Was IPC (USA), Inc. entitled to a gasoline-tax refund for fuel it claimed was taxed when racked out at Moriarty and later racked out again after being trucked to an Albuquerque terminal?

Plain-English summary

IPC (USA) did not qualify for a $66,691.42 refund of gasoline tax and petroleum products loading fees tied to fuel racked out of its Albuquerque terminal. IPC did not substantiate that the same gallons had already been taxed at Moriarty, and the statutory refund did not cover tax-paid fuel received from another New Mexico pipeline terminal.

IPC was registered as a gasoline distributor, special-fuel supplier, and rack operator. It owned gasoline stored at pipeline terminals in Moriarty and Albuquerque.

Gasoline was received when it left the terminal rack

New Mexico imposed gasoline tax when fuel was received in the first instance. Fuel was received when it was loaded from a pipeline terminal into tanker trucks or other transportation equipment.

As the registered distributor receiving the fuel it racked out, IPC was responsible for reporting and paying the tax.

An in-tank transfer did not trigger tax because the gasoline remained inside the terminal system. Fuel loaded into trucks and moved on public roads was different: it had been racked out and received.

IPC claimed the same fuel was taxed twice

IPC asserted that it racked 616,773 gallons of gasoline and ethanol out of Moriarty, paid tax, trucked the fuel to Albuquerque for storage, and later racked the same gallons out again.

During the periods at issue, IPC was not filing rack-operator reports and was filing Combined Fuel Tax reports incorrectly. It also was not tracking fuel by bill-of-lading number.

The Department credited tax IPC had paid on true in-tank transfers. After those credits, 129,548 gallons racked out of Albuquerque still showed no tax payment.

IPC paid the full related assessment of $280,065.95 and then claimed a $66,691.42 refund of gasoline tax and loading fees.

The protest could not more than double the refund claim

At the hearing, IPC sought $138,083.66 on 616,773 gallons, saying the original claim had omitted ethanol.

The AHO had jurisdiction only over the claim the Department had actually denied. IPC never filed a $138,083.66 claim, and the protest could not serve as an amendment to more than double the amount.

IPC's own calculations also separated $111,675.07 of gasoline tax principal and $4,740.83 of ethanol tax principal, plus penalty and interest, which did not support the explanation that only ethanol had been omitted.

IPC did not prove the fuel movement

IPC offered testimony and inventory totals but no bills of lading or other documents showing the Moriarty gallons were delivered into the Albuquerque terminal.

The claimed gallons did not reconcile with the assessed gallons. For example, IPC claimed a January 2012 refund on 51,637 gallons when the Department found zero unreported gallons for that month. Other months also contained mismatched figures.

Because fuel placed into a terminal was commingled and could not be discretely identified later, reliable shipment and reporting records were essential. IPC did not overcome the assessment's presumption of correctness.

The statutory refund would not cover this source anyway

Section 7-13-11(B) allowed a rack operator to claim a refund when tax-paid gasoline previously received in New Mexico from a source other than a New Mexico refiner or pipeline terminal was placed into a terminal.

IPC claimed the fuel came from the Moriarty pipeline terminal. Even if the movement and prior payment had been proved, that in-state terminal source fell outside the refund provision.

The exception for shipments from one refinery or terminal to another applied to fuel that remained in the terminal system, not gasoline racked into tanker trucks.

IPC presented no evidence or argument on the petroleum products loading fee, so that issue was abandoned. Because IPC did not prevail, administrative costs and fees were denied.

Result: protest DENIED. The $66,691.42 refund denial remained.

What this means for you

Fuel distributors moving product between terminals

Determine when fuel is legally received and taxed before moving it. A truck movement out of a rack may trigger tax even if the destination is another terminal.

Rack operators claiming tax-paid fuel credits or refunds

Maintain bill-of-lading numbers, manifests, rack reports, Combined Fuel Tax reports, invoices, delivery tickets, and terminal inventory records that reconcile gallon by gallon.

Taxpayers expanding a refund during protest

File a proper claim for the full amount first. A protest generally reviews the refund amount the Department actually denied; it may not create jurisdiction over a larger unfiled claim.

Businesses asserting double taxation

Prove both identity and statutory eligibility. Even proof that the same product bore tax twice may not create a refund when the specific refund statute excludes the source or transaction.

Common questions

Q: What amount was properly before the AHO?
A: $66,691.42, the amount claimed and denied by the Department.

Q: Why was the $138,083.66 request excluded?
A: IPC had never filed that refund claim, so the Department had not denied it and there was nothing to protest at that amount.

Q: What records were missing?
A: Bills of lading or other shipment documents connecting Moriarty rack-outs to Albuquerque terminal receipts.

Q: Are in-tank transfers taxable?
A: Not when the gasoline remains within the pipeline terminal system. IPC's alleged truck transfers involved fuel racked out into transportation equipment.

Q: Why did Section 7-13-11 not help IPC?
A: Its refund applied to tax-paid fuel received from a source other than a New Mexico refiner or pipeline terminal; IPC identified an in-state terminal as the source.

Q: What happened to the loading-fee issue?
A: IPC presented no evidence or argument, so the AHO treated it as abandoned.

Citations and references

Statutes and regulations:

• NMSA 1978, §§ 7-13-2(M), 7-13-2.1, and 7-13-3 — rack operators, first receipt, and gasoline tax
• NMSA 1978, § 7-13-11(B) — refund for tax-paid gasoline placed into a terminal
• NMSA 1978, § 7-13-12 — shipment manifest or bill of lading
• NMSA 1978, §§ 7-1-3 and 7-1-17 — tax definition and assessment presumption
• NMSA 1978, §§ 7-1-24 and 7-1-26 — protest and refund-claim scope
• NMSA 1978, § 7-1-29.1 — administrative costs
• Regulations 3.16.3.8, 3.16.3.9, and 3.16.12.8 NMAC — first receipt, distributor liability, and shipment records

Source

• Listing: New Mexico Decisions & Orders
• Decision post: IPC (USA), Inc
• Decision PDF: D&O 18-06

Original ruling text

STATE OF NEW MEXICO
ADMINISTRATIVE HEARINGS OFFICE
TAX ADMINISTRATION ACT

IN THE MATTER OF THE PROTEST OF
IPC (USA), INC. D&O No. 18-06
TO THE DENIAL OF REFUND ISSUED UNDER
LETTER ID NO. L1194062384

v.

NEW MEXICO TAXATION AND REVENUE DEPARTMENT

DECISION AND ORDER

A formal hearing on the above-referenced protest was held on November 2, 2017 before

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

represented by Mr. David Mittle, Staff Attorney, and Mr. Marek Grabowski, Staff Attorney. Ms.

Theresa Smith, Ms. Laura Lujan, and Ms. Leslie Montgomery also appeared as witnesses on

behalf of the Department. IPC (USA), Inc. (Taxpayer) appeared for the hearing through its

employee, Mr. Thomas Kim, with its attorneys, Mr. Charles Archuleta and Mr. Chris Marquez.

The Taxpayer’s exhibits #1, #2, #3, #4, #5, #6, #7, #8, #9, and #10 were admitted. The

Department’s exhibits “A”, “B”, “C”, and “D” were admitted. A more detailed description of

exhibits submitted at the hearing is included on the Administrative Exhibit Coversheet. The

Hearing Officer took notice of all documents in the administrative file. Mr. Kim, Ms.

Montgomery, Ms. Lujan, and Ms. Smith testified. The parties were given until January 8, 2018

to submit proposed findings of fact and conclusions of law. The parties requested additional

time, and the deadline was extended to January 26, 2018. Both parties submitted timely
proposed findings of fact and conclusions of law. Based on the evidence and arguments

presented, IT IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. On February 17, 2016, the Department denied the Taxpayer’s claim for refund of

$66,691.42 for Gasoline Taxes and Petroleum Products Loading Fees for the tax period

from January 1, 2012 through December 31, 2014.

2. On May 20, 2016, the Taxpayer filed a formal protest letter.

3. On June 30, 2016, the Department filed a Request for Hearing asking that the Taxpayer’s

protest be scheduled for a formal administrative hearing.

4. On June 30, 2016, the Administrative Hearings Office issued a notice of telephonic

scheduling hearing.

5. The telephonic scheduling hearing was conducted on August 5, 2016. The hearing was

held within ninety days of the protest.

6. On August 22, 2016, the scheduling order and notice of hearing was issued.

7. On August 18, 2017, an amended notice of hearing was issued.

8. On September 13, 2017, the parties filed a joint motion for continuance.

9. On September 20, 2017, the motion for continuance was denied.

10. On September 25, 2017, the Department filed its part of the joint prehearing statement.

11. On September 25, 2017, the Department filed a substitution of counsel.

12. On September 28, 2017, the Taxpayer’s attorneys filed their entrance of appearance.

13. On September 28, 2017, the Taxpayer filed an emergency motion to vacate and its

portion of the joint prehearing statement.

IPC (USA), Inc.
Letter ID No. L1194062384
page 2 of 15

14. On September 29, 2017, a hearing on the merits was commenced. On the record, the

parties renewed their motion to continue, and the motion for continuance was granted.

15. On October 2, 2017, the order granting the continuance and notice of hearing was issued.

16. On October 12, 2017, the Taxpayer filed its supplemental statement of grounds.

17. On October 20, 2017, the parties filed an amended joint prehearing statement.

18. The Taxpayer is a corporation registered with the Department as a gasoline distributor, a

special fuel supplier, and a rack operator.

19. The Taxpayer was registered as a rack operator beginning in March 2012.

20. As a rack operator, the Taxpayer was the owner of gasoline stored at pipeline terminals in

New Mexico. See NMSA 1978, § 7-13-2 (M) (1999).

21. The Taxpayer owned gasoline stored at a pipeline terminal in Moriarty, New Mexico

(Moriarty terminal). The Taxpayer also owned gasoline stored at a pipeline terminal in

Albuquerque, New Mexico (Albuquerque terminal).

22. Gasoline is taxed in New Mexico when it is received in the first instance. See NMSA

1978, § 7-13-3 (1995). See also 3.16.3.9 NMAC (2001).

23. Gasoline is received from a pipeline terminal “when it is loaded there into tank cars, tank

trucks, tank wagons or other types of transportation equipment, or when it is placed there

into a tank or other container from which sales or deliveries not involving transportation

are made”. NMSA 1978, § 7-13-2.1 (1999).

24. The first person to receive the gasoline is responsible for the tax; however, the tax can be

shifted to a registered distributor. See 3.16.3.8 (C) NMAC (2001).

25. When gasoline is taken from a pipeline terminal and loaded onto tanker trucks (racked

out), it is received in the first instance for tax purposes. See 3.16.3.8 (A) NMAC.

IPC (USA), Inc.
Letter ID No. L1194062384
page 3 of 15

26. A rack operator is required to report each sale of gasoline when the gasoline is racked out

of the pipeline terminal. Each sale of gasoline on a rack operator’s report should be

associated with a bill of lading number, which enables the Department to track the sale of

the gasoline from the rack operator to the registered distributor to the final customer.

27. A registered distributor who receives gasoline is required to report the purchase on a

Combined Fuel Tax report. The registered distributor is then required to pay the tax for

the receipt of the gasoline.

28. The first registered distributor to receive the gasoline is obligated to report and pay the

tax even if the gasoline is subsequently sold to another registered distributor. See

3.16.3.9 NMAC.

29. For the gasoline tax at issue, the Taxpayer was acting as the registered distributor of the

gasoline that it racked out of the terminals. Therefore, the Taxpayer was the first receiver

of the gasoline and responsible for the reporting and payment of tax.

30. During the tax periods at issue, the Taxpayer was not filing rack operator reports and was

not filing its Combined Fuel Tax reports correctly. The Taxpayer was not tracking its

gasoline by bill of lading numbers.

31. The Taxpayer asserts that it racked out 616,773 gallons of gasoline and ethanol from the

Moriarty terminal by loading it onto tanker trucks, and that it paid the gasoline tax on

those gallons at that time.

32. The Taxpayer asserts that the gallons of gasoline and ethanol were then driven to the

Albuquerque terminal, where it was loaded into the Albuquerque terminal for storage.

33. The Taxpayer did not provide documentation to show that the gasoline and ethanol

racked out from the Moriarty terminal was actually delivered to and stored in the

IPC (USA), Inc.
Letter ID No. L1194062384
page 4 of 15
Albuquerque terminal. Mr. Kim claimed such documentation exists, but admitted that it

was not provided to the Department and was not included in the exhibits.

34. The Taxpayer accepted “in-tank” transfers of gasoline at the Albuquerque terminal and

was paying the gasoline tax on the “in-tank” transfers.

35. “In-tank” transfers are not subject to the gasoline tax because the gasoline remains within

the pipeline terminal, and therefore, is not received. See NMSA 1978, § 7-13-2.1.

36. The Taxpayer racked out gasoline from the Albuquerque terminal and acted as its

registered distributor. Therefore, the Taxpayer was liable for the gasoline tax on the

gallons racked out from the Albuquerque terminal.

37. The Taxpayer was not paying the gasoline tax on the gallons that it racked out of the

Albuquerque terminal. The Taxpayer believed that the tax had already been paid on all

of the gallons stored at the Albuquerque terminal.

38. The Department audited the Taxpayer and investigated the gasoline that the Taxpayer

racked out of the Albuquerque terminal.

39. The Department credited the Taxpayer for the tax paid on the “in-tank” transfers. After

the credit was given, there were still 129,548 gallons of gasoline and ethanol that did not

show any tax paid when received out of the Albuquerque terminal. See Exhibit “A”.

40. Based on the Taxpayer’s documentation, the Department was not able to reconcile the

gallons that the Taxpayer claimed to have paid tax on at the Moriarty terminal with the

gallons stored at the Albuquerque terminal.

41. The Department would consider any gasoline uploaded into a pipeline terminal to be

commingled and inseparable from the other gasoline stored there. Because such gasoline

could not be discretely identified, the Department would consider any gallons racked out

IPC (USA), Inc.
Letter ID No. L1194062384
page 5 of 15
of the pipeline terminal to be taxable gasoline unless there was sufficient documentation

to prove otherwise.

42. On July 30, 2015, the Department assessed the Taxpayer for failure to pay tax, including

gasoline tax, on the 129,548 gallons that were racked out of the Albuquerque terminal.

43. The Taxpayer paid the assessment. A payment of $280,065.95, which was the full

amount of the assessment, was made on August 6, 2015.

44. On October 22, 2015, the Taxpayer claimed a refund of $66,691.42. The Taxpayer’s

claim was for a refund of the gasoline tax and petroleum products loading fee paid

pursuant to the assessment on the gallons of gasoline racked out of the Albuquerque

terminal.

45. On February 17, 2016, the Department denied the claim for refund.

46. On May 20, 2016, the Taxpayer filed its protest. The protest purported to be against the

denial of the claim for refund as well as against the assessment issued in July 2015.

47. The protest against the assessment was not referred for hearing, and the Taxpayer

acknowledged that the hearing was limited to the protest to the denial of refund. See

NMSA 1978, § 7-1-24 (requiring protests to be filed within 90 days of the instigating

action). See also NMSA 1978, § 7-1B-8 (requiring only timely filed protests to be

referred for hearing).

48. Despite its original claim for refund of $66,691.42, the Taxpayer now claims that it is

entitled to a refund of $138,083.66 on 616,773 gallons. The Taxpayer asserts that the

original claim for refund failed to include gallons of ethanol in its calculation.

49. There was no evidence and no argument presented on the issue of the petroleum products

loading fees. Therefore, that issue is deemed abandoned.

IPC (USA), Inc.
Letter ID No. L1194062384
page 6 of 15
DISCUSSION

The issue to be decided is whether the Taxpayer is entitled to a refund of $66,691.42 of

gasoline tax paid on gallons racked out of the Albuquerque terminal.

The Taxpayer argues that the refund should be increased to $138,083.66 because its

original claim neglected to include gallons of ethanol. The Taxpayer argues that the refund is

warranted because the gasoline tax was already paid. The Taxpayer argues that the tax was paid

on the gallons when they were originally racked out of the Moriarty terminal and that denying

the refund is tantamount to taxing the same gallons twice. The Taxpayer argues that shipping

gallons in trucks from one terminal to another should be treated the same as an “in-tank” transfer

and tax paid on such a transfer should be credited. The Taxpayer argues that it followed the

Department’s instructions when it racked the gallons out of the Moriarty terminal by creating a

fictitious sale to a customer that subjected the Taxpayer to the tax as a registered distributor. The

Taxpayer also requests an award of administrative costs and fees.

The Department argues that the amount in controversy is limited to the claim that was

denied. The Department argues that the Taxpayer failed to prove that the gallons racked out of

the Albuquerque terminal had already been taxed. The Department argues that the Taxpayer

failed to prove that the gallons racked out of the Moriarty terminal were actually delivered to the

Albuquerque terminal. The Department argues that the appropriate first instance of tax is when

the gasoline is racked out of a pipeline terminal. The Department argues that the statutes do not

allow for the Taxpayer’s alleged business practices of shipping gasoline by truck from one

pipeline terminal to another pipeline terminal within the state.

Burden of Proof.

IPC (USA), Inc.
Letter ID No. L1194062384
page 7 of 15
Both parties indicate that the Department enjoys a presumption of correctness in this case

since the refund claim is for monies paid pursuant to an assessment. Assessments by the

Department are presumed to be correct. See NMSA 1978, § 7-1-17. Tax includes, by definition,

the amount of tax principal imposed and, unless the context otherwise requires, “the amount of

any interest or civil penalty relating thereto.” NMSA 1978, § 7-1-3. See also El Centro Villa

Nursing Ctr. v. Taxation and Revenue Department, 1989-NMCA-070, 108 N.M. 795. Therefore,

the assessment issued to the Taxpayer is presumed to be correct, and it is the Taxpayer’s burden

to present evidence and legal argument to show that it is entitled to a refund of taxes that were

paid based on the assessment.

Scope of protest.

The Administrative Hearings Office has jurisdiction to hear protests that have been filed

pursuant to Section 7-1-24. See NMSA 1978, § 7-1B-6 and § 7-1B-8. A taxpayer may file a

protest to a denial of a claim for refund made pursuant to Section 7-1-26. See NMSA 1978, § 7-

1-24. A proper claim for refund must be in writing and must contain certain information,

including an amended return and “the sum of money…being claimed”. NMSA 1978, § 7-1-26.

The Taxpayer’s claim for refund indicated that the sum of money being claimed was

$66,691.42. That claim for refund was denied. The Taxpayer never filed a claim for refund for

$138,083.66. Therefore, there was not a denial of that claim, and nothing to protest as to that

amount. The only claim for refund made and denied was for $66,691.42. Therefore, there is

jurisdiction to hear the protest only as to that amount.

The Taxpayer argues that the greater amount should be considered because it is merely

curing an error made in the original refund claim that neglected to account for gallons of ethanol.

The Taxpayer’s own exhibits refute this explanation. By the Taxpayer’s current calculations, the

IPC (USA), Inc.
Letter ID No. L1194062384
page 8 of 15
refund for the tax principal on gallons of gasoline is $111,675.07 and on gallons of ethanol is

$4,740.83. See Exhibit 8. The Taxpayer also claims additional refund amounts from penalty and

interest. See Exhibit 9. The Taxpayer cites no authority that would allow it to use the protest to

amend its claim for refund to a sum more than double what it originally claimed. Moreover, the

Taxpayer’s calculations are unreliable, as they have changed significantly several times through

the course of the protest. See Exhibits 1, 5, 8, and 9. The request to expand the protest is denied.

Gasoline tax.

New Mexico imposes an excise tax on gasoline when it is received within the state. See

NMSA 1978, § 7-13-3. The first receiver of the gasoline is responsible for the payment of the

gasoline tax. See NMSA 1978, § 7-13-2.1. See also 3.16.3.8 and 3.16.3.9 NMAC. The gasoline

is received in the first instance when it is racked out of a pipeline terminal and loaded into tanker

trucks. See NMSA 1978, § 7-13-2.1. See also 3.16.3.8 (A) (1) NMAC. It was undisputed that

the Taxpayer was the first receiver of the gasoline and responsible for the payment of the tax.

The issue in dispute is whether, with respect to the gallons associated with the $66,691.42, the

Taxpayer racked out those gallons and paid tax, then shipped those gallons to another pipeline

terminal, and then racked out those same gallons from the second pipeline terminal and paid the

tax a second time. Both parties seem to concede that each gallon should be taxed only once,

when it is initially received.

Sufficiency of the evidence.

The Department argues that the Taxpayer failed to prove that any gallons from the

Moriarty terminal were ever delivered by tanker truck to the Albuquerque terminal. The

Department argues that even if the Taxpayer was able to prove that the gallons were so

IPC (USA), Inc.
Letter ID No. L1194062384
page 9 of 15
delivered, there was still no way to prove that the gallons racked of the Albuquerque terminal

were the same gallons that had previously been in the Moriarty terminal.

The only evidence to support the Taxpayer’s position is the testimony of Mr. Kim. After

the audit and assessment, Mr. Kim reviewed the Taxpayer’s inventories and concluded that the

number of gallons racked out of the Moriarty terminal had been placed into the Albuquerque

terminal. Mr. Kim prepared a list of totals based on his review of the inventories that purports to

reflect the number of gallons racked out of the Moriarty terminal and delivered to the

Albuquerque terminal. See Exhibit 8. There was no dispute on payments of the gasoline tax for

gallons racked out of the Moriarty terminal. Therefore, the Taxpayer concluded that it had

already paid the tax on the gallons racked out of the Albuquerque terminal.

The Taxpayer was not able to track the gallons by bill of lading. See NMSA 1978, § 7-

13-12 (1993) (requiring every shipment of gasoline racked out of a pipeline terminal to be

recorded on a manifest or bill of lading and to be signed by every person accepting shipment).

See 3.16.12.8 NMAC (2001) (indicating what information should be included). The Taxpayer

did not provide any documentation to show that the gallons racked out of the Moriarty terminal

were delivered to the Albuquerque terminal.

The Taxpayer admitted that it was not filing its rack operator reports at that time, and that

it filed its CFT reports incorrectly. The CFT reports recorded sales of gallons racked out of the

Moriarty terminal that the Taxpayer now claims were fictitious transactions that were required

by the Department for the imposition of the gasoline tax. The first receiver of the gasoline is

required to pay the gasoline tax regardless of whether the gasoline is sold to another customer or

not. See NMSA 1978, § 7-13-3. See 3.16.3.9 NMAC.

IPC (USA), Inc.
Letter ID No. L1194062384
page 10 of 15
The Department reviewed the reports that the Taxpayer filed as well as invoices, delivery

tickets, and emails when it performed the audit. See Exhibit “B”. The Department prepared a

list of unreported gallons for each month. See Exhibit “A”. The unreported gallons for which no

tax-paid credit could be attributed were the subject of the assessment, the payment of which is

the basis of the claim for refund. See Exhibits “A”, “B”, 2, and 3. In comparing the gallons

assessed by the Department and the gallons now claimed by the Taxpayer, it is impossible to

reconcile the data. The Department determined that the total number of unreported gallons for

January 2012 was zero. See Exhibit “A”. Despite the lack of assessment for January 2012 as

there were no unreported gallons, the Taxpayer claims that is owed a refund for January 2012 on

51,637 gallons of gasoline. See Exhibit 8. The unreported gallons for February 2012 were

188,814. See Exhibit “A”. Yet, the Taxpayer is claiming a refund for February 2012 on 214,908

gallons. See Exhibit 8. The unreported gallons for April 2012 were 66,372. See Exhibit “A”.

The Taxpayer claims a refund for April 2012 on 68,484 gallons. See Exhibit 8. In August 2013,

the Taxpayer overreported by 6,207 gallons, which were not subject to assessment. See Exhibit

“A”. Nevertheless, the Taxpayer claims a refund for August 2013 on 67,436 gallons. See

Exhibit 8. The Taxpayer’s claims for March 2012, January 2013, and April 2013 are for less

gallons than the total unreported gallons assessed for those months. See Exhibits 8 and “A”.

Again, the assessment is presumed to be correct. See NMSA 1978, § 7-1-17. The

Taxpayer claimed that it compared its inventories to gallons racked out and came to its

conclusion that 616,773 gallons were racked out of the Moriarty terminal and taken by tanker

truck to the Albuquerque terminal. The Taxpayer did not provide any documentation of

inventories to show how it came to that conclusion. There was no evidence presented on how

many gallons were racked out of the Moriarty terminal on any given date. There was no

IPC (USA), Inc.
Letter ID No. L1194062384
page 11 of 15
evidence presented to show how the inventory allegedly changed at the Albuquerque terminal in

correspondence or correlation to that action. There was no evidence to explain why the

Taxpayer was claiming refunds on 616,773 gallons when only 129,548 gallons were assessed.

“Unsubstantiated statements that the assessment is incorrect cannot overcome the presumption of

correctness.” 3.1.6.12 (A) NMAC (2001). Based upon that totality of the evidence, the

Taxpayer has not overcome the presumption of correctness and has not provided any

substantiated evidence to show that the gallons racked of the Albuquerque terminal had

previously been stored, or had tax paid on them, from the Moriarty terminal.

Limitations on claims for refund of gasoline tax.

“[G]asoline is not received when it is shipped from one refinery or pipeline terminal to

another refinery or pipeline terminal.” NMSA 1978, § 7-13-2.1 (A) (3). The Taxpayer argues

that this subsection applies to its shipping of gasoline from the Moriarty terminal to the

Albuquerque terminal. It is clear from the statute that the exception applies to “in-tank”

transfers, and is not meant to apply to gasoline that is racked out of the pipeline terminal. See

NMSA 1978, § 7-13-2.1 (indicating receipt is accomplished when gasoline is racked out of the

pipeline into tanker trucks, and in various other instances that do not occur within the pipeline

terminal). Even if the Taxpayer’s claims were substantiated, the claim for refund would fail.

The gasoline was first received when it was racked out of the Moriarty terminal and loaded into

tanker trucks. See id. See also 3.16.3.8 (A) (1) NMAC. Therefore, tax was owed at that time.

See NMSA 1978, § 7-13-3. “Upon the submission of proof satisfactory to the department, a rack

operator may submit,…, a claim for refund of a New Mexico tax paid on gasoline previously

received in New Mexico from a source other than a refiner or pipeline terminal in this state and

placed in a terminal from which it will be loaded into tank cars, tank trucks, tank wagons or other

IPC (USA), Inc.
Letter ID No. L1194062384
page 12 of 15
types of transportation equipment.” NMSA 1978, § 7-13-11 (B) (2015) (emphasis added). This

statute clearly presumes that gasoline racked out of a terminal is going to be subject to the

gasoline tax. See id. To reduce the likelihood that the same gallons will be taxed twice, the

statute allows for a refund of the gasoline tax when the tax-paid gallons are placed into a pipeline

terminal, but only if the gasoline was received in some way other than from a pipeline terminal

in this state. See id. Even if the Taxpayer paid the gasoline tax on those gallons and then placed

them back into a terminal, the claim for refund would not be supported by the statute because the

gallons were received from a pipeline terminal within this state. See id.

Costs and fees.

The Taxpayer moved for an award of administrative costs and fees. A taxpayer who has

substantially prevailed with respect to the amount or issues may be entitled to an award of

administrative costs. See NMSA 1978, § 7-1-29.1 (2015). The Taxpayer did not prevail in this case.

Therefore, the Taxpayer is not entitled to administrative costs.

CONCLUSIONS OF LAW

A. The Taxpayer filed a timely written protest to the denial of refund issued under

Letter ID number L1194062384, and jurisdiction lies over the parties and the subject matter of this

protest.

B. The Taxpayer received gasoline when it was racked out of the pipeline terminals,

and the Taxpayer was responsible for the excise tax on its receipt. See NMSA 1978, § 7-13-3. See

also NMSA 1978, § 7-13-2.1. See also 3.16.3.8 (A) (1) NMAC.

IPC (USA), Inc.
Letter ID No. L1194062384
page 13 of 15
C. The Taxpayer failed to provide substantiated evidence to prove its claims, and

failed to overcome the presumption that the assessment was correct. See NMSA 1978, § 7-1-17.

See also 3.1.6.12 (A) NMAC.

D. Even if the Taxpayer’s claims were proven, the Taxpayer would not be entitled to

a refund because the tax was paid on gasoline received from a pipeline terminal within this state.

See NMSA 1978, § 7-13-11.

E. The Taxpayer is not the prevailing party and is not entitled to administrative costs

and fees. See NMSA 1978, § 7-1-29.1.

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

DATED: February 19, 2018.

Dee Dee Hoxie
DEE DEE HOXIE
Hearing Officer
Administrative Hearings Office
Post Office Box 6400
Santa Fe, NM 87502

NOTICE OF RIGHT TO APPEAL

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

filing a notice of appeal with the New Mexico Court of Appeals within 30 days of the date

shown above. See Rule 12-601 NMRA. If an appeal is not filed within 30 days, this Decision

and Order will become final. A copy of the Notice of Appeal should be mailed to John Griego,

P. O. Box 6400, Santa Fe, New Mexico 87502. Mr. Griego may be contacted at 505-827-0466.

CERTIFICATE OF SERVICE
IPC (USA), Inc.
Letter ID No. L1194062384
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I hereby certify that I mailed the foregoing Order to the parties listed below this _ day of
___, 2018 in the following manner:

IPC (USA), Inc.
Letter ID No. L1194062384
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