If a New Mexico tax helpline gives me wrong information and I file late, can I get the penalty waived?

Plain-English summary

Stronghold Construction owed $250,939.00 in New Mexico gross receipts tax (GRT) for the period ending June 30, 2022, with the return and payment both due July 25, 2022. Its accounting manager was still checking his figures near the deadline, so he called the Department's helpline to ask about filing a few days late. An employee told him there would be a $5.00 late fee. Deciding a $5 fee was minor, the company filed on August 3 and paid on August 9 — both late. The Department then assessed $5,018.78 in penalty and $235.57 in interest ($5,254.35 total), and Stronghold protested.

Hearing Officer Dee Dee Hoxie denied the protest:

• The $5 tip was true only for a zero-tax return. The $5.00 figure is the minimum penalty for a return showing no tax due (Section 7-1-69(A)(3)). Because Stronghold actually owed $250,939, the penalty ran at the standard 2% per month (capped at 20%) — not $5.
• Acting on a mistaken belief is negligence. Penalty can be excused only if the taxpayer proves it was not negligent, and New Mexico defines negligence to include "erroneous belief." Relying on the helpline number and filing late anyway did not prove non-negligence. Interest, separately, has no waiver provision.
• A phone call cannot estop the Department. New Mexico estops the Department only where a taxpayer relied on a written ruling in effect at the time — one that interprets a statute and was reviewed and signed by Department counsel (Sections 7-1-60, 9-11-6.2). A verbal helpline conversation does not qualify. Equitable estoppel also failed: it is disfavored against the state (especially in tax cases), the employee's statement was accurate for a zero-liability return (so no "aggravated or overreaching" conduct), and estoppel cannot override the mandatory penalty statute.

Stronghold remained liable for the full $5,254.35.

What this means for you

Anyone who calls a tax helpline before filing late

Do not rely on a verbal answer from a call-center employee to protect you from penalties. The information may be right only for a different situation — here, the $5 figure was accurate for a return with no tax due, not one with a quarter-million-dollar liability. If a late filing is unavoidable, remember the penalty scales with the tax owed, and get any binding guidance in writing.

Businesses deciding whether to file on time or "file it right"

Filing accurately is important, but filing late still triggers penalty and interest that grow with the tax due. If you cannot finalize the numbers, file on time based on your best estimate and amend later, rather than filing late and absorbing a 2%-per-month penalty on a large balance.

Taxpayers hoping to use "the state misled me" (estoppel)

Estoppel against New Mexico's tax department is narrow. It generally requires a written ruling — reviewed and signed by Department counsel — that you relied on. A helpline call, an informal opinion, or a verbal statement will not estop the Department, and estoppel cannot be used to defeat a mandatory penalty.

Tax professionals

The decision applies the mandatory penalty/interest framework (Sections 7-1-69, 7-1-67; Marbob), treats an erroneous belief as negligence (3.1.11.10 NMAC; Tiffany Construction), and lays out the statutory-estoppel prerequisites of Section 7-1-60 / Section 9-11-6.2(C) (a counsel-reviewed written ruling), distinguishing them from disfavored equitable estoppel (Wisznia, Rainaldi, Bien Mur) — which an administrative tribunal generally lacks power to grant (AA Oilfield Service). Note the $5 minimum penalty of Section 7-1-69(A)(3) applies only to zero-liability returns.

Common questions

Q: A helpline told me the late fee would be small. Doesn't that protect me?
A: Generally no. A verbal statement does not estop the Department, and if the information fit a different situation (like a zero-tax return), relying on it is treated as negligence rather than a defense.

Q: Isn't the late-filing penalty just $5?
A: Only when the return shows no tax due. If you owe tax, the penalty is 2% per month of the unpaid tax, up to a 20% cap.

Q: I filed late to make sure the return was accurate. Is that a valid excuse?
A: No. Filing late still triggers penalty and interest, and choosing to file late is not proof that you were non-negligent.

Q: When can the Department be estopped by its own guidance?
A: Under Section 7-1-60, generally only when you relied on a written ruling — reviewed and signed by Department counsel and in effect at the time — not a phone call or informal statement.

Q: Can I rely on this decision for my own situation?
A: Not directly. A Decision and Order resolves one taxpayer's protest on its specific facts and is not a general ruling or advisory opinion of the Department. It does reliably show that late filing triggers mandatory penalty and interest and that a helpline call will not estop the state.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-1-69(A)(1), (2), (3) (2021) — mandatory penalty of 2% per month (20% cap); $5 minimum only for a zero-liability return
• NMSA 1978, § 7-1-67(A) (2013) — mandatory interest; no provision to excuse it
• NMSA 1978, § 7-1-60 (1993) — the Department is estopped only by a written ruling in effect when the liability arose
• NMSA 1978, § 9-11-6.2(B), (C) (2015); 3.1.2.8 NMAC — a binding ruling must interpret a statute and be reviewed/signed by Department counsel
• NMSA 1978, § 7-1-17 (2007); 3.1.6.12(A), 3.1.6.13 NMAC — presumption of correctness; taxpayer's burden
• 3.1.11.10, 3.1.11.11 NMAC — negligence includes erroneous belief; factors indicating non-negligence

Cases:

• Marbob Energy Corp. v. N.M. Oil Conservation Comm'n, 2009-NMSC-013, 146 N.M. 24 ("shall" makes penalty and interest mandatory)
• Tiffany Constr. Co. v. Bureau of Revenue, 1976-NMCA-127, 90 N.M. 16 (an erroneous belief / inadvertence is negligence)
• Wisznia v. State Human Servs. Dep't, 1998-NMSC-011, 125 N.M. 140; Rainaldi v. Pub. Employees Ret. Bd., 1993-NMSC-028, 115 N.M. 650; N.M. Taxation & Revenue Dep't v. Bien Mur Indian Market Ctr., 1989-NMSC-015, 108 N.M. 228; In re Kilmer, 2004-NMCA-122, 136 N.M. 440 (equitable estoppel against the state is disfavored and cannot contradict a statute)
• AA Oilfield Serv. v. N.M. State Corp. Comm'n, 1994-NMSC-085, 118 N.M. 273; Gzaskow v. Pub. Employees Ret. Bd., 2017-NMCA-064 (an administrative tribunal's quasi-judicial powers do not include granting equitable remedies)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Stronghold Construction
• Decision PDF: D&O 23-16

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 STRONGHOLD CONSTRUCTION
6 TO THE ASSESSMENT
7 ISSUED UNDER LETTER ID NO. L0154722416

8 v. AHO No. 23.08-036A, D&O No. 23-16

9 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

10 DECISION AND ORDER

11 On October 11, 2023, Hearing Officer Dee Dee Hoxie, Esq. conducted a videoconference

12 hearing on the merits of the protest to the assessment. The Taxation and Revenue Department

13 (Department) was represented by Timothy Williams, Staff Attorney. Lizette Rivera, Auditor, also

14 appeared on behalf of the Department. Stronghold Construction (Taxpayer) was represented by

15 its accounting manager, Alejandro Avila. Mr. Avila and Ms. Rivera testified. The Hearing

16 Officer took notice of all documents in the administrative file. No exhibits were submitted.

17 The main issue to be decided is whether the Taxpayer is entitled to an abatement of

18 penalty and interest. The Hearing Officer considered all of the evidence and arguments

19 presented by both parties. Because the Taxpayer’s return was filed late and it taxes were paid

20 late, the Hearing Officer finds in favor of the Department. IT IS DECIDED AND ORDERED

21 AS FOLLOWS:

22 FINDINGS OF FACT

23 1. On August 16, 2022, the Department issued a gross receipts tax assessment to the

24 Taxpayer for the tax period ending June 30, 20221. The assessment was for penalty of $5,018.78

1
All references to gross receipts tax due and filing of the return relate to this tax period.
Stronghold Construction
Case No. 23.08-036A
page 1 of 8
1 and interest of $235.57, for a total liability of $5,254.35. [Admin. file L0154722416; Testimony

2 of Mr. Avila; Testimony of Ms. Rivera].

3 2. On October 25, 2022, the Taxpayer filed a timely written protest to the

4 assessment. [Admin. file protest].

5 3. On February 28, 2023, the Department acknowledged its receipt of the protest.

6 [Admin. file L0134714480].

7 4. On August 28, 2023, the Department filed a request for hearing with the

8 Administrative Hearings Office with its answer to the protest. [Admin. file request].

9 5. On September 15, 2023, a telephonic scheduling hearing was conducted, which

10 was within 90 days of the request as required by statute. [Admin. file].

11 6. The Taxpayer’s gross receipts taxes and return were due on July 25, 2022.

12 [Testimony of Mr. Avila; Testimony of Ms. Rivera].

13 7. The Taxpayer filed its gross receipts tax return on August 3, 2022. [Testimony of

14 Mr. Avila; Testimony of Ms. Rivera].

15 8. The Taxpayer owed gross receipts tax of $250,939.00. [Admin. file protest;

16 Testimony of Mr. Avila; Testimony of Ms. Rivera].

17 9. The Taxpayer paid the gross receipts tax on August 9, 2022. [Admin. file;

18 Testimony of Mr. Avila; Testimony of Ms. Rivera].

19 10. Because the Taxpayer filed its return and paid its taxes after the July 25, 2022 due

20 date, the Department assessed the Taxpayer with penalty and interest. [Admin. file

21 L0154722416; Testimony of Mr. Avila; Testimony of Ms. Rivera].

22 DISCUSSION

23 Burden of proof.

Stronghold Construction
Case No. 23.08-036A
page 2 of 8
1 “The taxpayer shall have the burden of proof, except as otherwise provided by law.”

2 22.600.3.24 (B) NMAC (2020. Assessments by the Department are presumed to be correct. See

3 NMSA 1978, § 7-1-17 (2007). See El Centro Villa Nursing Ctr. v. Taxation and Revenue

4 Department, 1989-NMCA-070, 108 N.M. 795. See also Archuleta v. O'Cheskey, 1972-NMCA-

5 165, ¶11, 84 N.M. 428. See also N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-

6 NMCA-099, ¶8. The presumption extends to the assessment of penalty and interest. See 3.1.6.13

7 NMAC (2001). “The effect of the presumption of correctness is that the taxpayer has the burden of

8 coming forward with some countervailing evidence tending to dispute the factual correctness of the

9 assessment”. 3.1.6.12 (A) NMAC (2001) (emphasis added). See Gemini Las Colinas, LLC v. N.M.

10 Taxation & Revenue Dep’t, 2023-NMCA-039. See also 22.600.1.18 and 22.600.3.24 NMAC.

11 Assessment of penalty and interest.

12 The Taxpayer conceded that it was required to pay the tax and file the return on July 25,

13 2022. The Taxpayer conceded that it filed its return on August 3, 2022 and paid the tax on August

14 9, 2022, which made the filing and payment late.

15 When a tax is not paid by the due date or a return is not filed by its due date, “there shall

16 be added to the amount assessed a penalty”. NMSA 1978, § 7-1-69 (A) (2021) (emphasis

17 added). Interest “shall be paid” on taxes that were not paid on or before the date on which they

18 were due. NMSA 1978, § 7-1-67 (A) (2013). The word “shall” indicates that the assessments of

19 penalty and interest are mandatory, not discretionary. See Marbob Energy Corp. v. N.M. Oil

20 Conservation Comm’n., 2009-NMSC-013, ¶ 22, 146 N.M. 24.

21 Interest only accrues when tax is owed but not paid on the due date, and it accrues only

22 until the tax is paid. See NMSA 1978, § 7-1-67. There is no provision for excusing interest. See

23 NMSA 1978, § 7-1-67. See also 3.1.10.18 NMAC (2001). If a taxpayer is not negligent, penalty

Stronghold Construction
Case No. 23.08-036A
page 3 of 8
1 may be excused. See 3.1.11.11 NMAC (2001) (listing several factors, such as consulting an

2 accountant, that indicate non-negligence).

3 The Taxpayer argues that it was not negligent. Mr. Avila explained that the Taxpayer

4 was striving to file its taxes correctly, that he realized that he would not have the return ready by

5 the deadline because he was still making sure that he was calculating things correctly, and that he

6 called the Department’s helpline to inquire about the consequences of filing a return a few days

7 late. Mr. Avila was told by an unidentified Department employee that there would be a $5.00

8 late fee for filing a few days late. The Taxpayer decided that a $5.00 late fee was not too

9 onerous and decided to file late to ensure that it was filing correctly and accurately.

10 Penalty is added based on the greater of the amount of tax due but unpaid or on the

11 amount of tax liability established in the late-filed return, calculated by multiplying the

12 appropriate amount by “two percent per month or any fraction of a month” from the due date.

13 NMSA 1978, § 7-1-69 (A) (1) and (A) (2). In cases with no tax due, which would show a tax

14 liability of zero in a return, there is still a penalty due, which is the $5.00 minimum. See NMSA

15 1978, § 7-1-69 (A) (3).

16 Negligence includes “inadvertence, indifference, thoughtlessness, carelessness, erroneous

17 belief or inattention.” 3.1.11.10 NMCA (2001). The Taxpayer’s decision to file late because it

18 mistakenly believed it would be subject to a $5.00 fee is not proof of non-negligence. See

19 3.1.11.11 NMAC. A taxpayer’s lack of knowledge or erroneous belief is considered to be

20 negligence for purposes of assessment of penalty. See id. See also Tiffany Const. Co., Inc. v.

21 Bureau of Revenue, 1976-NMCA-127, 90 N.M. 16.

22 Estoppel.

Stronghold Construction
Case No. 23.08-036A
page 4 of 8
1 The Department can be estopped from taking action against a taxpayer when the party’s

2 action or inaction was due to a regulation in effect at the time or a ruling addressed to the party

3 personally in writing by the secretary that was in effect at the time that the liability arose. See

4 NMSA 1978, § 7-1-60 (1993). Rulings must meet certain criteria. See id. See also NMSA

5 1978, § 9-11-6.2 (2015). To be effective, a ruling must be reviewed by the attorney general or

6 other legal counsel of the Department and the ruling must reflect that such review was done. See

7 NMSA 1978, § 9-11-6.2 (C). A ruling must be signed by the secretary and by counsel to show

8 that such a review took place. See 3.1.2.8 NMAC (2000). Rulings are also required to be

9 written statements that interpret specific statutes. See NMSA 1978, § 9-11-6.2 (B) (2). A verbal

10 conversation is not sufficient to estop the Department from taking action under the statute. See

11 NMSA 1978, § 7-1-60.

12 The Taxpayer argues that it was misled by the Department employee. The Taxpayer

13 argues that its actions were caused by the information provided by the Department’s helpline,

14 and that they were misguided. The Taxpayer essentially argues for equitable estoppel.

15 Equitable estoppel may be found against the state where there is “a shocking degree of

16 aggravated and overreaching conduct or where right and justice demand it." Wisznia v. State,

17 Human Servs. Dep't, 1998-NMSC-011, ¶ 17, 125 N.M. 140. Generally, statements of opinion on

18 matters of law do not give rise to estoppel when the facts are known to both parties. See

19 Rainaldi v. Pub. Employees Ret. Bd., 1993-NMSC-028, ¶ 16, 115 N.M. 650. Equitable estoppel

20 against the state is disfavored, especially in cases involving taxes. See Taxation and Revenue

21 Dep’t v. Bien Mur Indian Market, 1989-NMSC-015, ¶9-10, 108 N.M. 228. Equitable estoppel

22 will not apply against the state when it would be contrary to the requirements of statute. See

Stronghold Construction
Case No. 23.08-036A
page 5 of 8
1 Rainaldi, 1993-NMSC-028, ¶ 18-19. See also In re Kilmer, 2004-NMCA-122, ¶ 26, 136 N.M.

2 440.

3 Mr. Avila’s testimony did not provide details of the conversation that he had with the

4 Department’s employee when he called the helpline. The evidence provided was that the

5 Taxpayer asked about filing a late return, but there was no evidence that the Taxpayer asked

6 about filing a late return with a substantial tax liability. The statements by the Department’s

7 employee to the Taxpayer were accurate for a return with zero tax liability, which would be

8 subject to the $5.00 minimum penalty. See NMSA 1978, § 7-1-69. Therefore, there is no

9 evidence that the Department’s employee engaged in conduct that was aggravated, overreaching

10 or misleading, and equitable estoppel does not apply. See Wisznia, 1998-NMSC-011. Moreover,

11 applying equitable estoppel in this case would be contrary to the requirements of the penalty

12 statute. See NMSA 1978, § 7-1-69. See also Rainaldi, 1993-NMSC-028. See also Kilmer,

13 2004-NMCA-122. See also AA Oilfield Serv. v. N.M. State Corp. Comm’n, 1994-NMSC-085, ¶

14 18, 118 N.M. 273 (holding that the quasi-judicial powers of an administrative body are limited to

15 making factual and legal determinations as authorized by the statute). See also Gzaskow v. Pub.

16 Employees Ret. Bd., 2017-NMCA-064, ¶35 (recognizing AA Oilfield Serv. for the proposition

17 that an agency with quasi-judicial powers did not have authority to grant an equitable remedy).

18 CONCLUSIONS OF LAW

19 A. The Taxpayer filed a timely written protest of the Department’s assessment, and

20 jurisdiction lies over the parties and the subject matter of this protest. See NMSA 1978, § 7-1B-8

21 (2019).

22 B. The first hearing was timely set and held within 90 days of the request for hearing.

23 See id. See also 22.600.3.8 NMAC (2020).

Stronghold Construction
Case No. 23.08-036A
page 6 of 8
1 C. Because the Taxpayer filed its return and paid its tax liability after the due date,

2 penalty and interest were owed. See NMSA 1978, § 7-1-67 and § 7-1-69.

3 D. The Taxpayer failed to prove that it was not negligent. Consequently, the penalty

4 was applied appropriately. See § 7-1-69. See also 3.1.11.10 NMCA and 3.1.11.11 NMCA.

5 E. The Taxpayer failed to prove that estoppel should apply. See NMSA 1978, § 7-1-

6 60. See also Wisznia, 1998-NMSC-011. See also Bien Mur Indian Market, 1989-NMSC-015.

7 See also Rainaldi, 1993-NMSC-028. See also In re Kilmer, 2004-NMCA-122

8 For the foregoing reasons, the Taxpayer’s protest IS DENIED. IT IS ORDERED that

9 Taxpayer is liable for $5,018.78 in penalty and $235.57 in interest for a total outstanding liability

10 of $5,254.35.

11 DATED: November 15, 2023.

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

18 NOTICE OF RIGHT TO APPEAL

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

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

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

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

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

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

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

Stronghold Construction
Case No. 23.08-036A
page 7 of 8
1 Hearings Office may begin preparing the record proper. The parties will each be provided with a

2 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

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

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

5 CERTIFICATE OF SERVICE

6 On November 15, 2023, a copy of the foregoing Decision and Order was submitted to the

7 parties listed below in the following manner:

8

9 INTENTIONALLY BLANK

Stronghold Construction
Case No. 23.08-036A
page 8 of 8