Could Michael Lunnon defeat a New Mexico personal income tax assessment based on IRS account transcripts by denying the federal figures without producing contrary evidence?

Plain-English summary

Michael Lunnon could not defeat a New Mexico personal income tax assessment based on IRS account transcripts by simply denying the federal figures. He produced no contrary records and resisted questions about his income and business activities.

At the hearing, he owed $44,553 tax, $8,910.60 penalty, and $7,022.59 interest for 2011 and 2012, totaling $60,486.19.

An IRS audit created a federal-state income mismatch

The Department sent Lunnon a limited-scope audit notice explaining that an IRS audit had identified income that might not have been reported to New Mexico.

The IRS account transcript showed adjusted gross income of:

• $467,663 for 2011; and
• $472,253 for 2012.

The corresponding adjusted federal taxable income was $458,163 and $462,503.

Lunnon had not filed New Mexico personal income tax returns for either year. The Department used the IRS information to generate state returns and calculate tax, penalty, and interest.

The Department gave him an opportunity to explain

Before assessing, the Department invited Lunnon to address the mismatch and supply information that could reduce the liability.

He responded that he did not understand the claim and that the Department relied on “bad information,” but supplied no documentation or substantive explanation.

The protest auditor later sent materials explaining the assessment and included the IRS transcript. Lunnon did not respond.

Unsupported denials did not shift the burden

At the hearing, Lunnon continued to insist the IRS information was wrong but admitted he had no evidence disputing it.

He refused or evaded questions about his occupation, sources of income, filing history, and business activities. He eventually disclosed that he managed a packing and shipping business but provided little detail and claimed to support himself through bartering and odd jobs.

Section 7-1-17(C) presumed the Department's assessment correct. To shift the burden, Lunnon had to present countervailing evidence or legal argument.

New Mexico personal income tax begins with federal adjusted gross income, and a state may measure its tax by reference to federally taxable income. The Department was therefore entitled to rely on the IRS transcript unless Lunnon rebutted it.

His unsubstantiated denials did not do so.

Penalty and interest remained mandatory

Interest accrued from the original due dates until the tax was paid.

The Department imposed the civil-negligence penalty rather than a willful-evasion penalty. At minimum, Lunnon's failure to report and pay the tax was inaction where action was required.

He presented no evidence of a good-faith mistake of law or any regulatory ground for non-negligence.

Federal litigation did not justify delaying the decision

Nearly two weeks after the hearing, Lunnon asked the AHO to hold the protest in abeyance while separate litigation with the IRS continued.

The AHO denied the late request, finding that it appeared intended to delay a potentially unfavorable decision. Waiting was also unnecessary because Section 7-1-26 offered a refund remedy if Lunnon later obtained a favorable federal result.

Result: protest DENIED. The full $60,486.19 remained due.

What this means for you

Taxpayers receiving a federal-state mismatch notice

Respond with records, corrected federal information, returns, and a clear calculation. A general statement that the IRS is wrong will not rebut a state assessment.

Nonfilers

The Department may generate a state return from available federal information when required returns are missing. Review the inputs promptly and supply any corrections.

Taxpayers disputing IRS data

Address federal errors through the IRS, but also preserve state remedies and deadlines. A pending federal dispute does not automatically suspend a New Mexico protest.

Protest participants

Income, occupation, business activity, and filing history are relevant in a personal income tax case. Refusing to answer does not transfer the burden to the Department.

Common questions

Q: Did Lunnon file New Mexico returns for 2011 and 2012?
A: No.

Q: What information supported the assessment?
A: IRS account transcripts resulting from a federal audit.

Q: Did Lunnon offer contrary financial or tax records?
A: No. He admitted he had no evidence disputing the IRS figures.

Q: Was the Department required to independently reconstruct his income?
A: No. The AHO held that New Mexico could rely on federally determined income unless the taxpayer rebutted it.

Q: Why was the negligence penalty upheld?
A: Lunnon failed to file, report, and pay and proved no reasonable mistake of law or other non-negligence ground.

Q: Could a later IRS victory matter?
A: Yes. The decision said a favorable federal result could be pursued through New Mexico's refund process, but it did not justify holding this protest open.

Q: How much remained due?
A: $60,486.19.

Citations and references

Statutes and regulations:

• NMSA 1978, §§ 7-2-1 through 7-2-36 — New Mexico Income Tax Act
• NMSA 1978, §§ 7-2-2(A), 7-2-3, and 7-2-12 — federal adjusted gross income, state tax, and return requirement
• NMSA 1978, §§ 7-1-3(X) and 7-1-17(C) — tax definition and assessment presumption
• NMSA 1978, §§ 7-1-67 and 7-1-69 — interest and negligence penalty
• NMSA 1978, § 7-1-26 — refund remedy
• Regulations 3.1.6.12 and 3.1.6.13 NMAC — unsubstantiated statements and presumption for penalty and interest
• Regulations 3.1.11.10 and 3.1.11.11 NMAC — negligence and indicators of non-negligence

Cases cited:

• Holt v. New Mexico Department of Taxation & Revenue, 2002-NMSC-034 — New Mexico income tax begins with federal adjusted gross income
• Champion International Corp. v. Bureau of Revenue, 88 N.M. 411, 540 P.2d 1300 (Ct. App. 1975) — state may measure income tax by federally taxable income
• New Mexico Taxation & Revenue Department v. Casias Trucking, 2014-NMCA-099 — taxpayer must present countervailing evidence or legal argument
• MPC Ltd. v. New Mexico Taxation & Revenue Department, 2003-NMCA-021 — unsubstantiated assertions do not overcome an assessment
• Marbob Energy Corp. v. New Mexico Oil Conservation Commission, 2009-NMSC-013 — mandatory effect of statutory “shall”

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Michael E. Lunnon
• Decision PDF: D&O 17-40

Original ruling text

STATE OF NEW MEXICO
ADMINISTRATIVE HEARINGS OFFICE
TAX ADMINISTRATION ACT

IN THE MATTER OF THE PROTEST OF No. 17-40
MICHAEL E. LUNNON
TO ASSESSMENT
ISSUED UNDER LETTER
ID NO. L2144229680

DECISION AND ORDER

A hearing occurred in the above-captioned protest on August 15, 2017 before Chris

Romero, Esq., Hearing Officer, in Santa Fe, New Mexico. At the hearing, Michael E. Lunnon

(“Taxpayer”) appeared in person and represented himself pro se. Staff Attorney Elena Morgan

appeared representing the State of New Mexico Taxation and Revenue Department

(“Department”). Protest Auditor Veronica Galewaler appeared as a witness for the Department.

Department Exhibit A and Taxpayer Exhibits 1 – 3 were admitted into the evidentiary record

without objection. A more detailed description of exhibits submitted at the hearing is included on

the Administrative Exhibit Coversheet. On August 28, 2017, Taxpayer requested that the

Hearing Officer withhold a decision in this matter and hold the protest in abeyance. For the

reasons stated below, that request is denied. Based on the evidence and arguments presented, IT

IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. On March 6, 2017, under Letter ID No. L2144229680, the Department assessed

$44,553.00 in personal income tax, $8,910.60 in penalty, and $6,212.09 in interest, for a total

assessment of $59,675.69 for the Personal Income Tax periods from January 1, 2011 through

December 31, 2012 (hereinafter “Assessment”).

2. On May 26, 2017, the Department’s Protest Office received Taxpayer’s formal

protest of the Department’s Assessment under Letter ID No. L2144229680.

3. On June 12, 2017, the Department acknowledged receipt of Taxpayer’s protest of

its Assessment.

4. On July 19, 2017, the Department submitted a Hearing Request that requested a

hearing on the merits of Taxpayer’s protest.

5. On July 20, 2017, the Administrative Hearings Office sent Notice of

Administrative Hearing, setting this matter for a merits hearing on August 15, 2017.

6. A hearing on the merits occurred on August 15, 2017. The hearing occurred

within 90 days of Taxpayer’s protest.

7. Prior to receiving the Department’s Assessment, Taxpayer received a Notice of

Limited Scope Audit Commencement – Personal Income Tax (hereinafter “Notice”). The Notice

was dated December 17, 2016 and explained that an IRS Audit identified income that may not

have been reported to the State of New Mexico. [Testimony of Mr. Lunnon; Testimony of Ms.

Galewaler; Taxpayer Ex. 1].

8. On February 13, 2017, Taxpayer responded to the Notice indicating that he did

not understand the basis for the claim and denied having income in those amounts specified by

the Notice. [Testimony of Mr. Lunnon; Taxpayer Ex. 2].

9. Taxpayer thereafter expressed surprise to receive the Department’s Assessment.

Taxpayer continued to deny that there was any basis for the Notice or the resulting Assessment.

[Testimony of Mr. Lunnon].

10. To the extent Taxpayer conducted any research or investigation to develop a

better understanding of the basis for the Assessment, Taxpayer was unwilling or unable to

elaborate regarding his findings or conclusions.

11. Taxpayer refused to testify regarding his occupation or his sources of income,

claiming those subjects were irrelevant to his protest. [Testimony of Mr. Lunnon].

In the Matter of the Protest of Michael E. Lunnon
Page 2 of 15

12. Taxpayer eventually reluctantly disclosed on cross examination that he managed a

business at the address of record, 2418 E. Historic Highway 66, Gallup, NM 87301-4767.

[Testimony of Mr. Lunnon].

13. Taxpayer denied receiving a salary from the business. [Testimony of Mr.

Lunnon].

14. Upon request for elaboration regarding his responsibilities as a manager for the

business, he said his responsibility was to “order things,” some of which may be intended for

resale, and provided no additional explanation. [Testimony of Mr. Lunnon].

15. Taxpayer refused to elaborate regarding the type of business he allegedly

managed, but admitted on cross examination that it involved packing and shipping services.

[Testimony of Mr. Lunnon].

16. Taxpayer, although the manager, denied having knowledge of whether the

business maintained any employees, how the store operated in his absence, or information

regarding income generated by the business. [Testimony of Mr. Lunnon].

17. Taxpayer claimed that he supported himself from bartering and performing odd

jobs. [Testimony of Mr. Lunnon].

18. Taxpayer admitted having a long history of disputes with the IRS. [Testimony of

Mr. Lunnon].

19. Although Taxpayer vehemently denied that the information provided by the IRS

was correct, Taxpayer admitted he did not have any evidence to dispute the information.

[Testimony of Mr. Lunnon].

20. Taxpayer could not recollect whether or not he filed New Mexico Personal

Income Tax returns for the years in protest, nor could he recall if he filed tax returns for even the

most recent years, including 2016. [Testimony of Mr. Lunnon].

In the Matter of the Protest of Michael E. Lunnon
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21. Taxpayer had not filed personal income tax returns for the years subject of the

protest. [Testimony of Ms. Galewaler].

22. Although Taxpayer claimed he could not comprehend the basis for the

Assessment, Taxpayer Ex. 3.1 – 3.8 represented Ms. Galewaler’s efforts to explain the

foundation for the Assessment. The IRS Account Transcript resulting in the Assessment was

provided in Taxpayer Ex. 3.3 – 3.8. Taxpayer did not respond to Ms. Galewaler. [Testimony of

Ms. Galewaler; Taxpayer Ex. 3.1 – 3.8].

23. The Assessment subject of the protest relied on information provided by the IRS

[Taxpayer Ex. 3-3 – 3.8]. To the extent any information provided by the IRS is erroneous,

Taxpayer is responsible for addressing such errors. [Testimony of Ms. Galewaler].

24. The IRS Account Transcript indicated that Taxpayer had an Adjusted Gross

Income in 2011 in the amount of $467,663.00, and in 2012 in the amount of $472,253.00.

[Taxpayer Ex. 3.3 – 3.8].

25. The Adjusted Federal Taxable Income was therefore $458,163.00 in 2011 and

$462,503.00 in 2012. [Taxpayer Ex. 1; Taxpayer Ex. 3.3 – 3.8].

26. The Department utilized the information derived from the IRS to generate a New

Mexico personal income tax return to identify the amounts of taxes, interest, and penalty due to

New Mexico. [Testimony of Ms. Galewaler].

27. Before issuing the Assessment, Taxpayer was provided with an opportunity to

address questions or concerns regarding the Notice, and respond with any information that might

be useful to reducing the identified amounts of tax, penalty, or interest due. [Testimony of Ms.

Galewaler; Taxpayer Ex. 1].

In the Matter of the Protest of Michael E. Lunnon
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28. Taxpayer’s response to the Notice was that he did not understand the basis for the

claim and that the Department was relying on “bad information.” Taxpayer provided no further

documentation or explanation. [Testimony of Mr. Lunnon; Taxpayer Ex. 2].

29. When Taxpayer did not provide any suitable response to explain the mismatch or

otherwise justifying a reduction of his estimated liability, the Department issued its Assessment.

[Testimony of Ms. Galewaler].

30. The Department relied heavily on information provided by the IRS and Taxpayer.

Where a dispute arises regarding the accuracy of information contained in a federal return or in

the records of the IRS, Taxpayer must address that issue of dispute with the IRS. [Testimony of

Ms. Galewaler].

31. As of the date of the hearing, Taxpayer owed $44,553.00 in personal income tax,

$8,910.60 in penalty, and $7,022.59 in interest for a total amount due of $60,486.19. [Testimony

of Ms. Galewaler; Dept. Ex. A].

32. On August 28, 2017, Taxpayer submitted a document entitled Supplemental

Hearing Information (hereinafter “Supplement”) in which Taxpayer requested that the Hearing

Officer place the matter in abeyance pending conclusion of litigation involving Taxpayer and the

IRS.

33. On August 31, 2017, the Department filed a document entitled New Mexico

Taxation and Revenue Department’s Motion in Limine to Exclude Taxpayer’s Supplemental

Hearing Information (hereinafter “Department’s Motion In Limine”).

34. On September 7, 2017, Taxpayer filed a second copy of his entitled Supplemental

Hearing Information and a document entitled Michael E. Lunnon’s Motion to Strike the New

Mexico Taxation and Revenue Department’s Motion in Limine to Exclude Hearing Information

(hereinafter “Taxpayer’s Motion to Strike”).

In the Matter of the Protest of Michael E. Lunnon
Page 5 of 15
DISCUSSION

The only issue presented in this protest is whether the Department was entitled to rely on

the information it received from the IRS in assessing Taxpayer for New Mexico Personal Income

Tax, penalty, and interest for tax years 2011 and 2012. Taxpayer argued that the Department

should not be permitted to rely on the IRS without conducting some independent investigation to

corroborate the reliability of the information it provided. Taxpayer claimed ignorance with

respect to all facts that may have led to the Assessment in this protest.

Presumption of Correctness and Burden of Proof

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

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

Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428. Accordingly, it is Taxpayer’s

burden to present some countervailing evidence or legal argument to show that he is entitled to

an abatement, in full or in part, of the assessment issued against him. See N.M. Taxation &

Revenue Dep't v. Casias Trucking, 2014-NMCA-099, ¶8. “Unsubstantiated statements that the

assessment is incorrect cannot overcome the presumption of correctness.” See MPC Ltd. v. N.M.

Taxation & Revenue Dep't, 2003-NMCA-21, ¶13, 133 N.M. 217; See also Regulation 3.1.6.12

NMAC.

Unless otherwise specified, for the purposes of the Tax Administration Act, “tax” is

defined to include interest and civil penalty. See NMSA 1978, Sec. 7-1-3 (X) (2013). Under

Regulation 3.1.6.13 NMAC, the presumption of correctness under Section 7-1-17 (C) extends to

the Department’s assessment of penalty and interest. See Chevron U.S.A., Inc. v. State ex rel. Dep't

of Taxation & Revenue, 2006-NMCA-50, ¶16, 139 N.M. 498, 503 (agency regulations interpreting

a statute are presumed proper and are to be given substantial weight). Taxpayer has the burden to

overcome the assessment. See Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428, 431.

In the Matter of the Protest of Michael E. Lunnon
Page 6 of 15
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

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

1 to 36. Unless otherwise exempted by law, a tax is imposed “upon the net income of every”

New Mexico resident. NMSA 1978, Sec. 7-2-3 (1981). NMSA 1978, Sec. 7-2-12 (2003) requires

any resident or any person deriving income from New Mexico to file a state income tax return.

Like many states, the calculation of New Mexico’s personal income tax liability begins with a

taxpayer’s adjusted gross income as reported to the IRS. See NMSA 1978, Sec. 7-2-2 (A) (2010);

See also Holt v. N.M. Dep't of Taxation & Revenue, 2002- NMSC-34, ¶23, 133 N.M. 11

(“calculation of the taxpayers’ state income tax is based upon their adjusted gross income…on their

federal return.”).

In this case, the Department identified a mismatch between the adjusted gross income as

calculated by the IRS and its own records. The Department therefore issued a Notice of Limited

Scope Audit Commencement and provided Taxpayer with an opportunity to explain the

inconsistency. Taxpayer’s response was that the information provided by the IRS was incorrect.

Although disputing the accuracy of the information provided by the IRS, Taxpayer did not offer any

evidence to contradict it. The Department subsequently issued its Assessment and Taxpayer filed

his protest in which he once again stated that the information provided by the IRS was erroneous.

At the hearing, Taxpayer continued to argue that the information provided by the IRS was

incorrect, and proclaimed that there was not any foundation to substantiate it. Although Taxpayer

did not waiver from his position, he also failed to introduce any credible evidence to substantiate his

claims and rebut the presumption that the Department’s Assessment was correct.

In the Matter of the Protest of Michael E. Lunnon
Page 7 of 15
As provided by Holt, the calculation of New Mexico’s personal income tax liability

begins with a taxpayer’s adjusted gross income as reported to the IRS. In this case, there was no

evidence that the Taxpayer reported any income to the IRS. In contrast, the income attributed to

Taxpayer was identified during an IRS audit. Nevertheless, “a state has the power to gauge its

income tax by reference to the income on which the taxpayer is required to pay to the United

States.” See Champion Int’l Corp. v. Bureau of Revenue, 88 N.M. 411, 416, 540 P.2d 1300, 1305

(Ct.App.1975). In this case, the IRS Account Transcript identified a total of $920,666.00 in income

taxable to the United States for 2011 and 2012. The Department was entitled to rely on that

information in issuing its Assessment. Id.

Therefore, Taxpayer was obligated to present evidence upon which it might be established

that the IRS Account Transcript was incorrect. Rather, Taxpayer incredibly claimed to be ignorant

and proved to be extremely elusive, even with the most ordinary topics of direct examination.

Taxpayer either declined or evaded examination in areas such as personal income, his occupation,

his business activities or employment responsibilities, his sources of income, and his tax preparation

and filing history, just to name a few. He claimed these topics of inquiry were irrelevant and

seemingly took offense when either the Hearing Officer or counsel for the Department asked

questions touching upon these issues. Taxpayer actually said he was surprised by examination into

such areas, despite the fact that the Assessment arose from personal income tax, which is directly

related to Taxpayer’s personal income. Nevertheless, the Hearing Officer found that examination

intended to solicit evidence regarding Taxpayer’s personal income was relevant to a proceeding in

which Taxpayer contested the Assessment of personal income tax.

Taxpayer’s strategy in this protest was obvious. His efforts were intended to shift the

burdens of persuasion and production to the Department to show the correctness of its Assessment,

but the law on this subject is firm. It is Taxpayer’s burden to present some countervailing

In the Matter of the Protest of Michael E. Lunnon
Page 8 of 15
evidence or legal argument to show that he is entitled to an abatement, in full or in part, of the

assessment issued against him. See Casias Trucking, supra. “Unsubstantiated statements that the

assessment is incorrect cannot overcome the presumption of correctness." See MPC Ltd. 2003-

NMCA-21, ¶13.

Taxpayer’s statements in opposition to the Assessment in this case are the types of

statements that our courts have found to be unpersuasive, unavailing, and ultimately insufficient.

Taxpayer’s statements were clearly unsubstantiated by any evidence in the record and were

insufficient to overcome the presumption of correctness in this case. Consequently, Taxpayer has

failed to rebut the presumption of correctness that attached to the Department’s Assessment.

Penalty and Interest

Although Taxpayer did not address the imposition of penalty or interest, they nevertheless

merit a brief discussion.

When a taxpayer fails to make timely payment of taxes due to the state, “interest shall be

paid to the state on that amount from the first day following the day on which the tax becomes

due...until it is paid.” NMSA 1978, Sec. 7-1-67 (2007) (italics for emphasis). Under the statute,

regardless of the reason for non-payment of the tax, the Department has no discretion in the

imposition of interest, as the statutory use of the word “shall” makes the imposition of interest

mandatory. See Marbob Energy Corp. v. N.M. Oil Conservation Comm'n, 2009-NMSC-013, ¶22,

146 N.M. 24, 32 (use of the word “shall” in a statute indicates the provision is mandatory absent

clear indication to the contrary). The language of the statute also makes it clear that interest begins

to run from the original due date of the tax and continues until the tax principal is paid in full.

In this case, the Department has no discretion under Section 7-1-67 and must assess interest

against Taxpayer from the time the tax was due but not paid until the tax principal liability is

satisfied.

In the Matter of the Protest of Michael E. Lunnon
Page 9 of 15
With regard for penalty, Department Ex. A indicates that the Department assessed

penalty consistent with the penalty that is imposed for negligence, rather than the penalty that is

imposed for a willful intent to evade or defeat a tax under Sec. 7-1-69 (D). When a taxpayer

fails to pay taxes due to the State because of negligence or disregard of rules and regulations, but

without intent to evade or defeat a tax, NMSA 1978 Section 7-1-69 (A) (2007) requires that:

there shall be added to the amount assessed a penalty in an amount equal
to the greater of: (1) two percent per month or any fraction of a month
from the date the tax was due multiplied by the amount of tax due but not
paid, not to exceed twenty percent of the tax due but not paid.

(italics added for emphasis).

As discussed above, the statute’s use of the word “shall” makes the imposition of penalty

mandatory in all instances where a taxpayer’s actions or inactions meet the legal definition of

“negligence.”

Regulation 3.1.11.10 NMAC defines negligence in three separate ways: (A) “failure to

exercise that degree of ordinary business care and prudence which reasonable taxpayers would

exercise under like circumstances;” (B) “inaction by taxpayer where action is required”; or (C)

“inadvertence, indifference, thoughtlessness, carelessness, erroneous belief or inattention.” In this

case, Taxpayer was negligent under Regulation 3.1.11.10 (B) NMAC, at a minimum, because of his

inaction in failing to report and pay personal income taxes when due.

In instances where a taxpayer might otherwise fall under the definition of civil negligence

generally subject to penalty, Section 7-1-69 (B) provides a limited exception: “[n]o penalty shall

be assessed against a taxpayer if the failure to pay an amount of tax when due results from a

mistake of law made in good faith and on reasonable grounds.” In this case, Taxpayer failed to

introduce any evidence to suggest or establish that his negligence resulted from a mistake of law

made in good faith on reasonable grounds.

In the Matter of the Protest of Michael E. Lunnon
Page 10 of 15
Further, in relevant part to this protest, Regulation 3.1.11.11 NMAC also allows for

abatement of penalty under various scenarios. However, none of those circumstances apply

under the evidence introduced in this protest.

For these reasons, Taxpayer’s protest should be denied.

Taxpayer’s Supplemental Hearing Information

Nearly two weeks after the close of evidence, Taxpayer submitted his Supplement in

which he requested that the Hearing Officer suspend or delay this decision, or otherwise hold the

protest in abeyance pending resolution of a federal lawsuit in which Taxpayer claimed the central

issue to be the amount of any federal taxes due and owing. The Department filed the

Department’s Motion In Limine and requested that the Supplement be excluded from the

Hearing Officer’s consideration of evidence in this case. Taxpayer responded by filing

Taxpayer’s Motion to Strike.

Although the pro se Taxpayer stated his intention to “supplement” his testimony in the

Supplemental Hearing Information, the Hearing Officer interprets the Supplement as a request to

hold the matter in abeyance rather than an effort to introduce evidence on any fact that is of

consequence to Taxpayer’s protest. In other words, Taxpayer’s request does not seek to establish

any facts that are directed to rebutting the presumption of correctness of the Department’s

Assessment. Rather, the Supplement states reasons why Taxpayer believes the matter should be

held in abeyance pending the conclusion of his litigation against the IRS.

Considering that specific request, the Hearing Officer finds the motion should be denied.

The request was presented nearly two weeks following the conclusion of the hearing on the

merits of Taxpayer’s protest. Although Taxpayer explained that he overlooked providing the

information contained in the Supplemental Hearing Information or making the request earlier,

the Hearing Officer, was not persuaded that the request was presented in good faith. Rather, the

In the Matter of the Protest of Michael E. Lunnon
Page 11 of 15
Hearing Officer finds that the request was made at such a late date in order to effect delay of a

potentially unfavorable decision.

The Hearing Officer also finds that the denial of Taxpayer’s request would not result in

any prejudice to Taxpayer. In the event Taxpayer obtains a favorable result from his litigation

against the IRS, then Taxpayer is not without relief in this matter. See NMSA 1978, Sec. 7-1-26.

Accordingly, the Hearing Officer finds Taxpayer’s request to hold the protest in

abeyance, Department’s Motion In Limine, and Taxpayer’s Motion to Strike shall all be denied.

CONCLUSIONS OF LAW

A. Taxpayer filed a timely, written protest to the Department’s Notice of Assessment

and Demand for Payment issued under Letter ID No. L2144229680, and jurisdiction lies over the

parties and the subject matter of this protest.

B. The hearing was timely set and held within 90-days of the Department’s

acknowledgment of receipt of a valid protest under NMSA 1978, Section 7-1B-8 (2015).

C. Taxpayer did not overcome the presumption of correctness that attached to the

Assessment under NMSA 1978, Section 7-1-17 (C) (2007) and Archuleta v. O'Cheskey, 1972-

NMCA-165, ¶11, 84 N.M. 428.

D. Taxpayer failed to prove that he was not negligent; therefore, penalty was properly

assessed under NMSA 1978, Sec. 7-1-69.

E. The tax was not paid when it was due, so interest was properly assessed under

NMSA 1978, Sec. 7-1-67.

For the foregoing reasons, Taxpayer's protest IS DENIED. As of the date of the hearing,

Taxpayer owed $44,553.00 in personal income tax, $8,910.60 in penalty, and $7,022.59 in

interest for a total amount due of $60,486.19.

DATED: September 20, 2017

In the Matter of the Protest of Michael E. Lunnon
Page 12 of 15
Chris Romero
Hearing Officer
Administrative Hearings Office
Post Office Box 6400
Santa Fe, NM 87502

In the Matter of the Protest of Michael E. Lunnon
Page 13 of 15
NOTICE OF RIGHT TO APPEAL

Pursuant to NMSA 1978, Section 7-1-25 (2015), 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. If an appeal is not timely filed with the Court of Appeals within 30 days, this

Decision and Order will become final. Rule of Appellate Procedure 12-601 NMRA articulates

the requirements of perfecting an appeal of an administrative decision with the Court of Appeals.

Either party filing an appeal shall file a courtesy copy of the appeal with the Administrative

Hearings Office contemporaneous with the Court of Appeals filing so that the Administrative

Hearings Office may begin preparing the record proper. The parties will each be provided with a

copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

which occurs within 14-days of the Administrative Hearings Office receipt of the docketing

statement from the appealing party. See Rule 12-209 NMRA.

In the Matter of the Protest of Michael E. Lunnon
Page 14 of 15
CERTIFICATE OF SERVICE

On September ___, 2017, a copy of the foregoing Decision and Order was mailed to the

parties listed below in the following manner:

First Class Mail Interoffice Mail

In the Matter of the Protest of Michael E. Lunnon
Page 15 of 15