Could a storage company recover gross receipts tax paid from 1999 through 2008 when it filed refund claims in 2013 after learning its receipts might have been deductible?

Plain-English summary

Mountain Moving & Storage lost its gross receipts tax refund claims because it filed them after New Mexico's three-year deadline. The decision did not reach the underlying question of whether the storage receipts were deductible.

The company operated a New Mexico storage business from 1999 through 2008 and filed and paid gross receipts tax during those years. In 2013, its president learned from another business owner that the receipts might have been deductible.

Mountain Moving filed refund claims for the entire 1999-2008 period in March 2013. The Department denied them, and the company protested.

Every claim was outside the statutory period

Section 7-1-26(D) required a refund claim within three years after the end of the calendar year in which the payment was due. The newest claim concerned 2008 tax due in 2009, so even that claim had to be filed by the end of 2012. The older claims expired earlier.

Because every claim arrived in 2013, all were time-barred. The hearing officer found no exception to the three-year limit.

The alleged advice did not extend the deadline

The company's president said she called the Department in 1995 after changing the business. She was told that everyone doing business in New Mexico, except Indian tribes, had to pay gross receipts tax. The company argued that this was bad information and that it should still receive refunds.

The Department responded that filing and paying gross receipts tax can still be required even when a taxpayer is entitled to deductions. More importantly, there was no evidence that the Department acted to keep Mountain Moving from filing timely refund claims.

Estoppel against the state required affirmative misconduct, not merely the alleged incomplete advice. The decision also said an administrative hearing officer could not grant the equitable remedy of estoppel because that authority belonged exclusively to the judiciary.

Result: protest denied. The refund claims remained barred without a decision on whether the underlying receipts qualified for a deduction.

What this means for you

Businesses discovering an old overpayment

File promptly. A potentially valid tax position does not override the statutory refund deadline.

Taxpayers relying on oral guidance

Keep written records and independently review filing and deduction rules. An old conversation that did not prevent a timely claim was not enough to stop the limitations period.

Accountants reviewing historical returns

Start with the oldest still-open period and calendar its deadline before completing the full merits analysis. Here, even the most recent year was already closed.

Common questions

Q: Were the storage receipts actually deductible?
A: The decision did not decide that issue. It denied the claims solely because they were filed too late.

Q: What was the deadline for the 2008 claim?
A: The tax was due in 2009, so the claim had to be filed by the end of 2012.

Q: Did the Department's alleged 1995 advice extend the deadline?
A: No. There was no evidence the Department acted to prevent the company from filing within the statutory period.

Q: Could the hearing officer grant equitable estoppel?
A: No. The decision said that equitable power belonged exclusively to the judiciary.

Q: Did the decision state how much refund was claimed?
A: No. It identified the years involved but did not give a dollar amount.

Citations and references

Statutes and rule:

• NMSA 1978, § 7-1-26(D) — three-year deadline for refund claims
• NMSA 1978, § 7-1-25 — appeal from a Decision and Order
• Rule 12-601 NMRA — appeal procedure

Cases cited:

• In re Kilmer, 2004-NMCA-122
• Wisznia v. Human Services Department, 1998-NMSC-011
• Kern v. St. Joseph Hospital, 1985-NMSC-031
• AA Oilfield Services v. New Mexico State Corporation Commission, 1994-NMSC-085

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Mountain Moving & Storage Inc.
• Decision PDF: D&O 13-28

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
MOUNTAIN MOVING & STORAGE INC., No. 13-28
TO DENIAL OF REFUNDS ISSUED UNDER
ID NO. L1173277504

DECISION AND ORDER

A formal hearing on the above-referenced protest was held September 19, 2013, before Dee

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

Mr. Aaron Rodriguez, Staff Attorney. Mr. Tom Dillon, Auditor, also appeared on behalf of the

Department. Mountain Moving and Storage Inc. (Taxpayer) appeared for the hearing by and through

its President, Ms. Fabi Romero. The Taxpayer represented itself. The Hearing Officer took notice of

all documents in the administrative file. Based on the evidence and arguments presented, IT IS

DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. The Taxpayer was engaged in a storage business in New Mexico from 1999 through 2008.

2. The Taxpayer filed and paid gross receipts taxes from 1999 through 2008.

3. In 2013, the Taxpayer learned from another business owner that its gross receipts taxes were

deductible.

4. In March 2013, the Taxpayer filed claims for refund for gross receipts taxes it paid from

1999 through 2008.

5. On April 12, 2013, the Department issued a letter denying the refund.

6. On June 3, 2013, the Taxpayer filed a formal protest to the denial of refund.

7. On July 22, 2013, the Department filed a Request for Hearing asking that the Taxpayer’s

protest be scheduled for a formal administrative hearing.

8. Notice of Hearing was sent to the parties on July 29, 2013.

DISCUSSION

The issue to be decided is whether the Taxpayer is entitled to a refund on gross receipts taxes

when the Taxpayer filed the claims for refund more than three years after the taxes were due.

Time Limits on Refund Claims.

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 latest claim, for the

2008 taxes, was required to be filed by the end of 2012 as the taxes for it were due in 2009. All of

the claims were filed in 2013, so each claim was beyond its three-year statute of limitations.

The Taxpayer argued that it did not have to pay that tax and was entitled to a refund no

matter when the claim was made. The Department argued that the statute provides a strict limitation

on time to claim a refund. 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 In Re Kilmer, 2004-NMCA-122, ¶ 16, 136

N.M. 440. 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. The Taxpayer’s claims for

refunds were not filed within three years of the tax due date. Therefore, the claims are barred by the

statute.

Estoppel.

The Taxpayer explained that it changed its business in 1995. At that time, Ms. Romero

called the Department to ascertain what changes in taxation would occur with the change in

operations. Ms. Romero was told that everyone doing business in the state is required to pay gross

receipts tax, except for Indian tribes. So, the Taxpayer continued to file and pay its gross receipts

Mountain Moving & Storage Inc.
Letter ID No. L1173277504
page 2 of 4
tax. The Taxpayer argued that it was given bad information by the Department and that it should still

be entitled to the refunds. The Department pointed out the default position is that everyone doing

business in the state is required to pay gross receipts tax. The Department also pointed out that the

Taxpayer is required to file and pay gross receipts tax even if it is entitled to deductions.

The Taxpayer’s argument is essentially an argument for equitable estoppel. Estoppel may be

found against the state where there is “a shocking degree of aggravated and overreaching conduct or

where right and justice demand it." Wisznia v. Human Servs. Dep't, 1998-NMSC-011, ¶ 17, 125

N.M. 140. When estoppel is invoked to avoid application of a statute of limitations, the issue is

whether the party to be estopped has taken some action to prevent the other party from bringing suit

within the prescribed period. Kern v. St. Joseph Hosp., 1985-NMSC-031,102 N.M. 452, 455-456.

There is no evidence that the Department acted in order to prevent Taxpayer from bringing the

claims within the time allowed by the statute. In addition, the party seeking estoppel must

demonstrate “affirmative misconduct on the part of the government.” Kilmer, 2004-NMCA-122, ¶

27. Even if estoppel were to apply, the Hearing Officer could not grant it. See AA Oilfield Serv. v. New

Mexico SCC, 1994-NMSC-085,118 N.M. 273 (holding that an administrative agency cannot grant the

equitable remedy of estoppel because that power is held exclusively by the judiciary).

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely written protest to the denial of refunds issued under

Letter ID number L1173277504, and jurisdiction lies over the parties and the subject matter of this

protest.

2. The Taxpayer filed its claims for refunds more than three years after the tax was

due.

3. The claims for refunds are barred by the statute of limitations.
   Mountain Moving & Storage Inc.
   Letter ID No. L1173277504
   page 3 of 4
   For the foregoing reasons, the Taxpayer's protest is DENIED.

DATED: October 3, 2013.

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

NOTICE OF RIGHT TO APPEAL

Pursuant to NMSA 1978, § 7-1-25, the parties have the right to appeal this decision by filing

a notice of appeal with the New Mexico Court of Appeals within 30 days of the date shown above.

See Rule 12-601 NMRA. If an appeal is not filed within 30 days, this Decision and Order will

become final. A copy of the Notice of Appeal should be mailed to John Griego, P. O. Box 630,

Santa Fe, New Mexico 87504-0630. Mr. Griego may be contacted at 505-827-0466.

CERTIFICATE OF SERVICE

I hereby certify that I mailed the foregoing Order to the parties listed below this _ day of
___, 20__ in the following manner:

First Class Mail Interoffice Mail

Mountain Moving & Storage Inc. Aaron Rodriguez
Fabi Romero, President Taxation and Revenue Department, Legal
120 Bertha St. 1100 S. St. Francis
Taos, NM 87571-5117 Santa Fe, NM 87504

Mountain Moving & Storage Inc.
Letter ID No. L1173277504
page 4 of 4