If I file my New Mexico gross receipts tax return on time but pay the tax late by mistake, can I get the penalty waived?

Plain-English summary

Tucker Midstream, Inc. is a monthly gross receipts tax (GRT) filer. For the period ending August 31, 2022, its return and payment were both due September 25, 2022. It filed the return on time (September 19) but did not pay the tax with it, and did not pay by the deadline. The Department assessed the unpaid tax, penalty, and interest on October 17, 2022, and Tucker paid the tax (about $69,532.56) on November 8 — but not the penalty or interest, which it protested and asked to be waived.

Hearing Officer Dee Dee Hoxie denied the protest. The reasoning is short and applies broadly:

• Penalty and interest are mandatory for a late payment. The statutes say penalty and interest "shall" be added when tax is paid late, and "shall" means there is no discretion to waive them.
• "Inadvertent error" is negligence. A penalty can be excused only if the taxpayer was not negligent — but New Mexico defines negligence to include "inadvertence, indifference, thoughtlessness, carelessness, erroneous belief or inattention." Tucker's own protest called the missed payment an inadvertent, unintentional mistake, which confirmed negligence rather than excusing it.
• The taxpayer offered no other evidence. Because Tucker presented nothing to show it was not negligent, it did not overcome the presumption that the assessment was correct.

Because paying late (even after filing on time) triggered the penalty, and because paying the tax more than 10 days after the assessment let more penalty and interest accrue, Tucker's remaining liability was $2,781.30 in penalty and $483.87 in interest — $3,265.17 total.

What this means for you

Businesses that file returns and pay separately

Filing your return on time does not protect you from penalty if the payment is late. New Mexico charges penalty and interest based on late payment, so a return filed early with no money attached still exposes you to both. Make sure the payment goes out with the return.

Anyone hoping "it was an honest mistake" will get the penalty waived

It usually will not. Under New Mexico's rules, an honest, inadvertent slip is the very definition of negligence — and penalty is only excused when the taxpayer proves non-negligence (for example, that it reasonably relied on an accountant and took ordinary care). Calling the error "inadvertent" tends to confirm the penalty, not defeat it. Interest has no waiver provision at all.

Anyone who gets assessed

Pay quickly. Penalty accrues at 2% per month (up to a cap) and interest keeps running until the tax is paid, so the longer an assessed balance sits, the more both grow — here, paying the tax more than 10 days after the assessment increased the penalty and interest owed.

Tax professionals

A clean illustration of the mandatory penalty/interest framework: Section 7-1-69(A) penalty and Section 7-1-67(A) interest are non-discretionary ("shall"); relief requires proving non-negligence under 3.1.11.11 NMAC against the 3.1.11.10 NMAC definition (inadvertence counts); and the taxpayer bears the burden against the presumption of correctness (Section 7-1-17; Gemini). See also Tiffany Construction on inadvertence as negligence.

Common questions

Q: I filed on time but paid a few weeks late — will the penalty be waived?
A: Generally no. Penalty and interest are mandatory for late payment, and filing the return on time does not prevent them.

Q: It was an honest mistake. Doesn't that count as reasonable cause?
A: New Mexico defines negligence to include inadvertence and carelessness, so describing the miss as an "inadvertent error" tends to confirm negligence. A penalty is excused only if you affirmatively prove you were not negligent.

Q: Can interest be waived if I had a good reason?
A: No. There is no provision to excuse interest; it accrues from the due date until the tax is paid.

Q: Why did the amount owed grow after I paid the tax?
A: Paying the tax more than 10 days after the assessment let additional penalty and interest accrue before payment. Paying an assessed balance promptly limits how much both grow.

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 illustrate that late payment triggers mandatory penalty and interest.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-1-69(A) (2021) — mandatory late penalty of 2% per month, capped at 20%
• NMSA 1978, § 7-1-67(A) (2013) — mandatory interest on late-paid tax; no provision to excuse it
• NMSA 1978, § 7-1-17 (2007) — assessment (including penalty and interest) presumed correct
• 3.1.11.10 NMAC — negligence includes inadvertence, carelessness, and inattention
• 3.1.11.11 NMAC — factors indicating non-negligence (e.g., consulting an accountant)
• 22.600.3.24(B), 3.1.6.12(A), 3.1.6.13 NMAC — burden of proof; presumption of correctness

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 inadvertent failure to pay is negligence)
• El Centro Villa Nursing Ctr. v. Taxation & Revenue Dep't, 1989-NMCA-070; Archuleta v. O'Cheskey, 1972-NMCA-165; N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-NMCA-099; Gemini Las Colinas, LLC v. N.M. Taxation & Revenue Dep't, 2023-NMCA-039 (presumption of correctness; taxpayer's burden)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Tucker Midstream Inc
• Decision PDF: D&O 23-17

Original ruling text

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

4 TUCKER MIDSTREAM, INC.

5 v. AHO No. 23.08-037A, D&O No. 23-17

6 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

7 DECISION AND ORDER

8 On November 17, 2023, Hearing Officer Dee Dee Hoxie, Esq. conducted a

9 videoconference hearing on the merits of the protest to the assessment. The Taxation and

10 Revenue Department (Department) was represented by Timothy Williams, Staff Attorney. Mitchell

11 Bartholomew, Auditor, was also present for the Department. Tucker Midstream, Inc. (Taxpayer)

12 was represented by Jake Adkins and William Bader of Merits Advisors. Mr. Bartholomew

13 testified. The Hearing Officer took notice of all documents in the administrative file. The

14 Department’s exhibits A through G (screenshots of website) were admitted.

15 The main issue to be decided is whether the Taxpayer owes penalty and interest. The

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

17 Because the Taxpayer’s payment of the tax was late and there was no evidence that the Taxpayer

18 was not negligent, the Hearing Officer finds in favor of the Department. IT IS DECIDED AND

19 ORDERED AS FOLLOWS:

20 FINDINGS OF FACT

21 1. On October 17, 2022, the Department issued an assessment to the Taxpayer. The

22 assessment was for the tax period ending August 31, 2022. The Taxpayer was assessed for gross

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1 receipts tax of $69,532.56, penalty of $1,390.65, and interest of $163.83, for a total liability of

2 $71,087.04. [Admin. file L0430147696; Testimony1].

3 2. On November 30, 2022, the Taxpayer filed a timely written protest by email.

4 [Admin. file protest].

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

6 [Admin. file].

7 4. On August 29, 2023, the Department filed a request for hearing and answer to the

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

9 5. On October 6, 2023, a telephonic scheduling hearing was conducted, which was

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

11 6. The Taxpayer files monthly gross receipts tax. [Testimony].

12 7. For the tax period ending August 31, 20222, the Taxpayer’s gross receipts tax

13 payment and return were due on September 25, 2022. [Testimony].

14 8. The Taxpayer filed a gross receipts tax return on September 19, 2022.

15 [Testimony; Exhibits C through G].

16 9. The Taxpayer failed to make its gross receipts tax payment when it filed its return

17 and failed to make its payment by the September 25th due date. [Testimony; Exhibits A through

18 G].

19 10. The Taxpayer was assessed for the unpaid gross receipts tax, penalty, and interest

20 on October 17, 2022. [L0430147696].

1
All references to testimony mean the testimony given by Mr. Bartholomew as he was the only witness who
testified at the hearing.
2
All references to the Taxpayer’s return or payment relate to this tax period.
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1 11. The Taxpayer paid the assessed gross receipts tax on November 8, 2022, but it did

2 not pay the penalty or interest. [Testimony; Exhibits A and B].

3 12. Since the Taxpayer’s payment was made more than 10 days after the assessment,

4 additional penalty and interest accrued. [Testimony; L0430147696].

5 13. The penalty due is $2,781.30, and the interest due is $483.87. Therefore, the

6 Taxpayer’s total current liability under the assessment is $3,265.17. [Testimony].

7 DISCUSSION

8 Burden of proof.

9 “The taxpayer shall have the burden of proof, except as otherwise provided by law.”

10 22.600.3.24 (B) NMAC (2020). Assessments by the Department are presumed to be correct. See

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

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

13 165, ¶11, 84 N.M. 428. See also N.M. Taxation & Revenue Dep't v. Casias Trucking, 2014-

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

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

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

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

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

19 Assessment of penalty and interest.

20 The Taxpayer presented no evidence and conceded on the facts. The Taxpayer was required

21 to pay the tax and file the return on September 25, 2022. The Taxpayer’s return was filed before the

22 deadline, but the tax was paid late. In its written protest, the Taxpayer indicates that the failure to

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1 pay the tax at the time that the return was filed was an inadvertent error. The Taxpayer requested a

2 waiver of penalty.

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

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

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

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

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

8 Conservation Comm’n., 2009-NMSC-013, ¶ 22, 146 N.M. 24. Penalty is added based on the

9 greater of the amount of tax due but unpaid or on the amount of tax liability established in the

10 late-filed return, calculated by multiplying the appropriate amount by “two percent per month or

11 any fraction of a month” from the due date. NMSA 1978, § 7-1-69 (A) (1) and (A) (2).

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

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

14 NMSA 1978, § 7-1-67. See also 3.1.10.18 NMAC (2001).

15 If a taxpayer is not negligent, penalty may be excused. See 3.1.11.11 NMAC (2001)

16 (listing several factors, such as consulting an accountant, that indicate non-negligence). The

17 Taxpayer presented no evidence at the hearing, and the written protest admits that the failure to

18 pay the tax when it was due was an unintentional mistake. Negligence includes “inadvertence,

19 indifference, thoughtlessness, carelessness, erroneous belief or inattention.” 3.1.11.10 NMCA

20 (2001). The Taxpayer’s failure to pay the tax when it was due was negligent. See id. See also

21 Tiffany Const. Co., Inc. v. Bureau of Revenue, 1976-NMCA-127, 90 N.M. 16.

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1 CONCLUSIONS OF LAW

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

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

4 (2019).

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

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

7 C. Because the Taxpayer paid the tax late, penalty and interest were owed. See NMSA

8 1978, § 7-1-67 and § 7-1-69.

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

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

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

12 Taxpayer is liable for $2,781.30 in penalty and $483.87 in interest for a total outstanding liability

13 of $3,265.17.

14 DATED: December 7, 2023.

15 Dee Dee Hoxie
16 Dee Dee Hoxie
17 Hearing Officer
18 Administrative Hearings Office
19 P.O. Box 6400
20 Santa Fe, NM 87502

21 NOTICE OF RIGHT TO APPEAL

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

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

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

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

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

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

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

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

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

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

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

9 CERTIFICATE OF SERVICE

10 On December 7, 2023, a copy of the foregoing Decision and Order was submitted to the

11 parties listed below in the following manner:

12 First Class Mail and Email First Class Mail and Email
13
14 INTENTIONALLY BLANK

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