Can a rural health care practitioner claim a New Mexico income tax credit refund after the three-year statute of limitations has run, if the eligibility certificate came in late?

Plain-English summary

A rural health care practitioner lost her income tax credit refund because she filed the amended return claiming it nearly a month after the three-year deadline had passed.

Loretta Garrett worked as a rural health care practitioner in New Mexico during 2015. She and her husband, Brian, filed jointly. When she filed the couple's 2015 return (on November 21, 2016, under an extension), she did not claim New Mexico's rural health care practitioner tax credit (Section 7-2-18.22).

She later learned about the credit and applied for a certificate of eligibility, which the Department issued on March 1, 2019. Her accountant then prepared an amended 2015 return claiming the credit and a refund. The Department received that amended return on January 28, 2020, and denied it as untimely.

The hearing officer agreed with the Department. A claim for refund must be filed within three years of the end of the calendar year in which the tax was originally due (Section 7-1-26(F)). The 2015 personal income tax was due in 2016, so the three-year clock ran out on December 31, 2019. The refund claim, filed on January 28, 2020, was late.

Garrett argued she could not file until she had the eligibility certificate. But the certificate issued March 1, 2019—leaving roughly ten months before the deadline in which she could have filed. The Department is statutorily barred from paying a refund claim that comes in late (Section 7-1-26(B)), no matter how sympathetic the circumstances. The hearing officer noted the Department expressly thanked Garrett for her rural service, but gratitude could not extend the deadline.

Result: protest DENIED; the refund claim was barred by the statute of limitations.

What this means for you

The refund clock runs from when the tax was due—not from when you discover the credit

The three-year window is measured from the end of the year the tax was originally due. Finding out about a credit years later, or getting a certificate late, does not restart it. If you may be entitled to a refund, calculate the deadline off the original due date and protect it.

A pending certificate is not an excuse to sit on the deadline

Garrett had ten months between receiving her eligibility certificate and the deadline. If you are waiting on paperwork, file as soon as you can once you have it—and if the certificate itself is delayed, seek guidance before the window closes rather than after.

The Department cannot waive the limitations period

Even when it agrees the taxpayer did valuable work and would otherwise qualify, the Department has no authority to pay a late refund. The statute of limitations is a hard cutoff, not a matter of discretion or fairness.

Amended returns claiming a refund are still "claims for refund"

Filing an amended return to claim a credit is treated as a refund claim and must meet the same three-year deadline. Do not assume an amendment gets more time than an original refund request.

Common questions

Q: What was the deadline?
A: December 31, 2019—three years after the end of 2016, the year the 2015 tax was due.

Q: When did she actually file the claim?
A: The Department received the amended 2015 return claiming the refund on January 28, 2020, about four weeks late.

Q: Didn't the late eligibility certificate justify the delay?
A: No. The certificate issued March 1, 2019, leaving about ten months to file before the deadline.

Q: Could the Department make an exception for a rural health care provider?
A: No. The Department is statutorily barred from granting a refund claim filed after the limitations period, regardless of the taxpayer's circumstances.

Q: Is this the same deadline that other refund claimants face?
A: Yes. The three-year rule in Section 7-1-26 applies generally; a related decision (D&O 21-09) shows a taxpayer who met the same deadline and won.

Citations and references

Statutes:

• NMSA 1978, § 7-1-26(F) — a refund claim must be filed within three years of the end of the year the tax was due
• NMSA 1978, § 7-1-26(B) — the Department may consider a refund claim only if it is timely
• NMSA 1978, § 7-2-18.22 — rural health care practitioner tax credit
• NMSA 1978, § 7-2-12 — personal income tax return due date and extensions
• NMSA 1978, § 7-1B-8 (2019) — 90-day hearing requirement

Cases:

• In re Kilmer, 2004-NMCA-122 — the statute of limitations prevents stale claims and puts the burden on taxpayers to pursue refunds in a timely manner

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Brian and Loretta Garrett
• Decision PDF: D&O 21-01

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 BRIAN AND LORETTA GARRETT
6 TO THE DENIAL OF REFUND
7 ISSUED UNDER LETTER ID NO. L0684550832

8 v. AHO No. 20.10-129R, D&O No. 21-01

9 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

10 DECISION AND ORDER

11 On January 7, 2021, Hearing Officer Dee Dee Hoxie, Esq. conducted a videoconference

12 hearing on the merits of the denial of refund. The Taxation and Revenue Department

13 (Department) was represented by Richard Pener, Staff Attorney, who was present by internet

14 without video. Alma Tapia, Auditor, appeared by videoconference on behalf of the Department.

15 Loretta Garrett 1 (Taxpayer) appeared by videoconference and represented herself. The Taxpayer

16 and Ms. Tapia testified. The Hearing Officer took notice of all documents in the administrative

17 file. No exhibits were submitted.

18 The main issue to be decided is whether the Taxpayer’s claim for refund was barred by

19 the statute of limitations. The Hearing Officer considered all of the evidence and arguments

20 presented by both parties. The Hearing Officer finds in favor of the Department. IT IS

21 DECIDED AND ORDERED AS FOLLOWS:

1
Brian and Loretta Garrett are a married couple who filed jointly. The denial of refund at issue is in regards to
Loretta Garrett’s claim of a credit as a rural healthcare practitioner. Therefore, the singular “Taxpayer” is used
throughout this decision.
Brian and Loretta Garrett
Case No. 20.10-129R
page 1 of 6
1 FINDINGS OF FACT

2 1. On February 7, 2020, under letter id. no. L0684550832, the Department issued a

3 denial of refund to the Taxpayer based on the statute of limitations for filing a claim for refund.

4 [Administrative file, Testimony of Taxpayer, Testimony of Ms. Tapia].

5 2. On March 25, 2020, the Taxpayer filed a written protest to the denial.

6 [Administrative file, Testimony of Taxpayer, Testimony of Ms. Tapia].

7 3. On April 30, 2020, the Department acknowledged its receipt of the protest.

8 [Administrative file].

9 4. On October 27, 2020, the Department filed a Request for Hearing.

10 [Administrative File].

11 5. On October 27, 2020, the Administrative Hearings Office sent notice of

12 administrative hearing by videoconference to the parties. [Administrative file].

13 6. The hearing was held within 90 days of the request for hearing, as required by

14 statute. See NMSA 1978, § 7-1B-8 (2019).

15 7. During the 2015 tax year, the Taxpayer was working in New Mexico as a rural

16 healthcare practitioner. [Testimony of Taxpayer].

17 8. Personal income taxes and returns for the 2015 tax year were due in April 2016,

18 but the Taxpayer had an extension to file her return to October 2016. [Testimony of Taxpayer].

19 See also NMSA 1978, § 7-2-12 (2016).

20 9. The Taxpayer filed her 2015 tax return on November 21, 2016. [Testimony of

21 Taxpayer].

Brian and Loretta Garrett
Case No. 20.10-129R
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1 10. The Taxpayer did not claim a rural healthcare practitioner credit when she

2 initially filed her 2015 tax return. [Testimony of Taxpayer]. See NMSA 1978, § 7-2-18.22

3 (2007).

4 11. Some time after she filed her 2015 tax return, the Taxpayer became aware of the

5 rural healthcare practitioner credit (the credit). The Taxpayer then applied for a certificate of

6 eligibility for the credit. [Testimony of Taxpayer]. See NMSA 1978, § 7-2-18.22.

7 12. A certificate of eligibility for the credit for the 2015 tax year was issued to the

8 Taxpayer on March 1, 2019. [Testimony of Taxpayer, Administrative file].

9 13. On January 24, 2020, the Taxpayer’s accountant prepared an amended 2015 tax

10 return, claiming the credit and a refund. The Department received and filed the amended return

11 on January 28, 2020. [Testimony of Taxpayer, Testimony of Ms. Tapia, Administrative file].

12 DISCUSSION

13 Statute of Limitations for Filing a Claim.

14 Generally, a claim for refund must be filed within three years of the end of the calendar

15 year in which the payment was originally due. See NMSA 1978, §7-1-26 (F) (2019)2. The

16 Taxpayer’s personal income taxes for the 2015 tax year were due and paid in 2016. Therefore,

17 the Taxpayer could file a claim for refund for the 2015 tax year three years from the end of 2016

18 when the taxes were due. Three years from the end of 2016 was December 31, 2019. The

19 Taxpayer’s claim for refund for the 2015 tax year was filed with the Department on January 28,

20 2020. Consequently, the Taxpayer’s claim for refund was not timely and was properly denied.

2
For ease of reference, the 2019 version of the statute is used, but previous versions of the statute also contained the
three-year limitation and would apply to the 2015 tax year.
Brian and Loretta Garrett
Case No. 20.10-129R
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1 The Taxpayer argues that she was unable to file the claim for refund until she received

2 the certificate of eligibility. The Department points out the Taxpayer received the certificate of

3 eligibility on March 1, 2019, which essentially left 10 months in 2019 during which the

4 Taxpayer could have filed her claim for refund. The Taxpayer argues that she is entitled to the

5 credit and that healthcare practitioners, particularly those who serve in rural areas, should be

6 given special consideration. The Department acknowledges the importance of New Mexico’s

7 healthcare practitioners and expresses its gratitude for the Taxpayer’s services. However, the

8 Department is statutorily barred from granting a claim for refund that is filed late. See NMSA

9 1978, § 7-1-26 (B) (allowing the Department to consider claims for refund only when they are

10 filed within the time limitations). See In re Kilmer, 2004-NMCA-122, ¶ 16, 136 N.M. 440

11 (noting that the statute of limitations prevents stale claims and places the burden on taxpayers to

12 pursue their claims in a timely manner).

13 CONCLUSIONS OF LAW

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

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

16 B. The hearing was held within 90 days of the request for hearing. See NMSA 1978,

17 Section 7-1B-8.

18 C. The Taxpayer’s claim for refund for the 2015 tax year was not filed within three

19 years of when the tax was due. See NMSA 1978, § 7-1-26.

20 D. The Taxpayer’s claim for refund was barred by the statute of limitations. See id.

21 See also In re Kilmer, 2004-NMCA-122.

Brian and Loretta Garrett
Case No. 20.10-129R
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1 For the foregoing reasons, the Taxpayer’s protest IS DENIED.

2 DATED: January 20, 2021.

3 Dee Dee Hoxie
4 Dee Dee Hoxie
5 Hearing Officer
6 Administrative Hearings Office
7 P.O. Box 6400
8 Santa Fe, NM 87502

9 NOTICE OF RIGHT TO APPEAL

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

11 decision by filing a notice of appeal with the New Mexico Court of Appeals within 30 days of the

12 date shown above. If an appeal is not timely filed with the Court of Appeals within 30 days, this

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

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

15 party filing an appeal shall file a courtesy copy of the appeal with the Administrative Hearings Office

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

17 begin preparing the record proper. The parties will each be provided with a copy of the record proper

18 at the time of the filing of the record proper with the Court of Appeals, which occurs within 14 days

19 of the Administrative Hearings Office receipt of the docketing statement from the appealing party.

20 See Rule 12-209 NMRA.

Brian and Loretta Garrett
Case No. 20.10-129R
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1 CERTIFICATE OF SERVICE

2 On January 20, 2021, a copy of the foregoing Decision and Order was submitted to the parties
3 listed below in the following manner:
4 Email Email

5 INTENTIONALLY BLANK
6
7 John Griego
8 Legal Assistant
9 Administrative Hearings Office
10 P.O. Box 6400
11 Santa Fe, NM 87502

Brian and Loretta Garrett
Case No. 20.10-129R
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