Could Elite Well Services use a refund claim to revive a $3.29 million High-Wage Jobs Tax Credit after missing the 90-day protest deadline for the credit denial?

Plain-English summary

Elite Well Services could not use a refund claim to reopen a denied High-Wage Jobs Tax Credit after it missed the statutory deadline to protest the denial. The Administrative Hearings Office granted summary judgment to the Department without reaching whether Elite otherwise qualified for the $3,287,058.23 credit.

Elite applied for the credit on December 30, 2016 for calendar years 2011 through 2016. The Department denied the application in full on June 27, 2017 and enclosed guidance explaining the taxpayer's remedies. That guidance said a protest had to be filed within 90 days.

Elite did not protest by September 25, 2017, the last day of that period. Instead, on June 25, 2018, it filed a refund claim for the same $3,287,058.23 based on the denied credit. The Department denied the refund on July 10, and Elite timely protested that later refund denial.

The legal question was whether the refund process supplied an alternative way to challenge the original credit denial. Because the material facts were undisputed, both parties agreed that a ruling for the Department on summary judgment would end the protest.

Credit approval had to come first

Section 7-9G-1 said an eligible employer may apply for the High-Wage Jobs Tax Credit, must file an application for approval to receive it, and may claim an approved credit against modified combined tax liability. Approval was therefore a condition precedent to claiming this particular credit.

Elite's application had been denied. Once the 90-day protest period expired, it had no approved credit to claim through a refund request.

The two administrative remedies were not interchangeable

Section 7-1-24 expressly allowed a taxpayer to protest the denial of a credit or rebate, but required a protest within 90 days. The denial letter dated June 27, 2017 triggered that deadline. Elite's failure to protest made the denial indisputable.

Section 7-1-26 allowed refund claims in specified situations, including when a person believed tax had been overpaid or had been denied a claimed credit. But that language did not create a new opportunity to contest eligibility for a credit whose separate application had already been denied and never timely protested.

The hearing officer distinguished between challenging a Department action and asking the Department to return money or property. A protest generally challenges an action the Department has taken; a refund claim asks the Department to act in the taxpayer's favor. The facts determine which remedy is available.

Allowing a refund claim to restart the dispute would make Section 7-1-24's 90-day deadline meaningless. It would also conflict with Section 7-1-26's rule that a denied claim may not simply be refiled.

Earlier district-court orders did not control

Elite argued that two district-court orders had already rejected the Department's statutory position. Those orders did not explain the basis for their rulings and were not published appellate precedent. They therefore did not bind the Administrative Hearings Office.

The AHO also had authority to decide the legal issue. Its jurisdiction over Tax Administration Act protests and power to rule on summary judgment necessarily included deciding the statutory question presented.

Result: Department's summary-judgment motion GRANTED; Elite's protest DENIED. The decision resolved only the procedural path. It did not decide the substantive merits of Elite's High-Wage Jobs Tax Credit application.

What this means for you

Calendar the denial date immediately

When New Mexico denies a tax-credit application, the 90-day protest period can determine whether eligibility will ever be reviewed. A later refund filing may not restore the lost protest right.

Check whether the credit requires preapproval

The result depended on Section 7-9G-1 requiring Department approval before the High-Wage Jobs Tax Credit could be claimed. Not every New Mexico credit has the same process.

A refund claim is not a universal second appeal

Protests and refund claims are distinct statutory remedies. The existence of both does not mean a taxpayer may choose either one after the Department has denied a required credit application.

Procedural losses can prevent merits review

The hearing officer never decided whether Elite's jobs and wages satisfied the substantive credit requirements. Missing the procedural deadline ended the case first.

Common questions

Q: How much credit did Elite seek?
A: $3,287,058.23 for calendar years 2011 through 2016.

Q: When was the original credit application denied?
A: June 27, 2017. The 90-day protest deadline was September 25, 2017.

Q: Was Elite's protest of the refund denial itself timely?
A: Yes. But that timely later protest could not revive the unprotested 2017 credit-application denial.

Q: Why could Elite not claim the credit through a refund?
A: The High-Wage Jobs Tax Credit statute required approval before the credit could be claimed, and Elite had no approved credit.

Q: Did the AHO decide that Elite was substantively ineligible?
A: No. It decided only that Elite missed the exclusive procedural route for challenging the application denial.

Citations and references

Statutes and regulation:

• NMSA 1978, § 7-9G-1(A), (D), (M), and (N) (2016) — application, approval, claiming, and extinguishment rules for the High-Wage Jobs Tax Credit
• NMSA 1978, § 7-1-24(A) and (E) (2017) — right to protest a credit denial and 90-day deadline
• NMSA 1978, § 7-1-26(A), (D), (E), and (F) (2017) — refund claims and statutory limits
• NMSA 1978, §§ 7-1B-6 and 7-1B-8(G) — AHO jurisdiction and summary judgment
• Regulation 3.1.9.8 NMAC (2010) — refund claims based on returns, overpayments, and credits

Cases:

• Team Specialty Products v. New Mexico Taxation and Revenue Department, 2005-NMCA-020 — tax credits are legislative grace and statutes are read together
• Lopez v. New Mexico Department of Taxation and Revenue, 1997-NMCA-115 — statutory protest deadline
• Associated Petroleum Transport, Ltd. v. Shepard, 1949-NMSC-002 — untimely protest may not be entertained
• Neff v. State ex rel. Taxation and Revenue Department, 1993-NMCA-116 — protest and refund remedies
• Intel Corp. v. Taxation and Revenue Department, 1995-NMCA-005 — refund claim involving a credit that did not require prior approval
• Hess Corp. v. New Mexico Taxation and Revenue Department, 2011-NMCA-043 — unpublished orders lack controlling precedential value

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Elite Well Services LLC
• Decision PDF: D&O 20-11

Original ruling text

1 STATE OF NEW MEXICO
2 ADMINISTRATIVE HEARINGS OFFICE
3 TAX ADMINISTRATION ACT

4 IN THE MATTER OF THE PROTEST OF
5 ELITE WELL SERVICES, LLC
6 TO THE DENIAL OF REFUND ISSUED UNDER
7 LETTER ID NO. L1028136752

8 v. Case No. 18.12-307R
9 D&O No. 20-11

10 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

11 DECISION AND ORDER

12 On June 11, 2020, Hearing Officer Dee Dee Hoxie, Esq. conducted a telephonic hearing

13 on the Department’s motion for summary judgment (SJ Motion). The Taxation and Revenue

14 Department (Department) was represented by Kenneth Fladager and Richard Pener, Staff Attorneys.

15 Elite Well Services, LLC (Taxpayer) was represented by its attorney, Joe Lennihan. Florence

16 Livingstone, an employee of the Taxpayer, and Steven Bartlett, from Axiom Certified Public

17 Accountants and Business Advisors, LLC (Axiom), also appeared for the hearing. The Hearing

18 Officer took notice of all documents in the administrative file. The Department’s motion for

19 summary judgment was filed on January 30, 2020. The Taxpayer’s response was filed on

20 February 21, 2020. The Taxpayer previously filed a motion to determine jurisdiction on

21 December 18, 2019. Pursuant to the order on jurisdiction, the Taxpayer’s arguments in the

22 motion to determine jurisdiction will also be considered in response to the Department’s motion

23 for summary judgment.

24 The summary judgment issue is whether the Taxpayer may file a claim for refund as an

25 alternative to a timely protest for a denial of an application for a tax credit. The Hearing Officer

26 considered all of the evidence and arguments presented by both parties. The Hearing Officer

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1 finds that the appropriate and only available remedy for a denial of an application for a tax credit

2 in this case was to file a protest within 90 days of the denial, pursuant to the statute. See NMSA

3 1978, § 7-1-24 (2017) 1. Consequently, the Hearing Officer finds in favor of the Department, and

4 the Department’s motion for summary judgment is HEREBY GRANTED. IT IS DECIDED

5 AND ORDERED AS FOLLOWS:

6 FINDINGS OF FACT

7 Procedural History

8 1. On July 10, 2018, under letter id. no. L1028136752, the Department denied the

9 Taxpayer’s claim for refund of $3,287,058.23 for the calendar years from 2011 to 2016. The

10 refund was denied “due to the denial of the High Wage Tax Credit as per Letter ID number

11 L1131498800.” [Administrative File and SJ Motion Exhibit E].

12 2. On October 9, 2018, the Taxpayer filed a formal written protest to the denial of

13 the claim for refund. The protest included several exhibits. [Protest in Administrative File].

14 3. On October 31, 2018, the Department acknowledged its receipt of the protest.

15 [Letter ID No. L0630427824 in Administrative File].

16 4. On December 3, 2018, the Department filed a Hearing Request. [Administrative

17 File].

18 5. On December 3, 2018, the Department also filed a motion to strike and disqualify

19 the Taxpayer’s representatives (Motion to Strike), which at that time were employees of Axiom.

20 [Administrative File].

21 6. On December 5, 2018, the Administrative Hearings Office issued a Notice of

22 Telephonic Scheduling Hearing, which set a hearing on January 2, 2019. [Administrative File]

1
The 2017 version of the statute is referenced because it was the statue in effect at the time when the events material
to this protest occurred.
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1 7. On December 17, 2018, the Taxpayer filed its response to the Motion to Strike.

2 [Administrative File].

3 8. On December 31, 2018, the Administrative Hearings Office issued the order

4 denying the Motion to Strike. [Administrative File].

5 9. On January 2, 2019, a telephonic scheduling hearing was conducted. The hearing

6 was held within 90 days of the protest, as required by statute. [Administrative File]. See NMSA

7 1978, § 7-1B-8 (2015)2.

8 10. On January 16, 2019, the Administrative Hearings Office issued the order holding

9 the protest in abeyance, which was done at the Taxpayer’s request and over the Department’s

10 objection. [Administrative File].

11 11. On August 19, 2019, the Taxpayer filed a motion to place the protest back on the

12 docket. [Administrative File].

13 12. On September 25, 2019, the Administrative Hearings Office issued a Notice for a

14 Second Telephonic Scheduling Hearing, which was set for October 16, 2019. [Administrative

15 File].

16 13. On October 10, 2019, the Taxpayer’s attorney entered his appearance.

17 [Administrative File].

18 14. On October 16, 2019, a telephonic scheduling hearing was conducted.

19 [Administrative File].

20 15. On October 23, 2019, the Administrative Hearings Office issued a Scheduling

21 Order and Notice of Hearing on the Merits, which was set for May 22, 2020. [Administrative

22 File].

2
This statute has since been amended to require a hearing within 90 days of the request for hearing. See NMSA
1978, § 7-1B-8 (2019).
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1 16. On December 4, 2019, the Administrative Hearings Office issued an Amended

2 Scheduling Order and Notice, which updated the location of the hearing. [Administrative File].

3 17. On December 18, 2019, the Taxpayer filed a motion to determine jurisdiction and

4 an amended and corrected motion to determine jurisdiction (Jurisdiction Motion).

5 [Administrative File].

6 18. On January 6, 2020, the parties filed a joint stipulated order to extend the

7 Department’s deadline to respond to the Taxpayer’s Jurisdiction Motion. [Administrative File].

8 19. On January 24, 2020, the Department filed its response to the Taxpayer’s

9 Jurisdiction Motion. [Administrative File].

10 20. On January 27, 2020, the Administrative Hearings Office issued an order on

11 jurisdiction. [Administrative File].

12 21. On January 28, 2020, the Taxpayer filed a motion for leave to reply and a request

13 for hearing on its Jurisdiction Motion. [Administrative File].

14 22. As the order on the Jurisdiction Motion had already been issued and indicated that

15 the Jurisdiction Motion would be considered as part of the arguments on any future-filed motions

16 for summary judgment, no further action was taken on the Jurisdiction Motion at that time.

17 [Administrative File].

18 23. On January 30, 2020, the Department filed its SJ Motion. [Administrative File].

19 24. On February 21, 2020, the Taxpayer filed its response to the SJ Motion

20 (Response) and a request for hearing on the SJ Motion. [Administrative File].

21 25. On February 26, 2020, the Taxpayer provided its packet of exhibits to go with its

22 Response. [Administrative File].

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1 26. On April 23, 2020, the Administrative Hearings Office issued a Notice for a

2 Telephonic Hearing on the SJ Motion, which was set for May 22, 2020 in lieu of the previously

3 scheduled hearing on the merits. [Administrative File].

4 27. On April 28, 2020, a second attorney entered his appearance on behalf of the

5 Department. [Administrative File].

6 28. On May 18, 2020, the Administrative Hearings Office issued an Amended Notice

7 for a Telephonic Hearing on the SJ Motion, which was set for June 11, 2020. [Administrative

8 File].

9 29. On June 11, 2020, the telephonic hearing on the SJ Motion was conducted.

10 [Administrative File].

11 Stipulated or Undisputed Material Facts

12 30. On December 30, 2016, the Taxpayer, through its Axiom representatives,

13 submitted an Application for High-Wage Jobs Tax Credit with the Department in the amount of

14 $3,287,058.23 (Credit Application). [SJ Motion Exhibit A; Protest Exhibit A.2].

15 31. On June 27, 2017, the Department denied the Taxpayer’s Credit Application in

16 full. [SJ Motion Exhibit B; Protest Exhibit C.1].

17 32. The denial instructed the Taxpayer “[i]f you disagree with the denial of this credit,

18 enclosed is a copy of FYI 402 TAXPAYER REMEDIES that details the procedures to protest

19 the denial of the credit.” [SJ Motion Exhibit B; Protest Exhibit C.1].

20 33. The FYI 402 provides information on “how to dispute a tax liability or other

21 administrative action the Taxation and Revenue Department takes against you.” [SJ Motion

22 Exhibit C] (emphasis added).

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1 34. The FYI 402 provides that “[y]ou may dispute a tax liability or certain actions the

2 department might take against you under the Tax Administration Act in one of two ways: 1) file

3 a written protest with the Secretary of Taxation and Revenue without making payment of the

4 protested amount, or 2) pay the tax liability and then file a refund claim.” [SJ Motion Exhibit C].

5 35. The FYI 402 provides that “[i]f you choose to protest, you must do so in writing

6 within 90 days of the date of the event you are protesting.” [SJ Motion Exhibit C].

7 36. The Taxpayer did not file a protest to the denial of the Credit Application by

8 September 25, 2017, which was 90 days from the date of the denial letter. [SJ Motion].

9 37. On June 25, 2018, the Taxpayer, through its representatives at Axiom, filed an

10 application for refund for the tax periods from 2011 to 2016 in the amount of $3,287,058.23

11 based on the High-Wage Jobs Tax Credit. [SJ Motion Exhibit D; Protest Exhibit B.1].

12 38. On July 10, 2018, the Department denied the Taxpayer’s application for refund

13 because the Credit Application had been previously denied. [SJ Motion Exhibit E;

14 Administrative File Letter ID No. 1028136752].

15 39. On October 9, 2018, the Taxpayer filed the protest to the denial of refund.

16 [Protest].

17 DISCUSSION

18 Summary Judgment Standard.

19 Summary judgment is appropriate when there is no genuine dispute of material fact and

20 the moving party is entitled to judgment as a matter of law. See Elane Photography, LLC v.

21 Willock, 2013-NMSC-040, ¶ 12. See also Romero v. Philip Morris, Inc., 2010-NMSC-035, ¶ 7,

22 148 N.M. 713. See also Roth v. Thompson, 1992-NMSC-011, 113 N.M. 331. See also Ute Park

23 Summer Homes Ass’n v. Maxwell Land Grant Co., 1967-NMSC-086, 77 N.M. 730. There was

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1 no dispute of the material facts. The parties also agreed that the outcome of the SJ Motion in

2 favor of the Department would be dispositive to the issues of the protest and that a final decision

3 and order could be issued if the Department prevailed.

4 The question of law in this protest is whether the Taxpayer must file a protest to the

5 denial of its Credit Application within 90 days of that denial, or whether the Taxpayer may file a

6 claim for refund more than 90 days after that denial as an alternative method of protesting the

7 denial of the Credit Application. The Department argues that Section 7-1-24 controls because it

8 requires taxpayers to file a protest within 90 days of the denial of a “credit or rebate”. See

9 NMSA 1978, § 7-1-24 (2017) 3. The Taxpayer argues that Section 7-1-26 controls because it

10 allows a taxpayer “who has been denied any credit or rebate claimed” to file a claim for refund.

11 See NMSA 1978, § 7-1-26 (2017) 4. The statutes’ meaning and construction are the main source

12 of the dispute regarding summary judgment.

13 Jurisdiction.

14 The Taxpayer argues that the Administrative Hearings Office has no jurisdiction to

15 determine the legal issue raised in the SJ Motion. [Jurisdiction Motion]. The Taxpayer argues

16 that the legal issue has been conclusively decided by the district court in at least two cases and

17 argues that the legislative history supports the district court’s orders. [Jurisdiction Motion;

18 Response, pages 2-11, 26]. The Taxpayer argues that the district court denied similar motions

19 for summary judgment “based on their interpretations of the applicable law” with the same legal

20 issue as this protest. [Jurisdiction Motion, page 9]. The Taxpayer argues that the only

21 jurisdiction in this protest is to determine whether the refund claim was properly denied on the

3
Throughout the decision, references are made to the 2017 version of the statute since it was in effect at the time the
Taxpayer’s Credit Application was denied and at the time of the Taxpayer’s claim for refund.
4
Throughout the decision, references are made to the 2017 version of the statute since it was in effect at the time
that the Taxpayer’s Credit Application was denied and at the time of the Taxpayer’s claim for refund.
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1 substantive eligibility of the Taxpayer to claim the credit, that is “to hear Elite Well’s protest on

2 its merits.” [Jurisdiction Motion, page 15].

3 The Department correctly pointed out that the orders in the district court do not expound

4 on the reasons for the denial of summary judgment. [Protest Exhibit B.23; Response Exhibit

5 “Elite Well MSJ Response Exhibit 1”; Response Exhibit “Plaintiff’s Exhibit 12”]. One order

6 only states that “being advised in the premises of the motion, the Court hereby denies the

7 motion”. [Protest Exhibit B.23; Response Exhibit “Elite Well MSJ Response Exhibit 1”]. The

8 other order indicates that the court is not bound to defer to an administrative agency’s

9 interpretation, and then states merely that “[b]ased upon this Court’s review of the applicable

10 statutes and applicable law, the Court determines that the Defendants’ Motion for Summary

11 Judgment is not well taken and should be denied.” [Response Exhibit “Plaintiff’s Exhibit 12”].

12 The Taxpayer cites a number of cases to support its proposition that the district court’s

13 orders have effectively bound the Administrative Hearings Office on this issue; however, these

14 cases refer to an administrative agency’s or a lower court’s failure to follow a published decision

15 or order. See Flores v. Sect. of Health, Educ. & Welfare, 228 F. Supp. 877, at 877-878 (U.S.

16 Dist. Ct. P.R. 1964) (noting that the hearing examiner refused to follow two published decisions

17 on the issue). See Hillhouse v. Harris, 547 F. Supp. 88, at 91-93 (U.S. Dist. Ct. Arkansas 1982)

18 (reiterating that lower courts must follow precedent). See Thomas v. N.C. Dep’t of Human

19 Resources, 478 S.E. 2d 816 (Ct. App. N.C. 1996), at 818 (noting the previously published

20 precedent on the issue), at 823 (noting that administrative agencies must give full effect to

21 precedent established by the court). See Costarell v. Fla. Unemployment Appeals Comm’n, 916

22 So. 2d 778 (Fla. Sup. Ct. 2005) at 779 (reviewing the published precedent on the issue), at 782

23 (noting that precedential holdings of the court are binding on administrative agencies). See

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1 Hecker v. Stark County Social Serv. Bd., 527 N.W. 2d 226 (Sup. Ct. N.D. 1994) at 232 (holding

2 an agency’s regulation was void because it attempted to supersede published caselaw). See also

3 Bd. Of County Comm’rs v. Industrial Com., 650 P.2d 1297 (Ct. App. Colo. 1982), at 1298-99

4 (noting that the court previously interpreted a statute in a published decision and holding that the

5 agency’s regulation could not overrule the precedent), reversed by Industrial Com. Of Colorado

6 v. Bd. Of County Comm’rs, 690 P. 2d 839 (Sup. Ct. Colo. 1984) (overruling the previous caselaw

7 that was contrary to the agency’s regulation).

8 Even if the district court orders provided the analysis of the issue, they are not published

9 precedent. See generally Rule 23-112 NMRA (2013) (indicating that precedential opinions are

10 those published and issued by the Supreme Court of New Mexico and the New Mexico Court of

11 Appeals). Therefore, the district court’s orders are not binding precedent. See id. See also Rule

12 12-405 NMRA (2012) (stating that unpublished decisions are not precedent but may still be

13 persuasive). See also Hess Corp. v. N.M. Taxation & Revenue Dep’t, 2011-NMCA-043, ¶ 35,

14 149 N.M. 527 (indicating that unpublished opinions and orders are written solely for the benefit

15 of the parties and have no controlling precedential value). See also Inc. County of Los Alamos v.

16 Montoya, 1989-NMCA-004, ¶ 6, 108 N.M. 361 (noting that unpublished caselaw is not binding

17 precedent). See State v. Granillo-Macias, 2008-NMCA-021, ¶ 11, 143 N.M. 455 (noting that

18 unpublished orders, decisions, and opinions are not controlling and are written solely for the

19 benefit of the parties). See State v. Gonzales, 1990-NMCA-040, ¶ 47-48, 110 N.M. 218 (noting

20 that unpublished orders, decisions, and opinions are not meant to be controlling authority and

21 that they rarely describe the context of the issue at length, which may be of controlling

22 importance to the decision).

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1 The Administrative Hearings Office has the jurisdiction to hear all protests under the Tax

2 Administration Act. See NMSA 1978, § 7-1B-6 (2019). The Administrative Hearings Office

3 has the jurisdiction to rule on summary judgment motions, a power that necessarily includes the

4 jurisdiction to decide a legal issue. See NMSA 1978, § 7-1B-8 (G) (2019). See also Elane

5 Photography, LLC, 2013-NMSC-040, ¶ 12. See also Romero, 2010-NMSC-035, ¶ 7. See also

6 Roth, 1992-NMSC-011. See also Ute Park Summer Homes Ass’n, 1967-NMSC-086. Therefore,

7 the Administrative Hearings Office has the jurisdiction to decide the issues of the SJ Motion.

8 High-wage jobs tax credit.

9 The Taxpayer argues that the requirements of the high-wage jobs tax credit statute are

10 irrelevant to the Taxpayer’s ability to claim the credit through the refund process after the Credit

11 Application was denied. The Taxpayer’s argument is untenable. All parts of a statute are to be

12 read together, in conjunction with other statutes, to achieve a harmonious whole. See Team

13 Specialty Prods. v. N.M. Taxation & Revenue Dep’t, 2005-NMCA-020, ¶ 9, 137 N.M. 50. See

14 also Key v. Chrysler Motors Corp., 1996-NMSC-038, ¶ 14, 121 N.M. 764. See also State ex rel.

15 Quintana v. Schnedar, 1993-NMSC-033, ¶ 4, 115 NM 573.

16 “A taxpayer who is an eligible employer may apply for, and the department may allow, a

17 tax credit for each new high-wage economic-based job.” NMSA 1978, § 7-9G-1 (A) (2016) 5

18 (emphasis added). “To receive a high-wage jobs tax credit, a taxpayer shall file an application for

19 approval of the credit with the department”. NMSA 1978, § 7-9G-1 (D) (emphasis added). “[A]n

20 approved high-wage jobs tax credit shall be claimed against the taxpayer’s modified combined tax

21 liability”. NMSA 1978, § 7-9G-1 (M) (emphasis added). Therefore, approval of the high-wage

22 jobs tax credit is a condition precedent to claiming the tax credit against one’s tax liability. See id.

5
Throughout the decision, references are made to the 2016 version of the statute since it was in effect at the time the
Taxpayer’s Credit Application and claim for refund were made.
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1 See also Team Specialty Prods., 2005-NMCA-020, ¶ 9 (noting that tax credits are strictly matters

2 of legislative grace and to be construed against a taxpayer).

3 Section 7-1-24.

4 A taxpayer has the right to protest the application to them of any provision of the Tax

5 Administration Act or to “the denial of or failure either to allow or to deny a: (a) credit or rebate;

6 or (b) claim for refund made in accordance with Section 7-1-26 NMSA 1978.” NMSA 1978, §

7 7-1-24 (A). Protests must be filed within 90 days of the date that the tax provision was applied

8 to them or to the date that the claim for refund was denied 6. See NMSA 1978, § 7-1-24 (E). See

9 Lopez v. N.M. Dep’t of Taxation & Revenue, 1997-NMCA-115, ¶ 6-10, 124 N.M. 270 (holding

10 that the taxpayer could not protest the application of a part of the Tax Administration Act beyond

11 the statutory time limit for filing a protest in Section 7-1-24).

12 The Department denied the Taxpayer’s Credit Application on June 27, 2017. Therefore,

13 the Taxpayer had 90 days from that date to file a protest. See NMSA 1978, § 7-1-24.

14 Consequently, the last day for the Taxpayer to file a protest to the denial of the Credit

15 Application was September 25, 2017. The Taxpayer did not file a protest by September 25,

16 2017. The Taxpayer may not protest the denial of its Credit Application beyond the statutory

17 time limit. See id. See also Lopez, 1997-NMCA-115. See also Associated Petroleum Transp.,

18 Ltd. v. Shepard, 1949-NMSC-002, ¶ 6-11, 53 N.M. 52 (holding that when a protest is not timely

19 filed as required by the statute, the protest may not be entertained). Due to the failure to file a

20 protest within 90 days of the denial of the Credit Application, the Department’s denial became

21 indisputable. See NMSA 1978, § 7-1-24. See Lopez, 1997-NMCA-115. See also Associated

22 Petroleum, 1949-NMSC-002.

6
If the Department failed to take action on the claim for refund, it is 90 days from the last date that the Department
could have taken action.
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1 The Taxpayer argues that the Legislature could not have intended this result because

2 Section 7-1-24 did not originally have the language allowing a taxpayer to protest the denial of a

3 credit or rebate; that language was added in the 2013 amendment. [Response, page 18]. The

4 Taxpayer argues that “[w]hen it added a protest remedy in 2013, the legislature added a remedy

5 where none existed before. The legislature’s addition of the protest remedy indicates that prior

6 to 2013 taxpayers did not have one. If, as the Department claims here, taxpayers had no refund

7 remedy either, then prior to 2013, taxpayers had no remedy at all.” [Response, page 18]. The

8 Taxpayer’s argument disregards the statutory opportunity to protest “the application to the

9 taxpayer of any provision of the Tax Administration Act”. See NMSA 1978, § 7-1-24 (2003) 7.

10 The Taxpayer’s argument also overlooks a 2005 published case in which the taxpayer filed an

11 administrative protest for a denial of an application for a tax credit, a remedy that the Taxpayer

12 argues did not exist before the 2013 amendment to the statute. See Team Specialty Prods. 2005-

13 NMCA-020 (an appeal from an administrative hearing where the taxpayer protested the

14 Department’s denial of its application for a tax credit). Consequently, the Taxpayer’s argument

15 is unpersuasive.

16 The Taxpayer questions why the Legislature would add the language to Section 7-1-24 in

17 2013 and argues that it “was apparently concerned that New Mexico’s tax procedures were

18 inadequate.” [Response, page 18]. However, the Taxpayer also acknowledges that the Fiscal

19 Impact Report regarding the 2013 amendment “says that the legislature intended to ‘make clear

20 that administrative processes apply to the denial or granting of a credit or rebate.’” [Response,

21 page 18]. Apparently, the 2013 amendment was meant to be a clarification. A clarification

22 occurs when, rather than changing an existing law, an amendment serves to make explicit what

7
This is the version of the statute immediately prior to the 2013 amendment.
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1 was previously implicit in the law. See Wood v. State Educ. Ret. Bd., 2011-NMCA-020, ¶ 25,

2 149 N.M. 455.

3 Section 7-1-26.

4 The Taxpayer argues that Section 7-1-26 allows taxpayers to file claims for refund when

5 the Department denies a tax credit. [Response, page 12]. The Taxpayer contends that “[t]he

6 language of Section 7-1-26(A) is not ambiguous. If the Department denies a tax credit or rebate,

7 then a taxpayer may claim a refund.” [Response, page 12].

8 The first step in statutory interpretation is to look at the plain language of the statute and

9 to refrain from further interpretation if the plain language is not ambiguous. See Marbob Energy

10 Corp. v. N.M. Oil Conservation Comm’n., 2009-NMSC-013, 146 N.M. 24. Statutes are to be

11 applied as written unless a literal use of the words would lead to an absurd result. See New

12 Mexico Real Estate Comm’n. v. Barger, 2012-NMCA-081, ¶ 7. If a statute is ambiguous or

13 would lead to an absurd result, then it should be construed in accordance with the legislative

14 intent or spirit and reason for the statute, even though it may require a substitution or addition of

15 words. See id. See also State ex rel. Helman v. Gallegos, 1994-NMSC-023, 117 N.M. 346. See

16 also Kewanee Indus., Inc. v. Reese, 1993-NMSC-006, 114 N.M. 784. When a statute is

17 ambiguous or would lead to an absurd result, it should be construed according to its obvious

18 purpose. See T-N-T Taxi Co. v. N.M. Pub. Regulation Comm’n, 2006-NMSC-016, ¶ 5, 139 N.M.

19 550.

20 Statutes are to be interpreted so that all of their terms are given effect and no term is

21 rendered surplusage or superfluous. See Helman, 1994-NMSC-023, ¶ 32. See also Pub. Serv. Co.

22 v. N.M. Taxation & Revenue Dep’t, 2007-NMCA-050, ¶ 39, 141 N.M. 520. See also Schneider

23 Nat’l, Inc. v. Taxation & Revenue Dep’t, 2006-NMCA-128, ¶ 10, 140 N.M. 561. “A person who

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1 believes that an amount of tax has been paid by or withheld from that person in excess of that for

2 which the person was liable, who has been denied any credit or rebate claimed or who claims a

3 prior right to property in the possession of the department…may claim a refund”. NMSA 1978, §

4 7-1-26 (A) (emphasis added).

5 The Taxpayer argues that the term “claimed” in Section 7-1-26 does not require a prior

6 approval of the credit by the Department. [Response, pages 15-17]. The Taxpayer argues that the

7 term “claim” should be given its ordinary meaning, which is to assert a legal right. [Response,

8 page 16]. A claim is generally the assertion of a legal right or “[a] demand for money or property

9 to which one asserts a right”. Black’s Law Dictionary, page 100 (pocket ed. 1996). A right is

10 “[a]n interest or expectation guaranteed by law”. Id., page 551.

11 The Taxpayer argues that a taxpayer does not apply for a credit; rather, a taxpayer just

12 claims a credit. [Response, page 20]. It is generally true that a taxpayer will claim a credit at the

13 same time that it claims a refund. A taxpayer claims the high-wage jobs tax credit by filing a

14 return, which will result in a refund if the credit exceeds liability. See NMSA 1978, § 7-9G-1 (M).

15 See also 3.1.9.8 NMAC (2010) (indicating that a completed return with overpayment or credit

16 claimed constitutes a claim for refund). However, the Taxpayer’s right to claim the tax credit is

17 not contemporaneous to and synonymous with the right to claim the refund. See NMSA 1978, § 7-

18 9G-1. The right to claim the high-wage jobs tax credit is afforded by statute, and the credit may

19 only be claimed once the application for the credit is approved by the Department. See NMSA

20 1978, § 7-9G-1. The Taxpayer’s Credit Application was denied, and the Taxpayer did not protest

21 that denial within 90 days. See NMSA 1978, § 7-1-24. Because the Credit Application was not

22 approved, there was no tax credit for which the Taxpayer could later assert a claim.

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1 The Taxpayer argues that “taxpayers may claim a refund any time the Department denies a

2 claim for a credit or rebate.” [Response, page 15]. The Taxpayer argues that the statute cannot

3 mean to apply “only ‘where the Department has denied the taxpayer’s claim of a credit that was

4 previously approved’”. [Response, page 15]. The Taxpayer argues that the Department cannot

5 approve a credit and also deny it. [Response, page 15]. The Taxpayer’s argument does not take

6 into account the provisions of the high-wage jobs tax credit statute. See NMSA 1978, § 7-9G-1.

7 The statute itself illustrates an example of when the Department has approved an application for

8 the credit, and then is required later to deny the claiming of that credit. See NMSA 1978, § 7-9G-1

9 (N) (requiring the Department to extinguish any amount of approved credit that has not already

10 been claimed when the taxpayer ceases doing business in New Mexico). The Taxpayer also

11 acknowledges that an application for credit might be approved by function of the statute when the

12 Department takes no action on the application, while the Department still retains the authority to

13 audit the taxes paid, including taxes that it determines result from tax credits found not to be valid.

14 [Response, pages 21-22]. See also NMSA 1978, § 7-1-29.2 (2003). Moreover, the statute itself

15 refers to various tax credit statutes, all of which place conditions on applying previously approved

16 credits toward tax liabilities. See NMSA 1978, § 7-1-26 (F) (2). In other words, claims for refund

17 are meant to address how a credit claimed is to be applied toward a tax liability, not to address a

18 taxpayer’s underlying eligibility for a tax credit that requires approval prior to being claimed. See

19 id. See also e.g. NMSA 1978, Section 7-9A-8 B (“A taxpayer having applied for and been granted

20 approval for a credit…”); NMSA 1978, Section 7-9E-5 and Section 7-9E-8 (eligibility must be

21 established prior to claiming credit); NMSA 1978, Section 7-9F-9 B (“A taxpayer having applied

22 for and been granted approval for a credit…”); NMSA 1978, Section 7-2E-1.1 G (“The holder of a

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1 tax credit document may apply all or a portion of the rural job tax credit granted by the

2 department…”).

3 The Taxpayer argues that limiting the claim for refund in this manner would render the

4 entire statute a nullity because it would require that the Department pre-approve all claims made

5 under that statute, which would effectively deny taxpayers the administrative remedy of claiming a

6 refund. [Response, page 19]. The Taxpayer again overlooks the specific requirements of the high-

7 wage jobs tax credit statute. See NMSA 1978, § 7-9G-1. The high-wage jobs tax credit statute

8 requires that the tax credit be approved prior to being claimed. See id. Not all tax credits require

9 an application and its approval before they may be claimed. See NMSA 1978, § 7-2A-14 (1995)

10 (the corporate-supported child care credit). See also Intel Corp. v. Taxation & Revenue Dep’t,

11 1995-NMCA-005, 122 N.M. 760 (the taxpayer filed a claim for refund based on the corporate-

12 supported child care credit and then protested the Department’s denial of the credit). Again, all

13 parts of a statute are to be read together, in conjunction with other statutes, to achieve a

14 harmonious whole. See Team Specialty Prods., 2005-NMCA-020, ¶ 9. See also Key, 1996-

15 NMSC-038, ¶ 14. See also State ex rel. Quintana, 1993-NMSC-033, ¶ 4.

16 The Taxpayer argues that the term “credit” and “tax credit” commonly are used

17 interchangeably, including in the Tax Administration Act and in the Department’s forms.

18 [Response, pages 24-26]. The Taxpayer also argues that the term “credit” in the statute cannot

19 mean a balance in favor of a taxpayer because some tax credits result in a reduction of taxable

20 income, rather than a reduction in the tax liability. [Response, pages 22-24]. The plain language

21 of the statute reveals the Legislature’s intent that it relate to claims for refund in which the state, as

22 a result of an overpayment or denial of a credit or rebate, becomes “indebted to the taxpayer for a

23 specified amount” of money. NMSA 1978, § 7-1-26 (E) (1) (b) (emphasis added). The plain

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1 meaning of the word “credit” is “2a: the balance in a person’s favor in an account” or “f: a

2 deduction from an amount otherwise due[.]” See https://www.merriam-webster.com/dictionary/

3 credit.

4 In other words, the statute requires that a taxpayer establish that a balance, in the form of a

5 credit claimed, actually exists in its favor, which results in the state’s indebtedness to the taxpayer.

6 See NMSA 1978, § 7-1-26. In this case, the Taxpayer cannot claim any high-wage jobs tax credit

7 because its application was not approved. See NMSA 1978, § 7-9G-1. Therefore, the Taxpayer

8 failed to establish that the state was indebted to it in any amount. See id. See also NMSA 1978, §

9 7-1-26.

10 Statutory interpretation should not lead to an absurd result.

11 The Taxpayer’s interpretation of Section 7-1-26 would, in effect, abolish many statutory

12 limitations. If Section 7-1-26 were to afford a separate and additional opportunity to protest the

13 denial of an application for a tax credit, it would render the deadlines to protest the denial of a tax

14 credit in Section 7-1-24 superfluous and meaningless. See NMSA 1978, § 7-1-24 (requiring a

15 protest be filed within 90 days). Again, statutes are to be interpreted so that all of their terms are

16 given effect and no term is rendered surplusage or superfluous. See Helman, 1994-NMSC-023, ¶

17 32. See also Pub. Serv. Co., 2007-NMCA-050, ¶ 39. See also Schneider Nat’l, Inc., 2006-NMCA-

18 128, ¶ 10.

19 The Taxpayer’s interpretation would also render parts of Section 7-1-26 superfluous and

20 meaningless. See NMSA 1978, § 7-1-26. Again, a taxpayer often asserts a claim to a tax credit by

21 making a claim for refund, and not all tax credits require an application and its approval before

22 they may be claimed. See NMSA 1978, § 7-2A-14 (1995) (the corporate-supported child care

23 credit). See also NMSA 1978, § 7-9G-1 (M). See also 3.1.9.8 NMAC (2010). If the Department

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1 denied the claim for refund based on its denial of a claimed credit that did not require an

2 application and pre-approval, then under the Taxpayer’s interpretation, the taxpayer could refile the

3 claim for refund instead of filing a protest or an action in court because “taxpayers may claim a

4 refund any time the Department denies a claim for a credit or rebate.” [Response, page 15]. Such

5 a result would be in direct contravention to the statute itself because “no claim may be refiled with

6 respect to that which was denied”. NMSA 1978, § 7-1-26 (D) (1). Reading a statute so that it

7 contradicts itself would lead to an absurd result, and interpretations of statutes that lead to absurd

8 results are not favored. See New Mexico Real Estate Comm’n., 2012-NMCA-081. See also

9 Helman, 1994-NMSC-023. See also Kewanee Indus., Inc., 1993-NMSC-006. See also T-N-T

10 Taxi Co., 2006-NMSC-016.

11 A taxpayer generally has two available administrative remedies, to file a protest or to file a

12 claim for refund. See Neff v. State ex rel. Taxation & Revenue Dep’t, 1993-NMCA-116, ¶ 16, 116

13 N.M. 240. The facts of the situation govern which remedy is available. See NMSA 1978, § 7-1-24

14 and § 7-1-26. Generally, when a taxpayer wishes to protest some action that the Department took

15 against the taxpayer, then a protest must be filed. See NMSA 1978, § 7-1-24 (indicating that

16 protests may be filed for an assessment, an application of the act, or a denial 8). Generally, when a

17 taxpayer wishes to prompt the Department to take an action in the taxpayer’s favor, then a claim

18 for refund must be filed. See NMSA 1978, § 7-1-26 (indicating that claims for refund may be filed

19 when a taxpayer is trying to get a sum of money or property from the Department). See also

20 3.1.9.8 NMAC (A) (2010) (indicating that the Department does not have the authority to initiate an

21 action in these circumstances without a claim for refund).

8
A denial also encompasses when the Department fails to take any action for a certain amount of time.
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1 In this case, the Taxpayer wishes to protest the action that the Department took against it

2 when the Department denied its Credit Application. Therefore, the Taxpayer should have filed a

3 protest within 90 days of that denial. See NMSA 1978, § 7-1-24. The Taxpayer failed to do so.

4 The Taxpayer then sought to file a claim for refund based upon a tax credit to which it had no right

5 because the Department had denied its Credit Application. See NMSA 1978, § 7-9G-1 and § 7-1-

6 26. The Taxpayer may not attempt to circumvent the statutory limitations on filing a protest by

7 filing a claim for refund. See NMSA 1978, § 7-1-24. See NMSA 1978, § 7-1-26.

8 CONCLUSIONS OF LAW

9 A. The Taxpayer filed a timely, written protest to the Department’s denial to its claim

10 for refund, and jurisdiction lies over the parties and the subject matter of this protest. See NMSA

11 1978, § 7-1-24 and § 7-1-26.

12 B. A hearing was conducted within 90 days of the protest, as required by the statute at

13 the time that the protest was filed. See NMSA 1978, Section 7-1B-8 (2015).

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

15 appropriate. See Elane Photography, LLC, 2013-NMSC-040. See also Romero, 2010-NMSC-

16 035. See also Roth, 1992-NMSC-011. See also Ute Park Summer Homes Ass’n, 1967-NMSC-

17 086. See also NMSA 1978, § 7-1B-8 (G) (2019).

18 D. The right to claim the high-wage jobs tax credit requires that the application for

19 the tax credit be approved by the Department. See NMSA 1978, § 7-9G-1.

20 E. The right to protest a denial of an application for the high-wage jobs tax credit is

21 contained exclusively in Section 7-1-24. See NMSA 1978, § 7-1-24.

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1 F. The right to claim a refund for the denial of a claimed credit does not provide an

2 alternative method to protest the denial of the tax credit application. See NMSA 1978, § 7-1-26

3 and § 7-1-24.

4 G. The Taxpayer failed to file a protest to the denial of the Credit Application within

5 90 days, at which time, the Department’s denial of the credit became indisputable. See NMSA

6 1978, § 7-1-24. See also Lopez, 1997-NMCA-115. See also Associated Petroleum Transp., Ltd.,

7 1949-NMSC-002.

8 For the foregoing reasons, the Department’s Motion for Summary Judgment IS HEREBY

9 GRANTED, and the Taxpayer’s protest IS DENIED.

10 DATED: July 23, 2020.

11 Dee Dee Hoxie
12 Dee Dee Hoxie
13 Hearing Officer
14 Administrative Hearings Office
15 P.O. Box 6400
16 Santa Fe, NM 87502

17 NOTICE OF RIGHT TO APPEAL

18 Pursuant to NMSA 1978, Section 7-1-25 (2015), the parties have the right to appeal this decision

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

20 above. If an appeal is not timely filed with the Court of Appeals within 30 days, this Decision and Order

21 will become final. Rule of Appellate Procedure 12-601 NMRA articulates the requirements of perfecting

22 an appeal of an administrative decision with the Court of Appeals. Either party filing an appeal shall file

23 a courtesy copy of the appeal with the Administrative Hearings Office contemporaneous with the Court of

24 Appeals filing so that the Administrative Hearings Office may begin preparing the record proper. The

25 parties will each be provided with a copy of the record proper at the time of the filing of the record proper

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1 with the Court of Appeals, which occurs within 14 days of the Administrative Hearings Office receipt of

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

3 CERTIFICATE OF SERVICE
4 On July 23, 2020, a copy of the foregoing Decision and Order was submitted to the parties listed
5 below in the following manner:
6 Email Email

7 INTENTIONALLY BLANK
8
9 John Griego
10 Legal Assistant
11 Administrative Hearings Office
12 P.O. Box 6400
13 Santa Fe, NM 87502

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