Was a prison warden exempt from 2003 New Mexico income tax because he worked and lived most of the year in Texas but kept a New Mexico home, license, and voter registration?

Plain-English summary

Rodolfo Franco remained a New Mexico resident for income-tax purposes even though he worked and lived most of 2003 in Pecos, Texas. He was in New Mexico fewer than 185 days, but residency could also arise from domicile, and the evidence showed that New Mexico remained his permanent home.

Franco worked full time as warden of the Reeves County Detention Center in Pecos, about 230 miles from his Anthony, New Mexico property. The hearing officer found it implausible that he spent 185 days in New Mexico while holding that job and doing consulting work in Puerto Rico.

That did not end the residency question. Section 7-2-2(S) provided two separate routes: physical presence in New Mexico for at least 185 days, or domicile in New Mexico during part of the year without a qualifying change of abode by year-end.

His official and personal ties pointed to New Mexico

Franco had bought seven acres in Anthony in 1989 and built a roughly 2,700-square-foot house there in 2001. His Pecos house was smaller, and he testified that his Texas employment was politically uncertain. He maintained the New Mexico connections because he knew he would leave that job and did not know where future work would take him.

In 2003 he also:

• remained registered to vote in New Mexico;
• held a New Mexico driver's license and did not obtain a Texas license;
• registered a Chevrolet Tahoe in New Mexico and insured it as located there;
• used the Anthony address for the vehicle purchase and registration; and
• had continuing family ties to New Mexico.

His wife applied for a New Mexico driver's license on December 30, 2003. After Franco retired from the Texas job in October 2004, he returned to the Anthony property.

Living elsewhere did not establish a new domicile

The decision explained that an established domicile continues until the person both resides in a new place and has a fixed purpose to remain there permanently or indefinitely. Mere absence from a permanent home—even a long absence—does not itself change domicile.

Franco's New Mexico voter registration and driver's license also triggered regulatory presumptions that he was domiciled in New Mexico. He did not prove that he intended to remain in Pecos beyond his employment or that he had changed domicile by the end of 2003.

Result: protest denied. As of the hearing, Franco owed $5,230 in 2003 personal income tax, $523 in penalty, and $4,094.37 in interest. Interest continued to accrue until payment.

What this means for you

People working outside New Mexico

Counting days is not enough when New Mexico remains your domicile. A person may be a resident even with fewer than 185 days of physical presence.

Taxpayers trying to change domicile

Official records matter. Voter registration, driver's licenses, vehicle registration, property exemptions, home ownership, family ties, and conduct showing an intent to return can outweigh a temporary work residence elsewhere.

Accountants advising mobile clients

Ask two separate questions: where was the client physically present, and where was the client's permanent home? Document both the move and the intent to remain in the new location.

Common questions

Q: Did Franco spend 185 days in New Mexico in 2003?
A: No. The hearing officer clearly found that he did not meet the 185-day physical-presence test.

Q: Why was he still a New Mexico resident?
A: He remained domiciled in New Mexico and did not prove a permanent or indefinite change of domicile to Texas.

Q: What evidence carried the most weight?
A: His New Mexico voter registration and driver's license created regulatory presumptions, while his Anthony home, vehicle records, family ties, uncertain Texas job, and intent to return reinforced them.

Q: Did using a Texas address on the federal return decide the issue?
A: No. The decision considered that fact but found the totality of the evidence showed New Mexico domicile.

Q: Were penalty and interest also upheld?
A: Yes. Franco did not separately challenge them beyond his residency argument, and the decision sustained both.

Citations and references

Statutes and regulation:

• NMSA 1978, § 7-2-3 — personal income tax on New Mexico residents
• NMSA 1978, § 7-2-2(S) — resident defined by domicile or 185-day physical presence
• Regulation 3.3.1.9 NMAC (2000) — domicile and residency presumptions
• NMSA 1978, § 7-1-17(C) — presumption that an assessment is correct
• NMSA 1978, §§ 7-1-67, 7-1-68, and 7-1-69 — interest and negligence penalty, as cited in the decision
• NMSA 1978, § 7-37-4(A) — resident head-of-family property exemption

Cases cited:

• Murphy v. Taxation & Revenue Department, 1980-NMSC-012
• Hagan v. Hardwick, 1981-NMSC-002
• Estate of Peck v. Chambers, 1969-NMSC-054
• Archuleta v. O'Cheskey, 1972-NMCA-165
• MPC Ltd. v. New Mexico Taxation & Revenue Department, 2003-NMCA-021
• Tiffany Construction Co. v. Bureau of Revenue, 1976-NMCA-127

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Rodolfo V. Franco
• Decision PDF: D&O 13-29

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
RODOLFO V. FRANCO No. 13-29
TO ASSESSMENT ISSUED UNDER LETTER
ID NO. L1963984512

DECISION AND ORDER

A protest hearing occurred on the above captioned matter on September 5, 2013 before

Brian VanDenzen, Esq., Tax Hearing Officer, in Santa Fe. Rodolfo V. Franco (“Taxpayer”)

appeared pro se. Staff Attorney Peter Breen appeared representing the State of New Mexico,

Taxation and Revenue Department (“Department”). Protest Auditor Milagros Bernardo appeared

as a witness for the Department. Taxpayer Exhibits #1-8 and Department Exhibits A-H, and J

were admitted into the record, as described more thoroughly in the Administrative Protest

Hearing Exhibit Log. Based on the evidence and arguments presented, IT IS DECIDED AND

ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. On April 25, 2007, the Department assessed Taxpayer $7,264.00 in personal

income tax, $726.40 in penalty, and $3,252.24 in interest for a total of $11,242.64 for the

personal income tax period ending December 31, 2003. [Letter id. L1963984512].

2. On May 14, 2007, Taxpayer protested the Department’s assessment.

3. On May 22, 2007, the Department acknowledged receipt of Taxpayer’s protest.

4. On June 6, 2013, the Department requested a hearing with the Hearings Bureau in

this matter.

5. On June 10, 2013, the Hearings Bureau issued Notice of Administrative Hearing,

setting this matter for a protest hearing on July 2, 2013.

6. On June 19, 2013, Taxpayer moved to continue the July 2, 2013 protest hearing.

The Department did not oppose Taxpayer’s continuance.

7. On June 25, 2013, the Hearings Bureau issued a Continuance Order and Amended

Notice of Administrative Hearing, rescheduling the hearing on September 5, 2013 at 1:00 p.m.

8. Before 1974, Taxpayer lived in New Mexico and graduated from New Mexico

State University. [09-5-13 CD 8:51-53].

9. In 1974, Taxpayer took a job with the Federal Bureau of Prisons in San Diego,

CA, where he remained until 1978. Taxpayer took various positions with the Federal Bureau of

Prisons across the country from 1974 through 1988. [09-5-13 CD 8:51-9:22].

10. In 1988, the Federal Bureau of Prisons transferred Taxpayer as an associate

warden to La Tuna Federal Corrections Facility in Anthony, TX. [09-5-13 CD 9:22-32].

11. La Tuna Federal Corrections Facility in Anthony, TX is three to four miles from

the New Mexico border. [09-5-13 CD 9:30-40].

12. The post office serving La Tuna Federal Corrections Facility in Anthony, TX is

located in Anthony, NM. [09-5-13 CD 9:30-40].

13. Taxpayer lived in staff housing at the federal reservation near La Tuna

Corrections Facility from 1989 to 1993. [09-5-13 CD 9:40-10:08].

14. In 1989, Taxpayer bought seven acres of farm land at 126 Whittington Place in

Anthony, NM. Taxpayer rented out this farmland for farming. [09-5-13 CD 13:59-14:33].

15. In 1993, Taxpayer was transferred to a Federal Bureau of Prisons facility in

Puerto Rico. [09-5-13 CD 10:08-12].

In the Matter of the Protest of Rodolfo V. Franco, page 2 of 15

16. In 1994, Taxpayer returned to La Tuna Corrections Facility as the warden of that

facility. [09-5-13 CD 10:17-21].

17. Upon his return to La Tuna Corrections facility in 1994, Taxpayer again resided

in staff housing at the federal reservation. [Taxpayer Ex. #6.1; 09-5-13 CD 10:21-27].

18. In 1996, Taxpayer decided to retire from the Federal Bureau of Prisons at the end

of the year. [09-5-13 CD 10:44-48; 11:31-36].

19. Taxpayer had two children, Christina and David Franco, that graduated from high

school in Anthony, TX. [09-5-13 CD 10:51-54; 32:28-34:28].

20. Taxpayer had one child, Amanda Lopez, who lived with her mother in Las

Cruces, NM, and graduated from high school in Las Cruces. [09-5-13 CD 10:54-59; 32:50 -

33:22].

21. In 1996, Taxpayer purchased a home at 100 Pecan Drive, Las Cruces, NM so that

his children could attend college in New Mexico. [09-5-13 CD 11:04-18; 31:53-59].

22. All three of Taxpayer’s children obtained residency in New Mexico and paid in-

state New Mexico tuition. [09-5-13 CD 32:50-34:01].

23. Taxpayer sold the home at 100 Pecan Drive, Las Cruces, NM home after his

children left and graduated from college four to five-years after he purchased that home.

Taxpayer did not still own this home in 2003. [09-5-13 CD 22:09-22:11; 32:00-17; 09-5-13 CD

55:21-42].

24. In July 1996, Taxpayer was contacted about assuming the warden’s position at the

Reeves County Detention Center in Pecos, TX. This facility had a contract with the Federal

Bureau of Prisons. [Taxpayer Ex. #5.1; 09-5-13 CD 12:30-39].

In the Matter of the Protest of Rodolfo V. Franco, page 3 of 15

25. Taxpayer officially retired from the Federal Bureau of Prisons on November 1,

26. [09-5-13 CD 12:40-49].

27. On November 5, 1996, Taxpayer voted at the polling place for the New Mexico

general presidential election. [Department Ex. A; 09-5-13 CD 35:09-29].

27. On November 14, 1996, Taxpayer accepted the warden position of employment in

Pecos, TX, a full-time job. [Taxpayer Ex. #5.1; 09-5-13 CD 12:49-13:58].

28. Taxpayer’s job as a warden in Pecos, TX was an all consuming, full-time job that

required his full attention. [09-5-13 CD 13:00-13:58].

29. Looking at Google maps, Pecos, TX is approximately 230-miles and three hours

away from Anthony, NM1. See Google Maps (Oct. 2, 2013), http://goo.gl/maps/UENzV.

30. As warden, Taxpayer answered directly to the county commissioners. Because the

situation with the county commissions was fluid politically, Taxpayer was concerned throughout

his employment with the Reeves County Detention Center in Pecos, TX that he could lose his

job at any time for political reasons. [09-5-13 CD 20:32-51].

31. From 1996 through 2004, Taxpayer also did some consulting work in the field of

corrections in Puerto Rico. [Taxpayer Ex. #5.1; 09-5-13 CD 20:50-21:07].

32. While in Pecos, TX, Taxpayer and his wife Imelda resided at 2206 Wyoming

Street. This home was about 1,900 to 2,000 square feet, had 3-bedrooms/2-baths, and cost

approximately $59,000. [Taxpayer Ex. #1.1; 09-5-13 CD 25:03-47; 09-5-13 CD 55:57-56:36;

09-5-13 CD 59:10-19].

33. On February 21, 2000, Taxpayer applied for a New Mexico Driver’s License,

listing his address as 126 Whitington Place, Anthony, NM 88021. On his application for a

1
Under Regulation 3.1.8.10 (C) NMAC and Rule 1-044 (8) NMRA, the undersigned hearing officer took
administrative notice of this fact without objection from the parties.

In the Matter of the Protest of Rodolfo V. Franco, page 4 of 15
driver’s license, Taxpayer swore under penalty of perjury that he was a resident of New Mexico.

Taxpayer maintained his New Mexico driver’s license through at least March 26, 2004.

[Department Ex. C; Department Ex. J; 09-5-13 CD 39:48-40:40].

34. On June 6, 2000, Taxpayer voted absentee in the New Mexico presidential

primary. [Department Ex. A].

35. In 2001, Taxpayer built a house on his farmland at 126 Whitington Place,

Anthony, NM 88021. That home is three bedrooms, two baths, and approximately 2,700 square

feet. [09-5-13 CD 44:00-14; 09-5-13 CD 50:21-30; 09-5-13 CD 54:50-55:14].

36. On November 5, 2002, Taxpayer voted early in the New Mexico gubernatorial

election. [Department Ex. A].

37. In 2003, Taxpayer’s sister-in-law resided at 126 Whitington Place, Anthony, NM.

She would pick up Taxpayer’s mail at that address. [09-5-13 CD 47:46-51].

38. In 2003, Taxpayer and his wife banked at a Credit Union in El Paso, TX. [09-5-13

CD 57:53-58:33].

39. On August 7, 2003, Taxpayer and his wife signed a sales contract with Rudolph

Chevrolet in El Paso, TX for a 2003 Chevy Tahoe. Taxpayer listed his address as 126

Whitington Place, Anthony, NM. [Department Ex. F; 09-5-13 CD 45:21-46:30].

40. On August 15, 2003, Taxpayer submitted a New Mexico Motor Vehicle

Registration on a 2003 Chevy Tahoe listing the address as 126 Whitington Place, Anthony, NM.

[Department Ex. D-E].

41. Taxpayer insured the 2003 Chevy Tahoe with a New Mexico insurance agent, and

listed the car as dwelling in New Mexico. [Department Ex. G; 09-5-13 CD 48:30-49:43].

In the Matter of the Protest of Rodolfo V. Franco, page 5 of 15

42. In 2003, Taxpayer maintained his driver’s license and vehicle registrations in

New Mexico because he knew he was leaving his position of employment in Texas, his future

employment and residency was uncertain, and his New Mexico address was most convenient.

[09-5-13 CD 17:17-18:11; 09-5-13 CD 22:25-29].

43. Taxpayer maintained property insurance from at least October 24, 2003 through

October 24, 2004, on his home at 2206 Wyoming Street, Pecos, TX. [Taxpayer Ex. #2.1; 09-5-

13 CD 25:03-47].

44. On December 30, 2003, Taxpayer’s wife Imelda Franco applied for a New

Mexico Driver’s License, listing her address as 126 Whitington Place, Anthony, NM 88021.

[Department Ex. H; 09-5-13 CD 49:55-50:20].

45. On their 2003 joint federal income tax returns, Taxpayer and his wife listed their

address as 2206 Wyoming Street, Pecos, TX. [09-5-13 CD 58:33-44].

46. Taxpayer did not file a 2003 New Mexico personal income tax return. [09-5-13

CD 1:00:31-46].

47. On January 30, 2004, Taxpayer applied for a New Mexico Driver’s License,

listing his address as 126 Whitington Place, Anthony, NM 88021. On his application for a

driver’s license, Taxpayer swore under penalty of perjury that he was a resident of New Mexico.

[Department Ex. B; 09-5-13 CD 36:50-37:55].

48. Taxpayer retired from the Reeves County Detention Center in Pecos, TX on

October 3, 2004. [Taxpayer Ex. #5.1].

49. After retiring from the Reeves County Detention Center in Pecos, TX in October

2004, Taxpayer returned to his farmland at 126 Whitington Place, Anthony, New Mexico. [09-5-

13 CD 22:37-51].

In the Matter of the Protest of Rodolfo V. Franco, page 6 of 15

50. On November 2, 2004, Taxpayer voted at the polling place in the New Mexico

general election. [Department Ex. A].

51. Although it is unclear the exact date of the valuation, it appears that in 2008 the

Dona Ana County Assessor’s Office valued Taxpayer’s property at 126 Whitington Place in

Anthony, NM at $249,798.00. [Department K; 09-5-13 CD 1:00:48-1:01:50].

52. At some unspecified point, Taxpayer claimed a family exemption and a Veteran’s

exemption on Taxpayer’s property at 126 Whitington Place in Anthony, NM. [Department K;

09-5-13 CD 1:02:22-49].

53. Taxpayer filed New Mexico personal income tax returns in 1996, 1997, 1998,

1999, 2005, 2006, 2007, 2008, 2009, 2010, 2011, and 2012. [Department L; Department M;

09-5-13 CD 1:03:09-1:04:27; 09-5-13 CD 1:06:14-1:07:20].

54. As of the date of the hearing, Taxpayer owed $5,230.00 in 2003 personal income

tax, $523.00 in penalty, and $4,094.37 in interest. [Department Ex. N; 09-5-13 CD 1:08:04-

50].

DISCUSSION

The issue at protest is whether in personal income tax year 2003, Taxpayer was a resident

of New Mexico subject to state personal income tax. Taxpayer argues that he was a resident of

Pecos, TX in 2003 because he was not physically present in New Mexico for 185-days or more

in 2003. The Department argues that Taxpayer was domiciled in New Mexico regardless of his

claimed physical presence in Texas, and therefore subject to New Mexico income tax.

Presumption of Correctness and Burden of Proof

Under NMSA 1978, Section 7-1-17(C) (2007), the assessment issued in this case is

presumed correct. Consequently, the Taxpayer has the burden to overcome the assessment of

In the Matter of the Protest of Rodolfo V. Franco, page 7 of 15
personal income tax. . See Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428. However,

once a taxpayer rebuts the presumption of correctness, the burden shifts to the Department to show

the correctness of the assessed tax. See MPC Ltd. v. N.M. Taxation & Revenue Dep't, 2003-NMCA-

21, ¶13, 133 N.M. 217.

Personal Income Tax, Residency, and Domicile

Payment of New Mexico personal income tax is governed by NMSA 1978, §§ 7-2-1, et

seq. Unless otherwise exempted by law, a tax is imposed “upon the net income of every” New

Mexico resident. NMSA 1978, §7-2-3 (1981). The question in this protest is whether Taxpayer

was a resident of New Mexico in income tax year 2003.

NMSA 1978, § 7-2-2 (S) (2003, amended 2010) of the Income Tax Act defines the term

“resident” as:

an individual who is domiciled in this state during any part of the taxable
year or an individual who is physically present in this state for one
hundred eighty-five days or more during the taxable year; but any
individual, other than someone who was physically present in the state for
one hundred eighty-five days or more during the taxable year, who, on or
before the last day of the taxable year, changed the individual's place of
abode to a place without this state with the bona fide intention of
continuing actually to abide permanently without this state is not a
resident for the purposes of the Income Tax Act [7-2-1 NMSA 1978] for
periods after that change of abode; (emphasis added).

Although Taxpayer believed that he could only be considered a resident if he was in New

Mexico for 185-days or more, under this statute there are two possible basis of residency in New

Mexico: either the person was physically present in New Mexico for 185-days or the person was

domiciled within the state during any part of the tax year and did not change domicile to a new

location by the last day of the tax year.

In this case, the evidence clearly established that Taxpayer was not physically present in

New Mexico for 185-days or more in 2003. During 2003, Taxpayer worked as warden at a

In the Matter of the Protest of Rodolfo V. Franco, page 8 of 15
County Correctional Facility in Pecos, TX, a full-time, all consuming job. Pecos, TX is some

three-hours and 230-miles away from Taxpayer’s farmhouse in Anthony, NM, making it

extremely unlikely that Taxpayer commuted to work every day from New Mexico to his job in

Pecos, TX. Even assuming for argument a fact not established in this record that Taxpayer spent

every weekend at his farmhouse in Anthony, NM, that would only amount to approximately 104-

days of physical presence in New Mexico, leaving Taxpayer 81-days short of the statutory 185-

day physical presence requirement. It is entirely implausible that Taxpayer spent an additional

81-days in New Mexico in 2003 while maintaining a full time job as a prison warden in Pecos,

TX, and doing consulting work at prisons in Puerto Rico.

Since Taxpayer did not meet the 185-day physical presence residency requirement, the

only possible basis of residency under Section 7-2-2 (S) for income tax purposes is if Taxpayer

was domiciled within New Mexico during any part of income tax year 2003 and did not change

that domicile before the last day of the taxable year.

New Mexico case law has also considered the term domicile extensively. In Murphy v.

Taxation & Revenue Department, 1980-NMSC-012, ¶7, 94 N.M. 54, the New Mexico Supreme

Court found that definition of “resident” depended on a person’s domicile and intent. The

Murphy court declared that for income tax purposes, residency is synonymous with domicile:

“A New Mexico ‘resident’ is an individual domiciled in New Mexico at anytime during the

taxable year who does not intentionally change his domicile by the end of the year.” id.

This definition of residency as synonymous with domicile was further affirmed a year

later by the New Mexico Supreme Court in Hagan, v. Hardwick, 1981-NMSC-002, ¶10, 95 N.M.

517. In Hagen, the court also found that domicile “does not require physical presence but rather

In the Matter of the Protest of Rodolfo V. Franco, page 9 of 15
physical presence in this state at some time in the past, and concurrent intention to make the state

one’s home.” id., ¶10 (internal citations omitted). As the court further explained in Hagan,

to effect a change from an old and established domicile to a new one, there
must be...a fixed purpose to remain in the new location permanently or
indefinitely. For domicile once acquired is presumed to continue until it is
shown to have changed, and to show the change two things are
indispensable,--"First, residence in the new locality; and, second, the
intention to remain there.... Mere absence from a fixed home, however
long continued, cannot work the change.

id., ¶11 (internal citations omitted). See also Estate of Peck v. Chambers, 1969-NMSC-054, ¶5-

6, 80 N.M. 290.

In addition to the case law, in 2003 Regulation 3.3.1.9 NMAC (12/14/00) provided

regulatory guidance for what constituted “domicile” in New Mexico2. Under Regulation 3.3.1.9

(A) NMAC (12/14/00), every person has one domicile somewhere. Regulation 3.3.1.9 (B)

NMAC (12/14/00) defines domicile as a

…place of a true, fixed home and a permanent establishment to which one
intends to return when absent and where a person has voluntarily fixed
habitation of self and family with the intention of making a permanent
home.

Regulation 3.3.1.9 (C)(1) NMAC (12/14/00) lists three situations where a non-military individual

is presumed domiciled in New Mexico: first, any person registered to vote in New Mexico

during the year who does not register to vote in another state before the end of the year is

presumed to be a New Mexico resident; second, any individual licensed to drive in New Mexico

during the year who did not obtain a new license in another state and surrender their New

2
This regulation actually was promulgated under a previous version of NMSA 1978, Section 7-2-2 (S) (1993 before
2003 amendment), which defined a resident only as person domiciled in New Mexico during any part of the year
whom had not established a new domicile by the last day of the year. An amended regulation addressing the
additional 185-day physical presence standard under amended Section 7-2-2 (S) (2003) was not promulgated until
April 29, 2005, after the period as dispute in this protest. See Regulation 3.3.1.9 NMAC (4/29/05).

In the Matter of the Protest of Rodolfo V. Franco, page 10 of 15
Mexico driver’s license by the end of the year; and third, any person who has claimed New

Mexico residency for any other official purpose.

At least two of the three, if not all three, domicile presumptions under Regulation 3.3.1.9

(C) (1) NMAC (12/14/00) cut against Taxpayer’s claimed residency in Texas in 2003. In 2003,

Taxpayer remained registered to vote in New Mexico, and presented no evidence that he

changed that registration to Texas. Taxpayer also retained his driver’s license in New Mexico in

2003 and presented no evidence that he obtained a Texas driver’s license that year. Moreover, it

is also possible that Taxpayer is a presumed resident of New Mexico under Regulation 3.3.1.9

(C) (1) (b) (ii) NMAC (12/14/00) because Taxpayer claimed a head of family property tax

exemption on his Anthony, NM farmhouse that was dependent on being a New Mexico resident.

See NMSA §7-37-4(A) (1993) (requiring claimant of exemption to be the “head of a family who

is a New Mexico resident.”). Therefore, it seems that Taxpayer was claiming New Mexico

residency for another official purpose, a basis to presume residency under Regulation 3.3.1.9 (C)

(1) (b) (ii) NMAC (12/14/00). The hesitation on this factor is that although the Department

presented evidence of Taxpayer’s Head of Family exemption claim, the Department did not

establish whether Taxpayer claimed this deduction in 2003 or some other unspecified year. But

in any case, the unequivocal evidence of Taxpayer’s 2003 voter registration in New Mexico and

Taxpayer’s 2003 possession of a New Mexico drivers’ license, established a presumption under

Regulation 3.3.1.9 (C)(1) NMAC (12/14/00) that Taxpayer was a domiciled resident of New

Mexico in 2003.

In addition to these presumptions, Taxpayer was also domiciled in New Mexico in 2003

based on the Hagen articulation that domicile “does not require physical presence but rather

physical presence in this state at some time in the past, and concurrent intention to make the state

In the Matter of the Protest of Rodolfo V. Franco, page 11 of 15
one’s home.” id., ¶10 (internal citations omitted). Taxpayer had a past presence in New Mexico

significant enough to require New Mexico personal income taxes in 1996, 1997, 1998, and 1999.

Taxpayer bought his farmland in Anthony, NM in 1989. In 2001, while employed in Pecos, TX,

Taxpayer built a home on his Anthony, NM farmland that was more substantial than his home in

Pecos, TX. The size of his Anthony, NM home he built compared to the home he purchased in

Pecos, TX suggests that Taxpayer intended to ultimately make New Mexico his home. Taxpayer

repeatedly testified that his employment status as warden in Pecos, TX was fluid and uncertain,

and therefore, because he was uncertain about his future, he maintained his New Mexico driver’s

license and vehicle registrations out of convenience. This notion that uncertainty about his future

caused Taxpayer to maintain his connections to New Mexico shows that Taxpayer intended to

return to New Mexico upon completion of his employment, which is in fact exactly what

happened after Taxpayer retired from his work as warden in Pecos, TX. These past physical

connections to New Mexico along with the intention to return to New Mexico satisfies the

Hagen court’s definition of domicile. See Hagen, ¶10.

In order for Taxpayer to show a change of domicile from his presumed 2003 New

Mexico residency, Taxpayer needed to show “a fixed purpose to remain in the new location

permanently or indefinitely.” Hagen, ¶10 (internal citations omitted). Under Section 7-2-2 (S),

this change must have occurred before the last day of 2003. Mere absence from Taxpayer’s home

in Anthony, NM while he worked in Pecos, TX is insufficient to show a change of domicile. See

Hagen, ¶10.

While Taxpayer may have been largely absent from New Mexico in 2003, there is little

evidence that Taxpayer intended to remain in Pecos, TX beyond his term of employment.

Indeed, Taxpayer acknowledged in testimony that there was some uncertainty about his

In the Matter of the Protest of Rodolfo V. Franco, page 12 of 15
continuing employment in Pecos, TX because of a fluid political situation there. Taxpayer’s

home in Pecos, TX was significantly smaller than the home and farmland he owned in Anthony,

NM. By 2003, Taxpayer’s children were residents of New Mexico or had attended university in

New Mexico, giving Taxpayer a familial connection to New Mexico that was not present in

Texas. Taxpayer registered his vehicles in New Mexico in 2003. Taxpayer maintained his New

Mexico driver’s license in 2003. Taxpayer remained registered to vote in New Mexico in 2003.

Taxpayer’s wife applied for a New Mexico driver’s license on the second to last day of the year

of 2003, hardly an action of a family intending to change its domicile from New Mexico to

Texas.

Under the totality of these facts, Taxpayer did not establish that he had changed his

domicile to Texas by the last day of 2003, did not overcome the presumption of residency under

Regulation 3.3.1.9 (C)(1) NMAC (12/14/00), and did not overcome the presumption of

correctness of the assessment under Section 7-1-17. Other than as an implicit corollary of his

argument that he was not a New Mexico resident subject to income tax, Taxpayer did not

challenge the assessment of either interest or penalty at hearing. The Department properly

assessed interest under NMSA 1978, Section 7-1-68 (2007) because the statute’s use of the word

“shall” mandates imposition of interest. See Marbob Energy Corp. v. N.M. Oil Conservation

Comm'n, 2009-NMSC-013, ¶22, 146 N.M. 24 (use of the word “shall” in a statute indicates

provision is mandatory absent clear indication to the contrary). The Department properly imposed

a civil negligent penalty under NMSA 1978, Section 7-1-69 (2007). See Tiffany Construction Co.

v. Bureau of Revenue, 1976-NMCA-127, ¶5, 90 N.M. 16 (imposing a reasonable duty on all

persons to ascertain the tax consequences of their actions). Consequently, the Department’s

In the Matter of the Protest of Rodolfo V. Franco, page 13 of 15
assessment of 2003 personal income tax, penalty, and interest was appropriate. Taxpayer’s

protest is denied.

CONCLUSIONS OF LAW

A. Taxpayer filed a timely, written protest of the assessment for 2003 for personal

income taxes, penalty, and interest, and jurisdiction lies over the parties and the subject matter of

this protest.

B. Taxpayer was registered to vote in New Mexico in 2003, and presented no evidence

that he changed registration to Texas. Therefore, Taxpayer was presumed domiciled in New Mexico

under Regulation 3.3.1.9 (C) (1) (a) NMAC (12/14/00).

C. Taxpayer possessed a New Mexico driver’s license in 2003, did not attempt to get a

Texas driver’s license, and did not surrender his New Mexico license. Taxpayer was presumed

domiciled in New Mexico under Regulation 3.3.1.9 (C) (1) (b) (i) NMAC (12/14/00).

D. In 2003, although Taxpayer had little physical presence in New Mexico, Taxpayer

was domiciled in New Mexico because he had significant past physical connection to New Mexico

and a continuing intention to make New Mexico his home. See Hagan v. Hardwick, 1981-NMSC-

002, ¶10, 95 N.M. 517.

E. Although Taxpayer was not present at his Anthony, NM farmhouse for most of

2003, Taxpayer did not show that he had the intention to remain at his Pecos, TX home, as required

to demonstrate a change in domicile. See Hagan v. Hardwick, 1981-NMSC-002, ¶10, 95 N.M.

517.

F. Taxpayer is liable for $5,230.00 in 2003 personal income tax, $523.00 in penalty,

and $4,094.37 in interest. Under NMSA 1978, Section 7-1-67 (2007), interest continues to

accrue until the tax obligation is satisfied.

In the Matter of the Protest of Rodolfo V. Franco, page 14 of 15
For the foregoing reasons, the Taxpayer's protest IS DENIED.

DATED: October 10, 2013.

Brian VanDenzen, Esq.
Tax Hearing Officer
Taxation & Revenue Department
Post Office Box 630
Santa Fe, NM 87504-0630

In the Matter of the Protest of Rodolfo V. Franco, page 15 of 15