Did CIBL's letters requesting a 2012 corporate income tax refund preserve the claim without a completed amended return before the December 31, 2016 deadline?

Plain-English summary

CIBL's $113,381 corporate income tax refund claim was barred because it did not submit a fully completed amended 2012 CIT-1 before the December 31, 2016 limitations deadline. Earlier letters requested refunds, but they did not satisfy the Department regulation governing a valid, processable claim.

CIBL owned two wholly owned subsidiaries that held interests in Verizon Wireless-operated partnerships providing cellular service in New Mexico.

Its original 2012 return requested a $53,086 refund, although the correct overpayment shown by the return should have been $55,943. The return also omitted $57,438 of partnership withholding CIBL was otherwise entitled to claim.

CIBL sent multiple requests with different amounts

On November 19, 2013, CIBL requested $110,524, combining the original $53,086 refund figure with the omitted $57,438 withholding.

On December 8, 2016, it sent another letter requesting $113,390 and explaining the asserted overpayment.

Neither submission included an amended 2012 corporate income tax return.

The deadline to make a valid claim was December 31, 2016. In February 2017, the Department requested an amended return. CIBL filed it around February 20 and claimed $113,381.

The Department denied that claim as untimely.

The statute did not provide an exhaustive list

Section 7-1-26(A) required a timely written refund claim that included the taxpayer's identifying information, tax type, amount, period, and factual and legal basis.

CIBL argued that the statute did not require an amended return and that its letters contained the listed information.

The AHO focused on the Legislature's word “include.” That word generally introduces a partial, nonexclusive list. The statute therefore did not prohibit the Department from imposing additional relevant processing requirements.

The amended-return regulation was valid

The Department had authority to adopt regulations that interpreted and exemplified the tax statutes, but could not add an irrelevant or contradictory restriction.

Regulation 3.1.9.8 required enough information to process a refund claim, including a fully completed amended return for each claimed period. A claim omitting required information was invalid.

The AHO found that requirement reasonable and relevant. An amended return gives the Department a standardized, reliable statement of the corrected tax calculation. That mattered here because the original return, two letters, and eventual amended return stated different amounts.

The rule placed responsibility on the taxpayer to submit a processable claim instead of requiring the Department to reconstruct calculations from correspondence and attachments.

Department inaction did not preserve the claim

After CIBL's November 2013 letter, little happened for more than three years. New Mexico law allowed the Department to grant, deny, or take no action on a refund claim.

If the Department did not act within 120 days, the taxpayer had statutory options to pursue the matter. The Department had no additional duty to preserve the claim for CIBL.

CIBL's December 2016 letter arrived only weeks before expiration and still lacked the amended return. The later Department request for that return did not revive an already expired claim.

Result: Department summary judgment GRANTED; protest DENIED. CIBL did not make a valid refund claim before the limitations period expired.

Date note: The official decision prints “DATED: February ___, 2018,” and the certificate of service also leaves the day blank. The exact issue date is therefore left unrecorded rather than inferred.

Text note: The discussion once refers to the November 2013 request as $110,254, but the stipulated finding, the described calculation, and the correspondence amount state $110,524. This summary follows the detailed finding.

What this means for you

Corporate taxpayers claiming a refund

File the amended return and every required claim document before the limitations deadline. A letter explaining the overpayment may not constitute a valid claim.

Businesses correcting partnership withholding

Reconcile the original return, withholding statements, amended return, and requested refund so every document states the same amount or clearly explains each difference.

Taxpayers waiting for Department action

Track the statutory response period and use the available protest or court procedures if the Department does not act. Silence does not necessarily preserve a claim indefinitely.

Businesses approaching a refund deadline

Do not assume the Department will identify missing items before time expires. Review the statute, regulation, official forms, and filing instructions early enough to cure defects.

Common questions

Q: What was the refund limitations deadline?
A: December 31, 2016.

Q: What did the original 2012 return claim?
A: $53,086, though the correct overpayment figure on that return should have been $55,943.

Q: What withholding was omitted?
A: $57,438 of Verizon partnership withholding.

Q: Why did the 2013 and 2016 letters not qualify?
A: Neither included the fully completed amended return required for a valid, processable claim.

Q: When did CIBL file the amended return?
A: Around February 20, 2017, after the deadline.

Q: Could the Department require more than the statute expressly listed?
A: Yes. The AHO held that the statute's use of “include” allowed relevant additional requirements that properly implemented the law.

Q: Did the Department have to follow up on the 2013 letter?
A: No. The statute allowed inaction, and CIBL had procedures available after 120 days to pursue the claim.

Citations and references

Statute and regulation:

• NMSA 1978, § 7-1-26(A), (B), and (D) (2015) — refund-claim requirements, possible Department responses, and limitations period
• NMSA 1978, § 9-11-6.2(A) and (B)(1) — Department rulemaking authority
• Regulation 3.1.9.8(E)(6) and (F) NMAC — amended-return requirement and invalid incomplete claims

Cases cited:

• Rainbo Baking Co. of El Paso v. Commissioner of Revenue, 1972-NMCA-139 — regulation cannot contradict or abridge a statute
• Gonzales v. Educational Retirement Board, 1990-NMSC-024 — agency cannot add unreasonable or irrelevant application requirements
• Unisys Corp. v. New Mexico Taxation and Revenue Department, 1994-NMCA-100 — Department may take no action and taxpayer must pursue the claim
• Kilmer v. Goodwin, 2004-NMCA-122 — limitations periods stabilize and protect agency exposure

Source

• Listing: New Mexico Decisions & Orders
• Decision post: CIBL INC. & Subsidiaries
• Decision PDF: D&O 18-05

Original ruling text

STATE OF NEW MEXICO
ADMINISTRATIVE HEARINGS OFFICE
TAX ADMINISTRATION ACT

IN THE MATTER OF THE PROTEST OF
CIBL INC. & SUBSIDIARIES
TO DENIAL OF REFUND
ISSUED UNDER LETTER
ID NO. L0035805488

v. D&O No. 18-05

NEW MEXICO TAXATION AND REVENUE DEPARTMENT

DECISION AND ORDER
GRANTING SUMMARY JUDGMENT

A summary judgment hearing on the above-referenced protest occurred on November 7,

2017, before Chris Romero, Esq., Hearing Officer, in Santa Fe, New Mexico. Staff Attorney, Mr.

David Mittle, Esq., appeared representing the Taxation and Revenue Department (“Department”).

Attorney, Mr. Robert Fiser, appeared representing CIBL, Inc. & Subsidiaries (“Taxpayer”). The

matter came before the Hearing Officer on the Department’s Motion for Summary Judgment

(hereinafter “Motion”) filed on October 4, 2017 and the Taxpayer’s Response to Department’s

Motion for Summary Judgment (hereinafter “Response”) filed on November 2, 2017.

The Department’s Motion presented a statement of facts that the Taxpayer did not dispute.

Based on the undisputed facts, review of exhibits and arguments presented, IT IS DECIDED AND

ORDERED AS FOLLOWS:

FINDINGS OF FACT

Procedural History

1. On March 7, 2017, the Department notified Taxpayer that it reviewed its claim for

Corporate Income Tax Refund for the period ending December 31, 2012 in the amount of
$113,381.00, and that the claim was denied as untimely. The refund denial was issued under Letter

ID No. L0035805488. [See Administrative File].

2. The deadline to make a claim for refund in this matter was December 31, 2016.

[See Motion, Pg. 3; Response, Pg. 4].

3. On April 28, 2017, the Taxpayer submitted a Formal Protest of the denial of its

claim for Corporate Income Tax Refund. The Formal Protest was received in the Department’s

Protest Office on May 1, 2017. [See Administrative File].

4. On May 11, 2017, the Department acknowledged Taxpayer’s Formal Protest under

Letter ID No. L0191554864. [See Administrative File].

5. On June 26, 2017, the Department filed a Hearing Request. The Department

requested a scheduling hearing. [See Administrative File].

6. On June 27, 2017, the Administrative Hearings Office entered a Notice of

Telephonic Scheduling Conference that set a scheduling hearing in reference to Taxpayer’s protest

for July 12, 2017. [See Administrative File].

7. On July 11, 2017, Taxpayer, by and through its Interim Chief Executive Officer

and Chief Financial Officer, Mr. Robert E. Dolan, filed a summary of events in reference to the

issues in protest. [See Administrative File].

8. A telephonic scheduling conference occurred on July 12, 2017. The hearing was

within 90 days of the Taxpayer’s protest. [See Administrative File].

9. On July 14, 2017, the Administrative Hearings Office entered a Scheduling Order

and Notice of Administrative Hearing that set a hearing on the merits of Taxpayer’s protest for

November 7, 2017. [See Administrative File].

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10. On October 4, 2017, the Department filed Department’s Motion for Summary

Judgment. [See Administrative File; Motion].

11. On October 10, 2017, Taxpayer’s attorney of record filed an Entry of Appearance.

[See Administrative File].

12. On October 19, 2017, the parties filed a Joint Motion to Vacate Hearing and

Convert to a Scheduling Hearing. [See Administrative File].

13. On October 23, 2017, the Administrative Hearings Office entered an Order

Converting Hearing on the Merits to Hearing on Department’s Motion for Summary Judgment.

[See Administrative File].

14. On November 2, 2017, Taxpayer filed Taxpayer’s Response to Department’s

Motion for Summary Judgment. [See Administrative File; Response].

Stipulated and Undisputed Material Facts

15. CIBL, Inc. owns two wholly-owned subsidiaries, Wescal Cellular, Inc. and Wescal

Cellular II, Inc. (“Subsidiaries”). [See Motion, Pg. 1, ¶1; Response, Pg. 2, ¶4.a].

16. The Subsidiaries in turn each owned an interest in a different partnership

(“Partnerships”). [See Motion, Pg. 1, ¶2; Response. Pg. 2, ¶4.b].

17. The Partnerships were operated by Verizon Wireless and provided cellular

telephone services in New Mexico. [See Motion, Pg. 1, ¶3; Response, Pg. 2, ¶4.c].

18. For the years ending December 31, 2011 and 2012, Verizon Wireless was

responsible for tax matters of the Subsidiaries. [See Motion, Pg. 2, ¶5; Response, Pg. 2, ¶4.e].

19. On or about September 5, 2012, Taxpayer filed its 2011 CIT-1 for the year ending

December 31, 2011. Taxpayer requested $126,437 in overpayment be applied to its 2012 liability.

[See Motion, Pg. 2, ¶6; Response, Attachment A-2/9, Line 27a, to Unidentified Exhibit].
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20. In December of 2012, the Subsidiaries sold their interests in the Partnerships to

Verizon Wireless. [See Motion, Pg. 2, ¶7; Response, Pg. 2, ¶4.f].

21. On or about September 11, 2013, Taxpayer filed its original 2012 CIT-1 for the

year ending December 31, 2012. Taxpayer’s return showed an overpayment and requested a

refund of $53,086. [See Motion, Pg. 2, ¶5; Pg. 2, ¶8; Response, Pg. 2, ¶4.d; P g. 2, ¶4.g;

Attachment B-1/9 to 2/9, Line 29 of Unidentified Exhibit].

22. The refund amount claimed on Line 29 of the original 2012 CIT-1 was in error.

[See Attachment B-2/9, Line 29 of Unidentified Exhibit to Response] The correct amount should

have been $55,943.00. [See Motion, Pg. 2, ¶8; Response, Pg. 3, ¶4.m; Pg. 2, ¶4.g].

23. Taxpayer’s original 2012 CIT-1 for the year ending December 31, 2012 did not

claim Verizon Partnership withholdings of $57,438.00, which it was otherwise entitled to claim.

[See Motion, Pg. 2, ¶8; Response, Pg. 2, ¶4.h; Attachments B-2/9, Line 21, and D-4/6 to

Unidentified Exhibit].

24. On October 29, 2013, the Taxpayer received a Proposed Assessment. [See Motion,

Pg. 2, ¶9; Response, Pg. 2, ¶4.i].

25. On November 19, 2013, the Taxpayer made a refund request to the Department for

$110,524.00, which represented $53,086.00, the amount of refund asserted in Taxpayer’s original

2012 CIT-1, plus an additional $57,438.00 for Partnership withholdings. [See Motion, Pg. 2, ¶10;

Response, Pg. 2, ¶4.j; Attachment C-1/1 and B-1/9 to 2/9 to Unidentified Exhibit].

26. At some point in 2014, Verizon Wireless updated and corrected its tax

withholdings with the Department. [See Motion, Pg. 2, ¶11; Response, Pg. 3, ¶4.k].

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27. On September 16, 2016, the Department mailed the Taxpayer a Statement of

Account. [See Motion, Pg. 2, ¶12; Response, Pg. 3, ¶4.l; Attachment D-3/6 to Unidentified Exhibit

to Response].

28. On December 8, 2016, Taxpayer, by and through Mr. Dolan, submitted

correspondence requesting a refund in the amount of $113,390.00. Although the parties stipulated

that the amount requested was $113,381.00, the correspondence clearly indicated that a slightly

different amount was requested. [See Motion, Pg. 2, ¶13; Response, Pg. 3, ¶4.m; Attachment D-

1/6 to D-6/6 to Unidentified Exhibit to Response].

29. On February 10, 2017, the Department requested an amended 2012 CIT-1.

Taxpayer filed an amended 2012 CIT-1 on or about February 20, 2017 (referring to date

accompanying Taxpayer’s agent’s signature) requesting a refund of $113,381.00. [See Motion, Pg.

2, ¶14; Response, Pg. 3, ¶4.n; Pg. 3, ¶4.o].

30. On March 7, 2017, the Department notified Taxpayer that it reviewed its claim for

Corporate Income Tax Refund for the period ending December 31, 2012 in the amount of

$113,381.00, and that the claim was denied as untimely. The refund denial was issued under Letter

ID No. L0035805488. [See Motion, Pg. 2, ¶15; Response, Pg. 3, ¶4.q].

31. Taxpayer did not file and amended 2012 CIT-1 prior to December 31, 2016.

DISCUSSION

The primary issue in this matter is whether Taxpayer’s claim for refund was untimely and

barred by the statute of limitations. The parties recognize that under NMSA 1978, Section 7-1-26 (D)

(1) (2015), no refund can be granted unless claimed within three-years of the end of the calendar year

in which the tax was due.

The parties do not dispute that the deadline to submit a claim for refund under the facts of this
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protest was December 31, 2016. See Motion, Pg. 3; Response, Pg. 4. The critical question is whether

two items of correspondence submitted to the Department prior to December 31, 2016 satisfied the

legal elements essential for establishing a claim for refund under Section 7-1-26 (2015) and

Regulation 3.1.9.8 NMAC. This is a question of law presented for summary judgment.

Summary Judgment is appropriate when there is no genuine dispute as to any material fact

and the moving party is entitled to prevail as a matter of law. See Romero v. Philip Morris, Inc.,

2010-NMSC-035, ¶7, 148 N.M. 713. In controversies involving a question of law, or application

of law where there are no disputed facts, summary judgment is appropriate. See Koenig v. Perez,

1986-NMSC-066, ¶10-11, 104 N.M. 664. The parties agree that this matter is suitable for

summary judgment. See Response, Pg. 1, ¶3.

The examination of what constitutes a claim for refund is initially determined by construing

Section 7-1-26 (2015). Questions of statutory construction begin with the plain-meaning rule. See

Wood v. State Educ. Ret. Bd., 2011-NMCA-20, ¶12. In Wood, the Court of Appeals stated “that the

guiding principle in statutory construction requires that we look to the wording of the statute and

attempt to apply the plain meaning rule, recognizing that when a statute contains language which is

clear and unambiguous, we must give effect to that language and refrain from further statutory

interpretation.” Id. A statutory construction analysis begins by examining the words chosen by the

legislature and the plain meaning of those words. State v. Hubble, 2009-NMSC-014, ¶13, 206 P.3d

579, 584. Extra words should not be read into a statute if the statute is plain on its face, especially if it

makes sense as written. See Johnson v. N.M. Oil Conservation Comm’n, 1999-NMSC-21, ¶ 27, 127

N.M. 120, 126, 978 P.2d 327, 333.

The parties agree that the Tax Administration Act establishes the requirements for asserting a

claim for refund under NMSA 1978, Section 7-1-26 (A) (2015):
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A. A person who believes that an amount of tax has been paid … in
excess of that for which the person was liable… may claim a refund
by directing to the secretary, within the time limited by the provisions
of Subsections D and E of this section, a written claim for refund.
Except as provided in Subsection I of this section, a refund claim shall
include:

(1) the taxpayer’s name, address and identification number;

(2) the type of tax for which a refund is being claimed, the credit
or rebate denied or the property levied upon;

(3) the sum of money or other property being claimed;

(4) with respect to refund, the period for which overpayment was
made; and

(5) a brief statement of the facts and the law on which the claim is
based, which may be referred to as the “basis for the refund”.

(Emphasis Added)

It is evident that the statute does not specifically require the submission of an amended tax

return as part of a claim for refund. In fact, the Department conceded that such requirement is

expressed only in its regulation. See Regulation 3.1.9.8 NMAC. Similarly, there is also no indication

from the statute that its list is intended to be exhaustive or definite, or that the Department is

prohibited from establishing additional requirements. The Hearing Officer noted the Legislature’s use

of “include” which Black’s Law Dictionary, 531 (9th ed. 2009), defines as “[t]o contain as a part of

something.” It continues to explain that “[t]he participle including typically indicates a partial list”

and that “some drafters use phrases such as including without limitation and including but not limited

to – which mean the same thing.” (Emphasis in Original).

Consistent with that definition, New Mexico courts and numerous other jurisdictions have

also recognized that:

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A term whose statutory definition declares what it “includes” is more
susceptible to extension of meaning by construction than where the
definition declares what a term “means.” It has been said “the word
‘includes’ is usually a term of enlargement, and not of limitation. It,
therefore, conveys the conclusion that there are other items includable,
though not specifically enumerated.”

See Mechant Bank & Trust Co. v. Meyer (In re Estate of Corwin), 1987-NMCA-100, ¶3, 106

N.M. 316, 317, 742 P.2d 528, 529, quoting 2A N. Singer, Sutherland Statutory Construction Section

47.07 (Sands 4th ed. 1984); citing Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S.

95, 62 S.Ct. 1, 86 L.Ed. 65 (1941); Smyers v. Workers’ Comp. Appeals Bd., 157 Cal.App.3d 36, 203

Cal.Rptr. 521 (1984); Schwab v. Ariyoshi, 58 Hawaii 25, 564 P.2d 135 (1977); Janssen v. Janssen,

331 N.W.2d 752 (Minn.1983).

Consequently, the Legislature’s use of “include” in Section 7-1-26 (2015) conveyed the

meaning that other items were includable, although not specifically enumerated. Therefore, contrary

to Taxpayer’s position, the statute does not preclude the imposition of additional requirements.

The next question addresses what authority, if any, the Department may have to promulgate

such additional requirements. As the Department accurately perceived, “[i]t is, of course, a

fundamental principle of administrative law that the authority of the agency is not limited to those

powers expressly granted by statute, but includes, also, all powers that may fairly be implied

therefrom.” See Wimberly v. N.M. State Police Bd., 1972-NMSC-034, ¶6, 83 N.M. 757, 758, 497

P.2d 968, 969.

The Department is empowered under NMSA 1978, Sec. 9-11-6.2 (A) to issue regulations to

administer the tax laws of this state. Its authority, however, is not without limitation. The Department

may only promulgate regulations that interpret and exemplify the statutes to which they relate. See

NMSA 1978, Section 9-11-6.2 (B) (1).

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Finding that the plain language of Section 7-1-26 (2015) does not preclude the

implementation of additional requirements on submitting claims for refund, and that the Department

is authorized to promulgate regulations to administer the law of this state, the question at this juncture

is whether Regulation 3.1.9.8 NMAC interprets or exemplifies the law.

Regulation 3.1.9.8 NMAC provides that “[a] claim for refund is valid if it states the nature

of the complaint and affirmative relief requested and if it contains information sufficient to allow

the processing of the claim.” (Emphasis Added). The regulation goes on to define the phrase

“information sufficient to allow processing of the claim.”

3.1.9.8 CLAIM FOR REFUND - GENERAL:

…

E. Information sufficient to allow processing of a claim includes:

(1) taxpayer’s name, address and identification number;

(2) the type or types of tax for which the refund is being claimed;

(3) the sum of money being claimed;

(4) the period for which the overpayment was made;

(5) the basis for the refund; and

(6) a copy of the appropriate, fully completed amended return for
each period for which a refund is claimed.

The Department’s regulation further provides that a claim for refund omitting any of the

information required by Subsections D and E of 3.1.9.8 NMAC is invalid. See Regulation 3.1.9.8 (F)

NMAC. The principal difference between Section 7-1-26 (A) (2015) and the regulation is that the

latter explicitly requires “a copy of the appropriate, fully completed amended return for each period

for which a refund is claimed.”

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In deciding whether a regulation interprets or exemplifies a statute, a regulation may not

abridge or otherwise limit the scope of the related statutory enactment. See Rainbo Baking Co. of El

Paso, Tex. v. Comm’r of Revenue, 1972-NMCA-139, ¶¶ 10-12, 84 N.M. 303, 305-306. In Rainbo

Baking Co., the court held that the Commissioner of Revenue may not promulgate a regulation that

would nullify a deduction authorized by the Legislature. In Rainbo, the Commissioner promulgated a

regulation that required a nontaxable transaction certificate to be in the possession of the buyer at the

time of an audit, which contradicted the statute that only required the buyer to have in its possession a

nontaxable transaction certificate. Consequently, the Court ruled that a regulation may not add a

requirement that the Legislature has not also authorized or imposed that limits or abridges a statute.

Similarly, in Gonzales v. Educ. Retirement Bd., 1990-NMSC-024, 109 N.M. 592, 788 P.2d

348, the Court held that the Educational Retirement Board could not enact a regulation that was

“unreasonable or irrelevant.” In Gonzales, the Board, by regulation, required a member who was

requesting an award of disability benefits to hold no property interest in a bus contract. The Court

said that there was nothing within the statutory grant of authority to award disability benefits that

authorized the Board to refuse to accept an application for disability if the applicant continued to have

a property interest in a bus contract. The Court held that the Board did not have the “statutory power

to create unreasonable or irrelevant requirements within the application process before it considers

the application.” See Gonzales, 109 N.M. at 594, 788 P.2d at 350. Thus, the Board’s regulation was

held to create an unreasonable or irrelevant requirement.

Turning to the undisputed facts in this protest, the parties agreed that on two occasions prior

to December 31, 2016, Taxpayer submitted correspondence to the Department that requested a refund

of corporate income taxes allegedly overpaid. Neither item of correspondence included an

appropriate, fully completed amended return for the period for which a refund was claimed as
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required by Regulation 3.1.9.8 (E) (6) NMAC.

The first item of correspondence was dated November 19, 2013. See Attachment C to

Unidentified Exhibit to Response. The correspondence references the Taxpayer’s name, Federal

Employer Identification Number (“FEIN”), and provides information (with the assistance of its

enclosures) for the Department to identify the Taxpayer and the essence of the claim. Taxpayer’s

correspondence sought a refund of $110,524.00.

The next item of correspondence was dated December 8, 2016. The correspondence provided

the name of the Taxpayer, its address, FEIN, addressed the type of tax for which a refund was being

sought, the period for which the overpayment was allegedly made, and the reasons for the refund. The

correspondence sought a refund for $113,390.00, which differed from the amount previously claimed

on November 19, 2013 ($110,254.00) and from the amount claimed in the original 2012 CIT-1

($53,086.00). It also differed, although not by much, from the amount that would eventually be

claimed on the amended 2012 CIT-1 ($113,381.00).

Less than three weeks later, on December 31, 2016, the statute of limitations expired. On or

about February 10, 2017, the Department requested that the Taxpayer file an amended 2012 CIT-1.

Taxpayer complied on or about February 20, 2017 (referencing the date on which the signature of

Taxpayer’s officer appears). On March 7, 2017, the Department denied the Taxpayer’s request for a

refund because a claim had not been made on or before December 31, 2016.

Although Taxpayer argued that it should be entitled to rely on its correspondence from

November of 2013 and December of 2016, a closer review of that correspondence illustrates the

reasonableness of the Department’s regulation. Both items of correspondence requested refunds in

amounts that differed from one another, from the final amount requested in Taxpayer’s amended

2012 CIT-1, and from the amount requested in the original 2012 CIT-1. The varying amounts
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resulted, at least in part, from clerical errors.

The regulation at issue herein is reasonable and relevant because it is designed, in part, to

minimize the potential for errors by requiring taxpayers to prepare an amended return, which in turn

requires taxpayers to acknowledge the following, appearing above the line reserved for every

taxpayer’s signature on the 2012 CIT-1:

I declare that I have examined this return, including accompanying
schedules and statements, and to the best of my knowledge and belief,
it is true, correct, and complete. Declaration of preparer (other than
taxpayer or an employee of the taxpayer) is based on all information of
which preparer has any knowledge.

Similar to a witness taking an oath to testify truthfully in a trial, the statement provided on the

form is intended to awaken a person’s conscience and impress upon his or her mind the duty to be

truthful. See e.g. UJI 13-211, NMRA 2016 (Committee commentary). Moreover, it encourages a

taxpayer to examine the return and any supporting documents for errors or omissions. The result

should be the submission of a return, or amended return, that the Department can reasonably rely

upon for truthfulness and accuracy.

The regulation is also reasonable and relevant given the volume of documents the Department

is tasked with processing because the requirement to submit an amended return promotes efficiency

and standardization. Otherwise, the Department would be required to manually verify even the most

basic computations and assemble the results in a format enabling the Department to take further

action. However, placing such responsibility on the Department contradicts the Legislature’s

intentions, which has made the taxpayer, not the Department, responsible for pursuing its refund. See

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

Since the relevant events giving rise to the current protest, the Legislature has codified the

Department’s requirement that an amended tax return accompany a refund claim. See NMSA 1978,
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Sec. 7-1-26 (A) (6) (2017). Taxpayer asserted that the amendment demonstrated the Legislature’s

intention that amended returns not be required under previous versions of the statute. The Hearing

Officer is unpersuaded. As previously explained, the use of the term “include” signifies a partial, non-

exhaustive list consistent with the inference that may be drawn from the Legislature’s inaction in

response to the Department’s administrative interpretation, that the implementation of the statute was

consistent with its intent. See Ensenada Land & Water Ass'n v. Reynolds (In re Sleeper), 1988-

NMCA-030, ¶15, 107 N.M. 494, 760 P.2d 787.

Had the Legislature been offended by the Department’s regulation, its purpose would have

been to enact legislation that would have expressly contradicted and overruled the regulation. Rather,

the Legislature did the opposite. It enacted legislation that codified the regulation.

The Hearing Officer was therefore persuaded that Regulation 3.1.9.8 NMAC is a proper

implementation of the law which required that Taxpayer submit an amended 2012 CIT-1 as part of

its claim for refund. The regulation is within the requirements of what the statute permitted, and

does not impose unreasonable or irrelevant requirements on taxpayers.

The facts in this case present an ancillary issue that concerns the responsibilities of the

respective parties to act on a claim for refund. Taxpayer submitted its initial request for refund on

or about November 19, 2013. According to the undisputed facts, the next documented

communication in reference to Taxpayer’s request for refund occurred more than three years later.

Except for Verizon updating and correcting information with the Department at some unidentified

point in 2014 (Motion, Pg. 2, ¶11; Response, Pg. 3, ¶4.k), and the Department’s Statement of

Account dated September 16, 2016 (Motion, Pg. 2, ¶12; Response, Pg. 3, ¶4.l), the record is void

of any evidence to suggest additional efforts by the Taxpayer to pursue its claim for refund.

There is similarly no evidence to suggest any action by the Department during the same
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period. However, New Mexico law does not require the Department to act on claims for refund,

specifically stating that “[t]he secretary or the secretary’s delegate may allow the claim in whole or

in part or may deny the claim.” (Emphasis Added). The Legislature’s use of the word “may” in

lieu of “shall” is decisive because New Mexico courts have explained that “the word ‘may’ in the

sentence allowing the secretary to grant or deny a claim should be construed as permissive.” See

Unisys Corp. v. N.M. Taxation & Revenue Dep’t., 1994-NMCA-059, 117 N.M. 609, 874 P.2d

1273. Although Subsection B of the statute may seem to permit only two options, whether to

allow or deny a claim for refund, Unisys concluded that “Section 7-1-26 (A) contains express

language indicating a legislative intent that the Secretary not be required to act on all claims and

providing a specific remedy for taxpayers whose claims the Secretary does not act upon.” Id., ¶11.

Hence, the Legislature anticipated three possibilities in response to a claim for refund: 1)

that the Department would deny the refund; 2) that the Department would grant the refund; or (3)

that the Department would take no action at all. See NMSA 1978, Section 7-1-26 (B) (2).

In the event the Department were to take no action, which best describes what occurred

after the Taxpayer’s correspondence of November 19, 2013 until February 10, 2017, the

responsibility to pursue Taxpayer’s refund fell on the Taxpayer, whose options are provided by

NMSA 1978, Section 7-1-26 (B) (2) (2015):

If the department has neither granted nor denied any portion of a
claim for refund within one hundred twenty days of the date the
claim was mailed or delivered to the department, the person may
refile it within the time limits set forth in Subsection D of this
section or may within ninety days elect to pursue one, but only one,
of the remedies in Subsection C of this section. After the expiration
of the two hundred ten days from the date the claim was mailed or
delivered to the department, the department may not approve or
disapprove the claim unless the person has pursued one of the
remedies under Subsection C of this section.

In the CIBL Inc. and Subsidiaries
Page 14 of 19.
When it became apparent that the Department had not acted on Taxpayer’s correspondence

from 2013, the Taxpayer responded with a second request for refund more than three years

following its initial communication. By that time, mere weeks remained under the statute of

limitations. Regrettably, for the reasons already discussed, Taxpayer’s correspondence failed to

satisfy the requirements for establishing a valid claim for refund, and the timing of the request left

no room for error. The correspondence, in similar fashion to the correspondence from 2013,

omitted the required amended 2012 CIT-1.

At a minimum, a perfunctory review of the Department’s Application for Refund forms,

utilized between 2013 and 2016 should have alerted the Taxpayer to its omission. See RPD-41071

(Rev. 3/24/2015); RPD-41071 (Rev. 8/2/2012). Both versions of the Application for Refund form

applicable during the period relevant to this protest instruct readers as follows:

Amended Returns: If your refund is the result of overstating the tax,
fees or surcharges due on a previously filed return, you must attach a
fully completed amended report for each period affected.

Taxpayer did not file an amended 2012 CIT-1 until after the statute of limitations passed,

and only after it was requested by the Department. Although the outward appearance of the

Department’s request in February of 2017 could be interpreted as suggesting that the Department

did not view Taxpayer’s refund request as barred, as of that date, such inference would be

unreasonable. Our courts have determined that agencies should not be discouraged from

communicating with taxpayers, and have declined to interpret statutes in a manner that might

encourage agencies to behave in such manner. See Kilmer, 2004-NMCA-122, ¶21 (“We decline to

encourage a state agency to behave in this fashion. It makes far more sense for the Department to

be able to respond, as it did, informing Taxpayers that it could not act on the claim.”).

Rather, if any inference is be drawn from the Department’s request in 2017, it would only
In the CIBL Inc. and Subsidiaries
Page 15 of 19.
be that the Department required the refund request to conform with its regulations before it would

make any further determinations.

However, once the deadline passed for making a claim for refund, the Department was

prohibited from taking further action, even in situations where it may be sensitive to a taxpayer’s

position. Kilmer explained:

The purpose of the time deadline in Section 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 time deadline places the burden of maintaining an
active claim on the taxpayer and makes it the taxpayer’s
responsibility to confront the Department inaction. The legislature
has apparently allocated that responsibility to the taxpayer because it
is the taxpayer who can more easily keep track of the status of a
refund claim.

See Kilmer, 2004-NMCA-122, ¶16.

Regrettably, Taxpayer’s diligence over a number of years was not sufficient to preserve its

claim for refund. Its efforts between November 19, 2013 and December 8, 2016 were negligible at

best, and the law placed no additional obligation on the Department to pursue or preserve

Taxpayer’s claim.

Since Taxpayer failed to request a refund in conformity with the statute, as implemented

by the regulation, before the expiration of its rights under the statute of limitations, its claim for

refund is barred. The Department’s Motion should be GRANTED and the Taxpayer’s protest should

be DENIED.

CONCLUSIONS OF LAW

A. Taxpayer filed a timely, written protest of the Department’s denial of refund and

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

In the CIBL Inc. and Subsidiaries
Page 16 of 19.
B. A hearing was held within 90 days of Taxpayer’s protest. See NMSA 1978, Section 7-

1B-6 (D).

C. There is no genuine dispute as to any material fact and summary judgment is

appropriate in this matter. See Romero v. Philip Morris, Inc., 2010-NMSC-035, ¶7, 148 NM 713.

D. NMSA 1978, Section 7-1-26 (2015) does not preclude the implementation of

additional requirements on the submission of claims for refund.

E. Regulation 3.1.9.8 NMAC is a proper implementation of the law. See NMSA 1978,

Sec. 9-11-6.2.

F. Taxpayer did not make a valid claim for refund within the period prescribed by the

statute of limitations. See NMSA 1978, Section 7-1-26 (2015); Regulation 3.1.9.8 NMAC.

G. Taxpayer’s claim for refund is barred. See NMSA 1978, Section 7-1-26 (2015);

Regulation 3.1.9.8 NMAC.

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

DATED: February ___, 2018

Chris Romero
Hearing Officer
Administrative Hearings Office
P.O. Box 6400
Santa Fe, NM 87502

In the CIBL Inc. and Subsidiaries
Page 17 of 19.
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 CIBL Inc. and Subsidiaries
Page 18 of 19.
CERTIFICATE OF SERVICE

On February ___, 2018, a copy of the foregoing Decision and Order Granting Summary

Judgment was mailed to the parties listed below in the following manner:

In the CIBL Inc. and Subsidiaries
Page 19 of 19.