 87504-0630

In the Matter of Mark Serros, page 3 of 3