New Mexico assessed me weight distance tax on trucks I ran through the state, but I already paid the port-of-entry trip tax — do I owe both, and was the assessment even on time?

Plain-English summary

Tyree Oil won its protest, and the whole assessment was abated. Tyree Oil is an Oregon-based motor carrier that, in 2014, sent trucks into New Mexico to provide a railroad-lubricator refilling service. In July 2020 the Department assessed it $4,942.71 in weight distance tax and related charges — $1,686.75 in tax and permit, $337.35 civil penalty, $418.61 interest, and a $2,500 weight-distance underreporting penalty — for the periods from January through September 2014. The assessment came from a mismatch between the New Mexico miles Tyree reported on its International Fuel Tax Agreement (IFTA) filings and its weight distance tax returns, which were never filed.

The problem for the Department: Tyree had paid the port-of-entry "trip tax" on those same trips. New Mexico's Trip Tax Act imposes that fee "in lieu of registration fees and the weight distance tax" on out-of-state commercial carriers (NMSA 1978, § 7-15-3.1(A)). Hearing Officer Ignacio Gallegos read "in lieu of" by its plain meaning — "instead of" — and held:

• Paying the trip tax means no weight distance tax. Because the trip tax stands in place of the weight distance tax for a foreign-based carrier, Tyree was not subject to the weight distance tax and was not required to file weight distance tax returns. Using the Department's own spreadsheet of Tyree's trip-tax payments, the taxpayer rebutted the presumption that the assessment was correct.
• The Department did not defend the assessment. Once the presumption was rebutted, the burden shifted back to the Department, which produced no evidence that a real mileage discrepancy existed — and did not respond to the hearing officer's order for additional briefing on the dispositive trip-tax issue. Under the regulations, that silence let the hearing officer infer the point was conceded.
• The assessment was untimely. Because Tyree was not required to file, it was not a "non-filer," so the extended seven-year window (and the six-year window for a 25% understatement) did not apply. Under the ordinary three-year limit, a 2020 assessment reaching back to 2014 was too late.

Result: protest GRANTED. The Department must abate the tax, penalty, and interest.

What this means for you

For out-of-state carriers, the trip tax is paid instead of the weight distance tax

If a foreign-based commercial motor carrier pays New Mexico's port-of-entry trip tax for its trips, that fee is imposed "in lieu of" both registration fees and the weight distance tax. You should not owe weight distance tax on the same trips, and you are not required to file weight distance tax returns for them.

If you weren't required to file, you can't be treated as a "non-filer"

This is the pivotal point. The Department's longer assessment windows — seven years for non-filers, six years for a large understatement — depend on the taxpayer actually having a filing duty it ignored. When no return was required in the first place, only the ordinary three-year limit applies, and an older assessment is untimely.

The Department's own records can be your best evidence

Tyree rebutted the assessment using a spreadsheet of its trip-tax payments that the Department itself had produced. If the agency's records show you complied, use them.

Once you rebut the presumption, the Department has to prove its case — and silence can cost it

An assessment starts out presumed correct, but a taxpayer who rebuts it shifts the burden back to the Department. Here the Department offered no supporting evidence and ignored an order to brief the key issue, which let the hearing officer infer the issue was conceded. Agencies, like taxpayers, must engage with a dispositive point or risk losing it.

Common questions

Q: Did Tyree get everything abated?
A: Yes. The hearing officer ordered the Department to abate the entire assessment — the tax, the civil penalty, the underreporting penalty, and the interest.

Q: Why didn't Tyree owe weight distance tax if its trucks used New Mexico roads?
A: Because it paid the port-of-entry trip tax, which the statute imposes "in lieu of" the weight distance tax for out-of-state carriers. Paying one satisfies the highway-use obligation; the state cannot also collect the other on the same trips.

Q: The assessment was for 2014 but issued in 2020 — how is that too late?
A: The general limit to assess is three years. The Department relied on the seven-year non-filer window, but Tyree was not required to file weight distance tax returns (it paid the trip tax), so it was not a non-filer and the three-year limit controlled. A 2020 assessment of 2014 tax fell outside it.

Q: What happened when the Department ignored the order for more briefing?
A: The regulations let the hearing officer infer that an unbriefed issue is adverse to the party that stayed silent. Because the Department did not respond on the dispositive trip-tax question, the hearing officer treated it as effectively conceded.

Q: Can another taxpayer rely on this decision?
A: No. It resolved this taxpayer's protest on its specific facts and the law in effect at the time. Another carrier should analyze its own filings, payments, and current law.

Citations and references

Statutes and regulations:

• NMSA 1978, §§ 7-15A-1 to 7-15A-8 — the Weight Distance Tax Act; imposes the tax and sets the rate by vehicle weight and New Mexico miles driven
• NMSA 1978, §§ 7-15-1 to 7-15-6 — the Trip Tax Act
• NMSA 1978, § 7-15-3.1 (A) (2005) — the trip tax is a use fee imposed "in lieu of" registration fees and the weight distance tax on foreign-based commercial motor carrier vehicles
• NMSA 1978, § 7-1-18 (2013) — time limits on assessment: subsection (A) three years generally; subsection (C) seven years for non-filers; subsection (D) six years for a 25% understatement
• NMSA 1978, § 7-1-17 (C) (2007) — an assessment is presumed correct and the taxpayer bears the burden to overcome it
• NMSA 1978, § 7-1-3 (Z) (2019) — "tax" includes interest and civil penalty, so the presumption covers those too
• NMSA 1978, § 7-1-24 (D) (2019) — protest requirements
• NMSA 1978, §§ 7-1B-6 (D)(2) and 7-1B-8 (F) (2019) — the hearing officer may order written briefing; 90-day hearing timing
• NMSA 1978, § 7-1-25 (2015) — right to appeal the decision to the New Mexico Court of Appeals
• NMSA 1978, §§ 12-2A-1 to 12-2A-20 — Uniform Statute and Rule Construction Act; the text of a statute is the primary source of its meaning
• Regulation 3.1.6.13 NMAC — the presumption of correctness extends to assessed penalty and interest
• Regulation 22.600.3.18 (A)(3) NMAC — the hearing officer may infer that an issue a party fails to brief is adverse to that party

Cases:

• Archuleta v. O'Cheskey, 1972-NMCA-165, 84 N.M. 428 — a taxpayer bears the burden to overcome the presumption of correctness
• N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-NMCA-099, 336 P.3d 436 — the taxpayer's burden to show entitlement to abatement of an assessment
• MPC Ltd. v. N.M. Taxation & Revenue Dep't, 2003-NMCA-021, 133 N.M. 217 — once the taxpayer rebuts the presumption, the burden shifts back to the Department
• Chevron U.S.A., Inc. v. State ex rel. Dep't of Taxation & Revenue, 2006-NMCA-050, 139 N.M. 498 — agency regulations interpreting a statute are presumed proper and given substantial weight
• State v. Hubble, 2009-NMSC-014, 146 N.M. 70 — statutory construction begins with the plain meaning of the words chosen by the legislature
• State v. Lindsey, 2017-NMCA-048, 396 P.3d 199 — courts use dictionary definitions to determine the ordinary meaning of undefined statutory terms

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Tyree Oil Inc
• Decision PDF: D&O 22-10

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 TYREE OIL INC.
6 TO ASSESSMENT ISSUED UNDER
7 LETTER ID NO. L0776238768

8 v. Case Number 21.03-012A; D&O #22-10

9 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

10 DECISION AND ORDER

11 On August 25, 2021, Hearing Officer Ignacio V. Gallegos, Esq., conducted an

12 administrative hearing on the merits in the matter of the tax protest of Tyree Oil Inc. (Taxpayer)

13 pursuant to the Tax Administration Act and the Administrative Hearings Office Act. At the

14 hearing, Payton Wayne, Chief Financial Officer, and Christopher Swires, Tax Compliance

15 specialist, appeared representing Taxpayer and as Taxpayer’s witnesses. Staff Attorney Peter

16 Breen appeared, representing the opposing party in the protest, the Taxation and Revenue

17 Department (Department). Department protest auditor Elvis Dingha appeared as a witness for the

18 Department. The parties stipulated to the admission of late-filed exhibits, and Taxpayer exhibits

19 1 through 5 were received within the timeframes allowed and are admitted. Exhibits are more

20 fully described in the Exhibit Log, which is made part of the Administrative File. Parties agreed

21 that the Taxpayer’s Motion to Dismiss and the Department’s Response to the Motion to Dismiss

22 would be considered as argument on the merits.

23 Based on the evidence in the record, after making findings of fact, the Hearing Officer finds

24 that Taxpayer overcame the presumption of correctness that attached to the Department’s

25 assessment, which disregarded Taxpayer’s port of entry payments under the Trip Tax Act,

In the Matter of the Protest of Tyree Oil, page 1 of 15.
1 superseding the application of the Weight Distance Tax, therefore the Taxpayer’s protest must be

2 granted. IT IS DECIDED AND ORDERED AS FOLLOWS:

3 FINDINGS OF FACT

4 Procedural findings

5 1. On July 9, 2020, the Department issued a Notice of Assessment of Taxes and

6 Demand for Payment to Tyree Oil Inc. for weight distance tax reporting periods beginning

7 January 1, 2014 and ending September 30, 2014. The assessment was for weight distance tax

8 and permit of $1,686.75, civil penalty of $337.35, interest of $418.61, and weight distance

9 underreporting penalty of $2,500.00 for a total assessment due of $4,942.71. [Letter ID#

10 L0776238768].

11 2. On August 6, 2020, the Taxpayer submitted a letter of protest (form ACD-31094)

12 alleging that the Department erred in issuing the assessment because the tax liability had already

13 been satisfied by paying port-of-entry taxes paid, that the miles were driven on private roadways

14 associated with railways, and it was beyond the statute of limitations. [Administrative file].

15 3. On August 31, 2020, the Department issued a letter acknowledging a timely

16 protest of the Notice of Assessment. [Letter ID# L1017728688].

17 4. On March 1, 2021, the Department filed a Request for Hearing asking that the

18 Taxpayer’s protest be scheduled for a scheduling hearing, alleging the amount at protest was

19 $4,942.71. [Administrative file].

20 5. On March 1, 2021, the Department filed an Answer to Protest challenging the

21 Taxpayer’s protest, denying the claim of an assessment beyond the statute of limitations, and

22 asserting that it is the Taxpayer’s duty to maintain records that support its tax compliance.

23 [Administrative file].

In the Matter of the Protest of Tyree Oil, page 2 of 15.
1 6. On March 3, 2021, the Administrative Hearings Office sent a Notice of

2 Telephonic Scheduling Hearing, setting the matter for a telephonic scheduling conference on

3 March 19, 2021. The notice was sent to all parties by email only. [Administrative file].

4 7. On March 19, 2021, the undersigned Hearing Officer conducted a telephonic

5 scheduling hearing with the parties present by telephone conference. Mr. Christopher Swires

6 and Mr. Payton Wayne appeared representing Taxpayer. Staff Attorney Peter Breen appeared

7 representing the Department. The hearing was conducted within 90-days of the Department’s

8 request for hearing, pursuant to NMSA 1978, Section 7-1B-8 (F). Parties did not object that the

9 hearing satisfied the deadline. The Hearing Officer preserved an audio recording of the hearing.

10 [Administrative file].

11 8. On March 19, 2021, the Administrative Hearings Office sent a Scheduling Order

12 and Notice of Motion Hearing, setting various deadlines and giving the parties notice that the

13 motion hearing would take place by videoconference on July 20, 2021, and providing a unique

14 URL with which to participate. The notice was sent to all parties by email only. [Administrative

15 file].

16 9. On June 29, 2021, the Department filed its Preliminary Exhibit List with the

17 Administrative Hearings Office, providing copies of the proposed exhibits to Taxpayer’s

18 representatives by email. [Administrative file].

19 10. On July 20, 2021, the undersigned Hearing Officer conducted a hearing by

20 videoconference, which had to be converted to a scheduling conference because Taxpayer had

21 not filed its proposed motion in accordance with the Scheduling Order. Christopher Swires

22 appeared at the hearing on behalf of Taxpayer. Attorney Peter Breen appeared at the hearing on

In the Matter of the Protest of Tyree Oil, page 3 of 15.
1 behalf of the Department. The Hearing Officer preserved an audio recording of the hearing.

2 [Administrative file].

3 11. On July 20, 2021, the Administrative Hearings Office sent a Notice of

4 Administrative Hearing, giving the parties notice that the merits hearing would take place by

5 videoconference on August 25, 2021, and providing a unique URL with which to participate.

6 The notice was sent to all parties by email only. [Administrative file].

7 12. On August 6, 2021, Taxpayer submitted its Motion to Dismiss, citing port-of-

8 entry payments as a rationale for falling outside the extended statute of limitations for issuance

9 of assessments. [Administrative file].

10 13. On August 13, 2021, the Department submitted its Response to Motion to

11 Dismiss, accompanied by a Declaration of Valerie Garcia, asserting that as a non-filer the

12 utilization of the extended statute of limitations for issuance of the assessment was proper.

13 [Administrative file].

14 14. The undersigned Hearing Officer conducted a hearing on the merits of Taxpayer’s

15 protest on August 25, 2021 by video conference using the Zoom video conference application.

16 Taxpayer’s representatives Christopher Swires and Payton Wayne appeared at the merits hearing

17 by video. The Department was represented by Staff Attorney Peter Breen, who appeared by

18 video conference. Witness Elvis Dingha appeared by video conference. The Taxpayer’s Motion

19 to Dismiss and the Department’s Response to Motion to Dismiss are considered as closing

20 arguments since they were late-filed and contained no stipulations of fact. The Hearing Officer

21 preserved an audio record of the hearing. [Administrative file].

In the Matter of the Protest of Tyree Oil, page 4 of 15.
1 15. Following the hearing, on August 25, 2021, Taxpayer submitted an email

2 containing Taxpayer Exhibits 1, 2, 3, 4, and 5. Without objection from the Department, the

3 exhibits were admitted. [Administrative file].

4 16. On March 3, 2022, the Hearing Officer issued an Order Requesting Additional

5 Briefing. The Order provided parties an additional 14 days from the date of issuance to meet and

6 confer, file responsive briefs, request a status hearing, or any combination of those options.

7 [Administrative file].

8 17. On March 24, 2022, twenty-one days after the issuance of the Order Requesting

9 Additional Briefing, the Administrative Hearings Office had received no response from either

10 party. The Administrative Hearings Office emailed parties reminding them of the deadline, and

11 resending the Order Requesting Additional Briefing. [Administrative file].

12 18. As of the date and time of issuance of this decision and order, which is more than

13 two weeks after the reminder email in the previous finding of fact, no additional briefs or

14 documents were submitted by parties following the invitation to submit additional information,

15 briefs, or requests as outlined in the Order Requesting Additional Briefing. [Administrative file]

16 Substantive findings

17 19. Taxpayer Tyree Oil Inc., during the timeframes at issue in 2014, was a company

18 based in Oregon, which provided a railroad lubricating service in New Mexico. [Administrative

19 file; Examination of Payton Wayne, H.R. 23:00-23:45, 25:30-26:55; Direct examination of Chris

20 Swires, H.R. 27:45-28:00; Cross examination of P. Wayne, H.R. 31:05-33:30; Taxpayer exhibit

21 5].

In the Matter of the Protest of Tyree Oil, page 5 of 15.
1 20. The Department issued a Notice of Assessment of tax based on a mismatch

2 between New Mexico miles as reported on International Fuel Tax Agreement (IFTA) returns,

3 compared to New Mexico weight distance tax returns, which were never filed. [Administrative

4 file; Direct examination of E. Dingha, H.R. 37:00-38:40; Taxpayer exhibit 5].

5 21. The Taxpayer paid port-of-entry fees during the timeframes at issue. The port-of-

6 entry fees were referred to as “trip tax” within the exhibit spreadsheet. [Department Attorney

7 colloquy/opening, H.R. 18:15-19:05; Examination of C. Swires, H.R. 28:15-28:40; Examination

8 of E. Dingha, H.R. 39:15-39:50; Taxpayer Exhibit #5].

9 22. The Taxpayer’s port-of-entry payments contained on the spreadsheet cover the

10 periods from December 31, 2011 through September 30, 2014. For the period covered by the

11 assessment (January 1, 2014 through September 30, 2014), there were eighteen entries. Each

12 entry contains several columns, identifying the Taxpayer FEIN, filing period, port name, account

13 number, DOT number, Taxpayer name, Taxpayer address, the vehicle license plate number,

14 permit type, make, model year, miles, trip tax, payment, transaction date, amount due, method of

15 payment (cash or credit), and original DOT number. During the relevant period, the taxes paid

16 total $642.82, and the miles associated with these payments total 6,556 miles. The tax is called a

17 “trip tax” within the Department’s document. [Taxpayer’s Exhibit #5].

18 23. Taxpayer representatives Christopher Swires and Payton Wayne were unable to

19 reconstruct Taxpayer’s mileage records for the tax periods at issue, reporting that records had

20 been destroyed prior to the audit and assessment. The only records available were Department

21 records. [Administrative file; Examination of P. Wayne, H.R. 23:45-24:40, 25:30-26:55; Cross

22 examination of P. Wayne, H.R. 33:50-34:40; Examination of C. Swires, H.R. 27:40-28:00;

23 Taxpayer exhibit 5].

In the Matter of the Protest of Tyree Oil, page 6 of 15.
1 24. The Department agreed to provide some credit, and at times full abatement (later

2 retracted), for payments made by Taxpayer. [Examination of C. Swires, H.R. 28:50-29:30;

3 Examination of E. Dingha, H.R. 39:25-39:55; Cross examination of E. Dingha, H.R. 41:00-

4 42:00; Taxpayer exhibits 1,2,3,4].

5 DISCUSSION

6 Port of Entry payments and the Trip Tax Act rebut the presumption of correctness.

7 The Taxpayer is a motor carrier based in Eugene, Oregon. Taxpayer provided a railroad

8 lubricator refilling service in 2014. During that time, Taxpayer paid port-of-entry fees, known as

9 a Trip Tax, for the vehicles it operated in New Mexico. The assessment issued under the Weight

10 Distance Tax Act came after a comparison of mileage travelled as reported under the

11 International Fuel Tax Agreement (IFTA) and weight distance tax reporting. Taxpayer’s protest

12 presents a question of whether a trip tax which is imposed in lieu of the weight distance tax is

13 able to rebut the presumption of correctness in an assessment issued six years after the weight

14 distance tax would have been due.

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

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

17 Archuleta v. O'Cheskey, 1972-NMCA-165, ¶11, 84 N.M. 428, 504 P.2d 638. Unless otherwise

18 specified, for the purposes of the Tax Administration Act, “tax” is defined to include interest and

19 civil penalty. See NMSA 1978, Section 7-1-3 (Z) (2019); see also Regulation § 3.1.1.16

20 (12/29/2000). Under Regulation § 3.1.6.13 NMAC, the presumption of correctness under Section

21 7-1-17 (C) extends to the Department’s assessment of penalty and interest. See Chevron U.S.A.,

22 Inc. v. State ex rel. Dep't of Taxation & Revenue, 2006-NMCA-050, ¶16, 139 N.M. 498, 134 P.3d

In the Matter of the Protest of Tyree Oil, page 7 of 15.
1 785 (agency regulations interpreting a statute are presumed proper and are to be given substantial

2 weight). Accordingly, it is a taxpayer’s burden to present some countervailing evidence or legal

3 argument to show that they are entitled to an abatement, in full or in part, of the assessment

4 issued in the protest. See N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-NMCA-099,

5 ¶8, 336 P.3d 436.

6 Here, Taxpayer provided a document which it had obtained from the Department, showing

7 that it had paid port-of-entry taxes. The taxes were described within the document as “Trip Tax.”

8 The trip tax is a highway usage fee similar to the weight distance tax. NMSA 1978, Section 7-15-

9 2.1 (G); NMSA 1978, Section 7-15A-3. Both the trip tax and the weight distance tax impose a fee

10 depending on the weight of the vehicle, and the miles driven on New Mexico highways. NMSA

11 1978, Section 7-15-3.1 (B); NMSA 1978, Section 7-15A-8. However, the trip tax “is imposed in

12 lieu of registration fees and the weight distance tax on the registrant, owner or operator of any

13 foreign-based commercial motor carrier vehicle…” NMSA 1978, Section 7-15-3.1 (A) (emphasis

14 added).

15 The Uniform Statue and Rule Construction Act, NMSA 1978, Section 12-2A-1 through

16 Section 12-2A-20, provides guidance in interpretation of statutes and regulations. “The text of a

17 statute or rule is the primary, essential source of its meaning.” NMSA 1978, Section 12-2A-19. A

18 statutory construction analysis begins by examining the words chosen by the legislature and the

19 plain meaning of those words. See State v. Hubble, 2009-NMSC-014, ¶13, 146 N.M. 70, 206 P.3d

20 579. When interpreting undefined terms in a statute, courts often use dictionary definitions to

21 ascertain the ordinary meaning of words and phrases. State v. Lindsey, 2017-NMCA-048, ¶14, 396

22 P.3d 199. The phrase “in lieu of” is a well-worn phrase in legal writing and should not require much

23 interpretation. The online Merriam-Webster Dictionary defines the noun “lieu” as “place, stead,”

In the Matter of the Protest of Tyree Oil, page 8 of 15.
1 defines the phrase “in lieu” as “instead,” and defines the phrase “in lieu of” as “in the place of”

2 or “instead of.”1

3 So, by imposing the trip tax, the Department placed a use tax in lieu of, or instead of, a

4 weight distance tax on this out-of-state carrier. By paying the trip tax at the port of entry, the

5 Taxpayer proved that it was not subject to the weight distance tax reporting and payment

6 requirements, thus rebutting the presumption of correctness that attached to the assessment.

7 When a taxpayer presents sufficient evidence to rebut the presumption, the burden shifts

8 to the Department to show that the assessment is correct. See MPC Ltd. v. N.M. Taxation &

9 Revenue Dep't, 2003-NMCA-21, ¶13, 133 N.M. 217, 62 P.3d 308. Following the presentation of the

10 evidence of payment of the trip tax, the Department did not present any evidence to support a

11 finding that the assessment was correct. While the Department had mentioned in its Preliminary

12 Exhibit List that there was a notice of intent to assess dated April 23, 2020, showing a mileage

13 discrepancy, it did not present the document at the hearing or thereafter for consideration by the

14 Hearing Officer. The Department acknowledged at the hearing that some sort of credit was due

15 Taxpayer for the port-of-entry taxes paid. And after the Hearing Officer gave a fair opportunity

16 to submit additional briefing on the apparent dispositive language of the Trip Tax in this protest,

17 the Department did not provide any additional legal argument, response, or additional documents

18 in support of its assessment. Furthermore, no documents were submitted by the Department to

19 show that a discrepancy existed, or how to calculate a credit against the purported discrepancy.

20 For unknown reasons, the Department did not submit the briefing ordered by the Hearing

21 Officer in the Order Requesting Additional Briefing. The Hearing Officer had clear authority to

22 require the Department to submit additional briefing in support of its assessment under NMSA

1
Online definition is available at: https://www.merriam-webster.com/dictionary/lieu (last visited 03/29/2022).

In the Matter of the Protest of Tyree Oil, page 9 of 15.
1 1978, Section 7-1B-6 (D) (2) (2019) (allowing the hearing officer to order written briefing on the

2 case). See also Regulation 22.600.3.23 NMAC; see also 22.600.3.26 NMAC. By not submitting

3 the ordered briefing on the identified potentially determinative issue when given the extended

4 opportunity to do so, Regulation 22.600.3.18 (A)(3) NMAC (8/25/2020) permits the Hearing

5 Officer to infer that the issue is adverse to the Department’s position and as such, the Hearing

6 Officer infers that the Department has effectively conceded on that determinative issue. Here, the

7 Taxpayer, using the Department’s own records, rebutted the assessment of weight distance tax.

8 The Department did not provide facts or argument to uphold the assessment even after being

9 given an opportunity thereafter to respond. Consequently, the Taxpayer has overcome the

10 presumption of correctness and the Department has failed to reestablish the correctness of its

11 assessment.

12 Time limit on assessments.

13 Generally, an assessment must be made within three years from the end of the calendar year

14 in which payment of the tax was due. See NMSA 1978, Section 7-1-18 (A) (2013). Because

15 Taxpayer was alleged to be a non-filer in the three quarters of 2014 that its trucks travelled on New

16 Mexico roads, the Department issued an assessment in 2020 looking as far back as January of 2014.

17 The primary contention of Taxpayer was that because it had paid at the port of entry, it was not a

18 non-filer, hence the assessment was beyond the statutory limit.

19 The fact that this Taxpayer is an out-of-state carrier, and it paid port-of-entry taxes under the

20 Trip Tax Act, fortifies the Taxpayer’s position that it was not required to report and pay weight

21 distance taxes. See NMSA 1978, Section 7-15-3. The primary evidence that trip tax was paid was

22 contained in a spreadsheet forwarded to the Taxpayer by the Department and provided in

In the Matter of the Protest of Tyree Oil, page 10 of 15.
1 evidence by Taxpayer. The spreadsheet itemized Taxpayer’s port of entry payments from

2 December 31, 2011 through September 30, 2014. For the period covered by the assessment

3 (January 1, 2014 through September 30, 2014), there were eighteen entries. Each entry contains

4 several columns, identifying, in pertinent part, the Taxpayer, the vehicle license plate number,

5 state of issue of the license plate, make, model year, miles, trip tax, payment, transaction date,

6 amount due, method of payment, and DOT number. During the relevant period, the taxes paid

7 total $642.82, and the miles associated with these payments total 6,556 miles. The tax is called a

8 “trip tax” within the Department’s document.

9 The Trip Tax Act details the goals and the mechanics of this highway use tax. NMSA 1978,

10 Section 7-15-1 through 7-15-6. As part of the Trip Tax Act, the statute indicates that “a use fee, to be

11 known as the “trip tax”, is imposed in lieu of registration fees and the weight distance tax on the

12 registrant, owner or operator of any foreign-based commercial motor carrier vehicle” which meets

13 the list of requirements. See NMSA 1978, Section 7-15-3.1 (A) (emphasis added). Since the tax was

14 assessed and collected at the ports of entry, the Department should have have known that the

15 Taxpayer was not subject to the weight distance tax act. The statute is clear in its plain meaning and

16 must be determinative of the issues at protest. In lieu of means in place of, or instead of. Imposing

17 this trip tax in lieu of a weight distance tax foreclosed application of the weight distance tax and

18 should have prevented the subsequent assessment issued under the weight distance tax act six years

19 after the time the trip tax was paid. The Taxpayer was not required to file weight distance tax returns

20 or pay a weight distance tax, hence the Taxpayer cannot be termed a non-filer when it was not

21 required to file.

22 The Taxpayer’s contention that no return was necessary when it paid at the port of entry

23 is accurate. When the trip tax was imposed “in lieu of” the weight distance tax, no weight

24 distance tax return was required. The Department’s extension of the time limit for assessment from

In the Matter of the Protest of Tyree Oil, page 11 of 15.
1 three years to seven years from the end of the calendar year in which payment of the tax was due,

2 based on non-filer status, was improper. See Section 7-1-18 (C) (2013). Likewise, The

3 Department’s extension of the time limit for assessment from three years to six years from the end

4 of the calendar year in which payment of the tax was due, based on understatement of tax by

5 twenty-five percent, was also improper. See Section 7-1-18 (D) (2013). Therefore, the assessment

6 made in 2020 for tax reporting periods ending September 30, 2014 was untimely, outside the time

7 limits set forth in Section 7-1-18 (C) and (D).

8 It should be noted that the Department had opportunities to present evidence that would

9 contradict the Taxpayer’s evidence but did not take the opportunity. No evidence supported the

10 Department’s allegation that there was a discrepancy between the miles paid and the miles alleged

11 to be due. There is only evidence of payment of a trip tax, which, imposed in lieu of a weight

12 distance tax, is satisfactory evidence of compliance with the tax laws of New Mexico.

13 Conclusion.

14 The Taxpayer paid port-of-entry fees known as the Trip Tax. The trip tax is imposed on out-

15 of-state carriers in lieu of a weight distance tax. Under New Mexico Law, the Taxpayer was not

16 required to file subsequent weight distance tax returns. The Department’s assessment was rebutted

17 by its own documents, and no document provided thereafter substantiated the issuance of the

18 assessment. The issuance of the assessment was untimely, and this Taxpayer cannot be considered a

19 non-filer, or under-reporter, as no return was required, since the trip tax was paid. The protest is

20 granted, the assessment must be abated.

21 CONCLUSIONS OF LAW

In the Matter of the Protest of Tyree Oil, page 12 of 15.
1 A. The Taxpayer filed a timely written protest to the Notice of Assessment of Tax and

2 Demand for Payment issued under Letter ID number L0776238768, and jurisdiction lies over the

3 parties and the subject matter of this protest. See NMSA 1978, Section 7-1-24 (D) (2019); see also

4 NMSA 1978, Section 7-15A-1, et seq. (“Weight Distance Tax Act”).

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

6 hearing under NMSA 1978, Section 7-1B-8 (F) (2019). Parties did not object that the hearing

7 satisfied the 90-day hearing requirement of Section 7-1B-8 (F). See also Regulation § 22.600.3.8

8 (J) NMAC (8/25/20).

9 C. Any assessment of tax made by the Department is presumed to be correct.

10 Therefore, it is the taxpayer’s burden to come forward with evidence and legal argument to establish

11 that the Department’s assessment should be abated, in full or in part. See NMSA 1978, Section 7-1-

12 17 (C) (2007).

13 D. “Tax” is defined to include not only the tax program’s principal, but also interest and

14 penalty. See NMSA 1978, Section 7-1-3 (Z) (2019). Assessments of penalties and interest therefore

15 also receive the benefit of a presumption of correctness. See Regulation § 3.1.6.13 NMAC

16 (1/15/01).

17 E. The Taxpayer paid a trip tax in lieu of the weight distance tax. See NMSA 1978,

18 Section 7-15-3.1 (2005).

19 F. The Taxpayer rebutted the presumption of correctness in the assessment. See NMSA

20 1978, Section 7-1-16 (2019); see also Regulation § 22.600.1.22 NMAC (8/25/20); see also NMSA

21 1978, Section 7-1B-8 (H) (2019); see also Regulation § 22.600.3.12 NMAC (8/25/20).

22 G. When a taxpayer presents sufficient evidence to rebut the presumption, the burden

23 shifts to the Department to show that the assessment is correct. See MPC Ltd. v. N.M. Taxation &

In the Matter of the Protest of Tyree Oil, page 13 of 15.
1 Revenue Dep't, 2003-NMCA-21, ¶13, 133 N.M. 217, 62 P.3d 308. The Department did not present

2 evidence to reestablish that its assessment was correct.

3 H. Because Taxpayer was not required to file weight distance tax returns by virtue of

4 having paid the trip tax, the assessment was not timely. The statutory guidelines for non-filers does

5 not apply to this Taxpayer. See NMSA 1978, Section 7-1-18 (C) and (D) (2013).

6 For the foregoing reasons, the Taxpayer’s protest IS GRANTED. IT IS ORDERED that

7 the Department must abate the underlying tax, penalty, and interest associated with this assessment.

8 DATED: April 8, 2022.

9
10 Ignacio V. Gallegos
11 Hearing Officer
12 Administrative Hearings Office
13 Post Office Box 6400
14 Santa Fe, NM 87502

15 NOTICE OF RIGHT TO APPEAL

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

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

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

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

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

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

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

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

In the Matter of the Protest of Tyree Oil, page 14 of 15.
1 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

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

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

4 CERTIFICATE OF SERVICE

5 On April 8, 2022, a copy of the foregoing Decision and Order was submitted to the parties

6 listed below in the following manner:

7 Email and First Class USPS mail Email
8
9 INTENTIONALLY BLANK

In the Matter of the Protest of Tyree Oil, page 15 of 15.