If my bank wires a New Mexico tax payment one day late or to the wrong account, can the state still charge a penalty and a full month's interest?

Plain-English summary

Southwestern Public Service Company, an electric utility, owes so much New Mexico tax each month that it is a "special payment" taxpayer — it must transmit its combined gross receipts, compensating, and withholding taxes (reported under the Combined Reporting System, or CRS) electronically, so the money is available to the state on the due date (§ 7-1-13.1). Its September 1995 CRS taxes were due October 25, 1995. The company gave its bank (Amarillo National Bank) correct, timely instructions to wire the payment, but the bank misdirected the wire to an unrelated third party's account at the state's fiscal-agent bank. The error was caught and fully corrected the next day, October 26. Because the funds weren't in the state's account on the due date, the Department assessed a $15,213.59 penalty and $9,508.50 in interest for a payment that was, in the end, one day late.

The Hearing Officer denied the protest and upheld both the penalty and the interest:

• A flat 2% penalty applies automatically to a missed special payment. Section 7-1-69(C) adds a 2% penalty whenever a special-payment taxpayer fails to pay in the manner § 7-1-13.1 requires — no proof of negligence needed. (The Hearing Officer expressly reconsidered and departed from his own earlier decision in Robert A. Woods Construction, Inc., D&O 95-05, which had read a negligence requirement into subsection (C); doing so, he concluded, made the subsection meaningless.)
• Even the general negligence penalty would apply. Under § 7-1-69(A), a bank's inadvertent error is negligence, and the negligence of an agent (the bank) is charged to the taxpayer (El Centro Villa Nursing Center). There is no "one free late payment" — a strong payment history is simply what's expected of every taxpayer.
• Interest is a full month for any fraction of a month. Section 7-1-67 sets interest at 15% per year, "computed at the rate of one and one-fourth percent per month or any fraction thereof." By its plain terms, a payment even one day late owes a full month's interest — the statute leaves no room to prorate it, and this has been the Department's consistent reading since 1965.
• The taxpayer's other arguments didn't fit. The regulation treating a self-corrected amended return within twelve months as non-negligent (Regulation 3 NMAC 1.11.11) applies to amended returns, not to late payments, so it didn't help here.

What this means for you

Your bank's mistake is your mistake

If you route tax payments through a bank or payroll processor, an error by that agent — a wire to the wrong account, a mis-encoded transfer, a missed cutoff — is treated as your negligence for penalty purposes. You can pursue the bank separately, but as far as New Mexico is concerned, the payment was late and the penalty applies. Build in margin and confirm receipt rather than assuming the transfer went through.

"Immediately available on the due date" is the real deadline for large filers

Special-payment taxpayers aren't judged by when they initiate a transfer but by whether the funds are in the state's account and available on the due date (§ 7-1-13.1). Initiating a wire on the last day leaves no cushion for a routing error. The Hearing Officer even suggested that waiting until the final day, given the stakes, is arguably not ordinary business care.

Interest runs by the month, so one day late costs a full month

New Mexico computes interest at 1.25% per month "or any fraction thereof." There is no daily proration — a payment one day late accrues a whole month's interest. On a large payment that can be thousands of dollars for a single day, as it was here ($9,508.50). Missing a due date by any margin is expensive.

A clean history and a fast fix don't erase the penalty or interest

The company had never been late before or since and corrected the error within a day, with no prod from the Department. Commendable, but not a defense: there's no statutory allowance for a first-time slip, and neither the penalty (§ 7-1-69) nor the interest (§ 7-1-67) can be waived on those grounds.

Common questions

Q: My bank sent the wire to the wrong account. Why am I penalized?
A: Because the bank acts as your agent, and its inadvertent error is charged to you. The payment wasn't available to the state on the due date, so the special-payment penalty (and, alternatively, the negligence penalty) applies even though you did nothing wrong yourself.

Q: The payment was only one day late — why a whole month of interest?
A: The interest statute (§ 7-1-67) charges 1.25% per month "or any fraction thereof." A fraction of a month counts as a full month, so one day late means one month's interest, with no daily proration.

Q: I've always paid on time before. Doesn't that count for anything?
A: It's expected, not exculpatory. The Hearing Officer found no basis in the statute or regulations for a "free" late payment; every payment must independently meet the deadline.

Q: I caught and fixed the error the very next day. Isn't there a rule that rewards self-correction?
A: The self-correction example in the regulations applies to filing an amended return within twelve months, not to paying a tax late. It doesn't cover this situation, so it didn't excuse the penalty.

Citations and references

Statutes and regulations:

• § 7-1-13.1 NMSA 1978 — special payment procedures requiring high-volume taxpayers to make funds immediately available to the state on the due date (including by Fedwire or ACH)
• § 7-1-69(A) NMSA 1978 — negligence penalty of 2% per month, up to 10%; § 7-1-69(C) NMSA 1978 — flat 2% penalty for special-payment taxpayers who fail to comply with § 7-1-13.1 (collected under subsection (A) if that also applies)
• Regulation 3 NMAC 1.11.10 (formerly TA 69:3) — defines taxpayer negligence; Regulation 3 NMAC 1.11.11 (formerly TA 69:4) — examples of non-negligence, including a self-corrected amended return filed within twelve months
• § 7-1-67 NMSA 1978 — mandatory interest at 15% per year, computed at 1.25% per month "or any fraction thereof"
• § 7-1-13(A) NMSA 1978 — taxpayers are liable for tax from the time of the taxable transaction; §§ 7-9-11 and 7-3-6 NMSA 1978 — CRS taxes are due on the 25th of the month following the taxable event

Cases cited:

• El Centro Villa Nursing Center v. Taxation and Revenue Department, 108 N.M. 795, 779 P.2d 982 (Ct. App. 1989) — an agent's inadvertent error is attributed to the taxpayer for purposes of the negligence penalty
• Katz v. New Mexico Department of Human Services, 95 N.M. 530, 624 P.2d 39 (1981) — a statute must be construed so that no provision is rendered surplusage
• Burroughs v. Board of County Commissioners of Bernalillo County, 88 N.M. 303, 540 P.2d 233 (1975) — courts should not read language into a statute that is not there
• Waksman v. City of Albuquerque, 102 N.M. 41, 690 P.2d 1035 (1984) — statutes are given effect as written, according to the plain meaning of their words
• State v. Herrera, 86 N.M. 134 (Ct. App. 1974) — where a statute is unambiguous, courts do not substitute their own view of what is reasonable
• Perea v. Baca, 94 N.M. 624, 614 P.2d 541 (1980) — an agency's administrative construction of a statute is entitled to great deference

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Southwestern Public Service Co.
• Decision PDF: D&O 97-29

Original ruling text

BEFORE THE HEARING OFFICER
OF THE TAXATION AND REVENUE DEPARTMENT
OF THE STATE OF NEW MEXICO

IN THE MATTER OF THE PROTEST OF
SOUTHWESTERN PUBLIC SERVICE COMPANY NO. 97-29
ID. NO. 01-038632-00 7, PROTEST TO
ASSESSMENT NO. 1975329

DECISION AND ORDER

This matter comes on for determination before Gerald B. Richardson, Hearing Officer.

Southwestern Public Service Company, hereinafter, "Taxpayer", is represented by Paul R. Owen,

Esq. of Campbell, Carr, Berge & Sheridan, P.A. The Taxation and Revenue Department,

hereinafter, "Department", is represented by Margaret B. Alcock, Special Assistant Attorney

General. By agreement of the parties, this matter is submitted for decision upon a stipulation of

facts and briefs of the parties. Briefing was completed with the filing of the Taxpayer's Reply

Brief on July 3, 1997 and the matter was considered submitted for decision at that time. Based

upon the stipulated facts and the arguments submitted, IT IS DECIDED AND ORDERED as

follows:

FINDINGS OF FACT

1. The Taxpayer is a corporation which engages in the provision of energy services

in New Mexico.

2. Due to the large dollar volume of the Taxpayer's monthly gross receipts, the

Taxpayer is required to make payment of its monthly gross receipts, compensating and

withholding taxes which are reported under New Mexico's Combined Reporting System (CRS)

according to the special payment procedures set forth in NMSA 1978, § 7-1-13.1 (1995 Repl.

Pamp.).

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3. Effective July 1, 1992, the Department adopted new formatting requirements for

special payment taxpayers who elect to make payment according to subsection B(1) (automated

clearinghouse transactions) or subsection B(2) (Fedwire transfers) of § 7-1-13.1.

4. Department Publication FYI-401 (formerly FYI-25K) provides instruction to

special payment taxpayers concerning the requirements for making timely payment of tax under §

7-1-13.1.

5. The Taxpayer's common method of payment is to transfer the taxes due by wire

transfer to the First Security Bank in Albuquerque, the fiscal agent bank for the State of New

Mexico.

6. The Taxpayer has an excellent payment history of CRS taxes, and at no time

previous to or since the payment at issue has the taxpayer submitted a late payment of its CRS

taxes.

7. The Taxpayer's CRS taxes for the September, 1995 reporting period were due on

or before October 25, 1995. Payment had to be received by First Security Bank in Albuquerque,

the fiscal agent bank for the State of New Mexico, on or before October 25, 1995 with the

information required by the Department.

8. The Taxpayer provided correct and timely instructions to its agent, Amarillo

National Bank, to initiate a wire transfer for the payment of the Taxpayer's CRS taxes for the
September, 1995 reporting period, to First Security Bank in Albuquerque.

9. On October 25, 1995, the Taxpayer, through its agent, Amarillo National Bank,

initiated a wire transfer for the payment of its CRS taxes.

10. The October 25, 1995 wire transfer for the payment of the Taxpayer's CRS taxes

was erroneously sent by Amarillo National Bank to an account at the First Security Bank in

Albuquerque which account was held by an unrelated third party.

11. First Security Bank in Albuquerque, did not reject the October 25, 1995 wire

transfer from Amarillo National Bank. Prior to the assessment at issue, the Department did not

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inform the Taxpayer or Amarillo National Bank that the payment had not been received by First

Security Bank in a manner which would satisfy the Department's requirements for the payment of

CRS taxes by wire transfer.

12. One day later, on October 26, 1995, the Taxpayer received confirmation of the

October 25 wire transfer and immediately gave instructions to Amarillo National Bank to initiate

a new wire transfer to First Security Bank in Albuquerque, to the account to which the wire

transfer for the payment of the Taxpayer's CRS taxes was required to be directed under the

Department regulations and instructions governing the payment of CRS taxes by wire transfer.

13. On October 26, 1995, Amarillo National Bank informed First Security Bank that

the October 25 wire transfer had been directed to the incorrect account, and instructed First

Security Bank to credit the October 25 wire transfer to an account for the State of New Mexico,

the account to which the wire transfer for payment of the Taxpayer's September, 1995 CRS taxes

should have been directed.

14. On October 26, 1995, First Security Bank transferred the funds which had been

sent to it by the October 25 wire transfer, and credited those funds to the State of new Mexico

account into which the Taxpayer's payment of CRS taxes were required to be paid.

15. On October 26, 1995, the Taxpayer, through its agent, Amarillo National Bank,

correctly paid its CRS taxes for the September, 1995 reporting period, through the above-
described transfer of funds from the unrelated third party's account at First Security Bank of

Albuquerque, to the account attributable to the State of New Mexico at First Security Bank of

Albuquerque. The October 26 transaction satisfied the Taxpayer's principal CRS tax payment for

the September, 1995 reporting period.

16. On November 10, 1995, the Taxpayer received Assessment No. 1975329 from the

Department which assesses $15,213.59 in penalty and $9,508.50 in interest with respect to the

late payment of the Taxpayer's CRS taxes for the September, 1995 reporting period.

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17. On November 13, 1995 the Taxpayer mailed a written protest to the Department,

protesting Assessment No. 1975329. This protest satisfied all statutory and regulatory

requirements for the filing of a valid protest to the subject assessment.

18. On December 8, 1995, the Department acknowledged receipt of the Taxpayer's

protest.

19. On April 1, 1996, the Department, through its tax auditor, responded to the

Taxpayer's protest, and stated the Department's position that the assessment is correct and

payable.

20. On April 11, 1996, the Taxpayer authorized Monte Brogdin of Amarillo National

Bank to be its representative in connection with its protest of the subject assessment.

21. On April 15, 1996, the Taxpayer, through its designated representative, Monte

Brogdin of Amarillo National Bank, requested a hearing on its protest of the subject assessment.

22. On May 24, 1996, the Taxpayer authorized Paul Owen, Esq., of Campbell, Carr,

Berge & Sheridan, P.A., to be its authorized representative in connection with its protest of the

subject assessment.

23. On July 8, 1996, Mr. Owen entered an appearance on behalf of the Taxpayer in

connection with the Taxpayer's protest of the subject assessment.

24. In lieu of a formal hearing, the parties have agreed to submit this matter for
    determination upon stipulated facts and exhibits and briefs submitted by the parties.

DISCUSSION
The issues to be determined herein are whether the Department properly assessed the

Taxpayer penalty and interest for the late payment of the Taxpayer's September, 1995 tax

payment. Due to the large amount of taxes which the Taxpayer must report and pay each month

to the Department, the Taxpayer is required to pay its taxes in accordance with the special

payment procedures of NMSA 1978, §7-1-13.1. Subsection B of that statute provides that:

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Taxpayers who are required to make payment in accordance with the
provisions of this section shall make payment by one or more of the
following means on or before the due date so that funds are immediately
available to the state on or before the due date....(emphasis added).

There is no dispute in this case that because the Taxpayer's bank erroneously made the

Taxpayer's tax payment by Fedwire transfer to an account not held by the state, that the tax

payment was not made in a manner so that the funds were immediately available to the state on

the tax due date. Subsection C of that same statute provides that:

If the taxes required to be paid under this section are not paid
in accordance with Subsection B of this section the payment is not timely
and is subject to the provisions of Sections 7-1-67 and 7-1-69 NMSA
1978.

Section 7-1-67 provides for the imposition of interest on untimely tax payments and Section 7-1-

69 provides for the imposition of penalty when taxes are not timely paid. It is the application of

those statutes to the Taxpayer under the circumstances of this case which is in dispute in this

proceeding.

PENALTY
The Taxpayer disputes the imposition of the Department's assessment of penalty under

the circumstances of this case, arguing that its late payment of tax was not due to negligence,

relying upon the fact that the Taxpayer has not previously or since then been late in paying taxes,

that it was an error by the Taxpayer's bank, and that the error was corrected the following day

after the due date for the payment without any intervention by the Department to secure the

payment of the Taxpayer's taxes.

Section 7-1-69 provides for the imposition of penalty for the failure to timely pay tax or

the failure to file a return. With respect to the failure to timely pay tax, there are two subsections

of Section 7-1-69 which may apply when there has been a failure to timely pay tax by taxpayers

subject to the special payment provisions of Section 7-1-13.1. First, there is the general

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negligence penalty provided by Subsection A, which imposes a penalty of two percent per month,

up to a maximum of ten percent:

In the case of failure, due to negligence or disregard of rules and
regulations, but without intent to defraud, to pay when due any amount of
tax required to be paid or to file by the date required a return regardless of
whether any tax is due,....

NMSA 1978, § 7-1-69(A)(1995 Repl. Pamp.). Second, there is a specific penalty which applies

to the special payment taxpayers who fail to make payment in accordance with § 7-1-13.1, which

is provided in Subsection C, as follows:

In the case of failure to pay the amount of tax required to be paid in
accordance with Section 7-1-13.1 NMSA 1978 in the manner required by
that section, there shall be added to the amount due a penalty of two
percent of the amount due except that, if a penalty is required to be
imposed by this subsection and a penalty is also required to be imposed
under Subsection A of this section, the penalty shall be imposed and
collected pursuant to Subsection A of this section only.

NMSA 1978, § 7-1-69(C)(1995 Repl. Pamp.). The Department argues that Subsection C creates

a per se standard of negligence and requires the imposition of a 2% penalty in any case where a

special payment taxpayer has failed to meet the requirements of § 7-1-13.1 and that the Taxpayer

would thus be subject to the penalty assessed because of its failure to meet the requirements of §
7-1-13.1 with respect to the payment at issue herein. The Department also argues, however, that

the Taxpayer is liable for penalty under Subsection A, on the basis of negligence, thereby

requiring the imposition of penalty under that Subsection only because of the provision in

Subsection C to that effect.

This decision maker has previously discussed the interplay between Subsection A and

Subsection C in the decision issued in the protest of Robert A. Woods Construction, Inc.,

Decision and Order No. 95-05. In discussing the standard to be applied in determining whether

penalty should be imposed upon a special payment taxpayer who fails to make payment in

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accordance with § 7-1-13.1, I found the interplay between the two subsections to be puzzling, but

that the one thing that was clear was that the legislature intended that only one penalty be

imposed upon taxpayers who fail to comply with § 7-1-13.1, and that the two subsections could

be harmonized if a requirement of taxpayer negligence is imposed before penalty is applied to

taxpayers who have failed to comply with § 7-1-13.1. Upon further reflection, however, I have

come to question that approach. While it is true that in construing conflicting statutes, wherever

possible they should be harmonized, the approach taken in the Robert A. Woods decision

overlooks another way in which the two subsections can be harmonized and its application

violates other established principles of statutory construction.

The construction given to Subsection C, which read into that subsection a requirement of

negligence violates established principles of statutory construction in the following manner. It

has the effect of making Subsection C meaningless because Subsection A already imposes

penalty for taxpayer negligence. A statute is to be construed so as to give effect to all of its

provisions and so that no part of a statute is rendered surplusage or superfluous. Katz v. New

Mexico Department of Human Services, 95 N.M. 530,, 624 P.2d 39 (1981). The other way to

look at the approach taken in the Robert A. Woods decision is that it read language

into Subsection C (a requirement of taxpayer negligence) which was not there. Courts should

not read into a statute language which is not there, particularly if the statute makes sense as
written. Burroughs v. Board of County Commissioners of Bernalillo County, 88 N.M. 303,

540 P.2d 233 (1975). Additionally, unless a contrary intent is clear, statutes are to be read and

given effect as written, attributing to the words their plain meaning. Waksman v. City of

Albuquerque, 102 N.M. 41, 690 P.2d 1035 (1984). The plain meaning of Subsection C is to

impose a 2% penalty whenever a tax payment is not made in accordance with § 7-1-13.1 when

that statute applies to the payment. The construction given Subsection C disregarded its plain

meaning.

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Subsections A and C can be harmonized and each can be given effect when we consider

that in addition to the distinction in the standards applied for the imposition of penalty, they also

impose different amounts of penalty, depending upon the circumstances of any given case.

Subsection C imposes a flat penalty of 2% of the amount due. Subsection A imposes a late

payment penalty of "two percent per month or any fraction of a month from the date the tax was

due multiplied by the amount of tax due but not paid, not to exceed ten percent of the tax due but

not paid". This allows for the imposition of a 2% penalty each month that a tax is not paid due to

negligence, until the penalty maximizes at 10%. Thus, if a special payment taxpayer fails to

make timely payment, there would be a 2% flat penalty imposed under Subsection C. If,

however, the taxpayer, through negligence, fails to correct its failure to make payment of the tax

and neglects to pay the tax for the next six months as well, penalty would be imposed under

Subsection A, only, and that penalty would maximize at the 10% statutory maximum.

Upon reconsideration, then, the imposition of penalty in this case is proper under the

provisions of § 7-1-69(C). Even if penalty were imposed under Subsection A, on the basis of

negligence, however, the imposition of penalty in this case would be proper.

Taxpayer "negligence" for purposes of assessing penalty pursuant to Subsection A of § 7-

1-69 is defined in Regulation 3 NMAC 1.11.10 (formerly TA 69:3) as:

1) failure to exercise that degree of ordinary business care and prudence
which reasonable taxpayers would exercise under like circumstances;
2) inaction by taxpayers where action is required;
3) inadvertence, indifference, thoughtlessness, carelessness, erroneous belief
or inattention.

In this case, it appears that the Taxpayer's payment was late in being deposited into the state's

account due to an inadvertent error by the Taxpayer's bank, acting as its agent, which transmitted

the payment to the bank account of an unrelated third party. Inadvertent error has been held to

amount to negligence for purposes of the imposition of penalty and the fact that the error was

committed by an agent for the Taxpayer does not insulate the Taxpayer from the consequences of

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the error. El Centro Villa Nursing Center v. Taxation and Revenue Department, 108 N.M.

795, 779 P.2d 982 (Ct. App. 1989). Thus, the imposition of penalty pursuant to Subsection A

was proper.

The Taxpayer argues that it should not be considered negligent because it argues that it

acted with ordinary business care and prudence in the manner in which it handled its tax

payment. In support of this argument, the Taxpayer points to the fact that it has a record of

timely payment, both before and after the subject payment for which penalty was imposed.

While this is certainly commendable, it is also what is required of this and every other taxpayer.

I can find no language in the statute or the regulations which gives taxpayers one free late

payment. Each payment is subject to the requirements of timely payment.

The issue of what constitutes ordinary business care bears further discussion. Section 7-

1-13(A) provides as follows:

Taxpayers are liable for tax at the time of and after the transaction or
incident giving rise to tax until payment is made. Taxes are due on and
after the date on which their payment is required until payment is made.

Thus, taxpayers are liable for taxes at the time a taxable transaction occurs, but they are given

until the statutory due date to make payment of the tax. In the case of the taxes covered by the

combined reporting system; gross receipts, compensating and withholding taxes, they are due on

the twenty-fifth day of the month following the month in which the taxable incident occurred or
when the taxes were required to be withheld. See, NMSA 1978, §§ 7-9-11 and 7-3-6. This

provides taxpayers reporting taxes under the CRS system at least 25 days after they become

liable for tax before the payment is due. During this period of time the Taxpayer had the use of

these monies and chose not to make payment until the last possible day on which payment could

be made. This is, of course, an entirely proper course of action. But it provides for no allowance

for the type of inadvertent error which occurred with the transmittal of the payment in this case.

Given the consequences of such an error, the payment of both penalty and interest for late

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payment, it is at least arguable that waiting until the last day to make payment of taxes does not

amount to the exercise of ordinary business care and prudence.

The Taxpayer has argued that the Department's Regulation TA 69:4, now found at 3

NMAC 1.1.11 provides a basis for finding that it was not negligent for purpose of imposition of

penalty. Specifically, the Taxpayer relies upon the portion of the regulation which gives as one

example of non-negligence where:

a taxpayer, within twelve months of the original filing of a return and
without action of the Secretary or delegate, files an amended return
reflecting tax due or additional tax due and payment accompanies the
amended return.

The Taxpayer argues that since it caught its error in one day and corrected the error and made

payment on the same day it caught the error, that it falls within the standard of the example.

This regulation does not apply to the late payment of taxes. By its own language, it

applies to the filing of an amended return after the filing of an apparently erroneous return.

The Taxpayer has referred to a number of decisions which reflect that penalty has been

abated as providing authority for the abatement of penalty in this case. In almost all of those

cases, the Department abated penalty prior to the hearing on the other issues and the facts

pertinent to the abatement of penalty are not even discussed in the decision. Whatever the

reasons for the abatement of penalty, they were not in issue nor was the appropriateness of the

imposition of penalty discussed in those decisions. In the case or two in which penalty was

abated, there were facts which are clearly distinguishable from those in this case. The decision in

which the facts are most analogous to the facts in this case, an unnamed decision which was

attached as Exhibit H to the Taxpayer's Brief in Chief, the imposition of penalty was discussed

and upheld. That case involved an error committed by a special payment taxpayer's bank in

encoding an Automated Clearinghouse (ACH) payment, which is another method of

electronically transferring funds. Because the ACH payment was improperly encoded, it was

rejected by the state's fiscal agent bank. The Taxpayer's bank corrected the error and

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retransmitted payment the day following the due date. In response to the taxpayer's protest of the

imposition of penalty, the Decision and Order upheld the imposition of penalty, finding that the

bank's inadvertent error was negligent and attributing the negligence of the agent bank upon the

taxpayer for purposes of imposing penalty. Those facts are virtually indistinguishable from the

instant case.

INTEREST
The Taxpayer also contests the amount of interest which was assessed in this case. The

Department imposed a month's interest although the payment was only one day late. The

Taxpayer argues that the Department may not read NMSA 1978, § 7-1-67 in that manner because

it results in an unjust imposition of an usurious rate of interest.

The manner in which interest was imposed by the Department's assessment in this case is

exactly what the statute mandates. NMSA 1978, § 7-1-67 (1995 Repl. Pamp.) governs the

imposition of interest on late payments of tax. In pertinent part, it provides:

A. If any tax imposed is not paid on or before the day on which it
becomes due, interest shall be paid to the state on such amount from the
first day following the day on which the tax becomes due, without a regard
to any extension of time or installment agreement, until it is paid....
B. Interest due to the state under Subsection A or D of this section shall
be at the rate of fifteen percent a year, computed at the rate of one and one-
fourth percent per month or any fraction thereof.

D. If any tax required to be paid in accordance with Section 7-1-13.1
NMSA 1978 is not paid in the manner required by that section, interest
shall be paid to the state on the amount required to be paid in accordance
with Section 7-1-13.1 NMSA 1978. If interest is due under this subsection
and is also due under Subsection A of this section, interest shall be due
and collected only pursuant to Subsection A of this section. (emphasis
added).

The language of Subsection B is clear and unambiguous. Interest is computed at the rate of one

and one quarter percent per month, "or any fraction thereof". Thus, an entire month's interest is

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imposed on any fraction of a month in which the payment is late at the rate specified in the

statute. While the Taxpayer contends that this is unreasonable and unjust, when statutes are

unambiguous, there is no room to construe them or for courts to substitute their concept of what

is reasonable and just for that of the legislature. State v. Herrera, 86 N.M. 134 (Ct. App. 1974).

The language in the statute imposing a month's interest for "any fraction thereof" has been in the

Tax Administration Act since its enactment in 1965. See, Laws 1965, Ch. 248, §68. Since that

time, the Department has consistently interpreted the statute to impose a month's interest for any

fraction of a month that a payment is late.1 The administrative construction given a statute by the

agency charged with its administration is entitled to great deference and the administrative

interpretation will not be lightly overturned. Perea v. Baca, 94 N.M. 624, 614 P.2d 541 (1980).

When an administrative construction is of long standing, as is the case here, it is to be given even

greater weight. Kenneth v. Schmoll, 482 F.2d 90 (10th Cir., 1973). Thus, the assessment of one

month's interest in this case even though the Taxpayer's payment was only one day late was in

accordance with § 7-1-67 and was proper.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely, written protest to Assessment No. 1975329 pursuant

to NMSA 1978, § 7-1-24 and jurisdiction lies over the parties and the subject matter of this
protest.

1
Although this decision maker can only vouch that this has
been the Department's interpretation since his employment began
in 1978, it was understood at the time to be consistent with the
Department's longstanding interpretation of Section 7-1-67.

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2. NMSA 1978, § 7-1-69(C) imposes a penalty of 2% whenever a special payment

taxpayer fails to make payment of tax required to be paid pursuant to § 7-1-13.1 in accordance

with that statute, unless penalty is also required to be imposed pursuant to § 7-1-69(A).

3. The Taxpayer was negligent, pursuant to § 7-1-69(A), in failing to make timely

payment of tax, and penalty was properly imposed.

4. One month's interest was properly assessed pursuant to § 7-1-67, to the Taxpayer

for being one day late in paying its September, 1995 CRS taxes.

For the foregoing reasons, the Taxpayer's protest IS HEREBY DENIED.

DONE, this 4th day of August, 1997.

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