Could Dain Rauscher obtain a retroactive extension after missing the deadline to protest New Mexico's failure to act on its tax-refund claim?

Subject

Dain Rauscher, Inc. (Formerly Known as Rauscher Pierce Refsnes, Inc.) (D&O 98-46)

Plain-English summary

Dain Rauscher, Inc., formerly Rauscher Pierce Refsnes, Inc., filed a claim on December 23, 1996 for a refund of gross receipts tax paid in 1993. The Department neither granted nor denied it within 120 days. Under the refund-claim procedure then in Section 7-1-26(B)(1), the company's 90-day period to protest that inaction ended on July 21, 1997.

The company did not file until July 31, 1997. On that date it submitted both a protest and a request for a retroactive extension under Section 7-1-24(B). The Department denied the request, reasoning that Section 7-1-24(B)'s extension power covered protests of assessments and other peremptory notices or demands, while Section 7-1-26 separately controlled refund claims.

Hearing Officer Gerald B. Richardson agreed with the Department. He reviewed the intertwined legislative history of both statutes and concluded that the Legislature had created different procedural routes. Section 7-1-24(B) allowed extensions for the specific protest types named in that subsection — assessments and other peremptory notices or demands. A refund denial or agency failure to act was governed by Section 7-1-26, whose 90-day period already matched the maximum time available for the other protest types after extensions.

Because Section 7-1-24(B) did not authorize an additional extension for a refund protest, the Secretary lacked authority to consider Dain Rauscher's late request. The Department's summary-judgment motion was GRANTED, the taxpayer's cross-motion and protest were DENIED, and the Hearing Officer did not consider the merits of the underlying refund claim.

What this means for you

• A refund claim's procedural clock can decide the case before the tax merits are heard. Dain Rauscher missed the then-applicable deadline by ten days, and the tribunal never reached whether the company had overpaid tax.
• An agency's silence can start a protest period. Once the Department had taken no action for 120 days, the statutory 90-day period to protest that inaction began running.
• Extension rules are not automatically transferable between protest types. The decision treated assessment protests and refund-claim protests as separate statutory procedures.
• Calling every administrative challenge a "protest" did not make every rule in Section 7-1-24 apply. The Hearing Officer relied on the more specific refund provisions and the statutes' legislative history.
• This decision applied the statutes in effect for the 1996-1997 filing sequence. The page's reliance disclaimer matters especially for procedural deadlines, which may change.

Key questions answered

When did Dain Rauscher's refund-protest deadline expire?
July 21, 1997 — 90 days after the Department's 120-day period to act on the December 23, 1996 refund claim had elapsed.

Why couldn't the company receive a retroactive extension?
Section 7-1-24(B) authorized extensions for protests of assessments and other peremptory notices or demands. The Hearing Officer held that it did not extend to refund denials or failures to act on refund claims governed by Section 7-1-26.

Did the Hearing Officer decide whether the company deserved the gross receipts tax refund?
No. The issue was jurisdictional, so the decision expressly treated the merits as irrelevant and did not consider them.

What happened on the cross-motions for summary judgment?
The Department's motion was granted. Dain Rauscher's motion and its protest were denied.

Verbatim citations

The decision's statement of the disputed issue:

What is in dispute, however, is whether the provisions of Section 7-1-24(B) NMSA 1978 (1995 Repl. Pamp.) apply to allow extensions of time to be granted, at the discretion of the Secretary, when the matter in protest is the denial of a claim for refund.

The statutory-construction conclusion:

For all of the above reasons, it is concluded that the Legislature did not intend that the provisions of § 7-1-24(B) apply to protests to the Department’s denial of or failure to act upon a claim for refund.

The holding on the Secretary's authority:

The Secretary’s authority, pursuant to § 7-1-24(B) NMSA 1978 (1995 Repl. Pamp.) to grant extensions of time to file protests, is limited to protests of notices of assessment and other peremptory notices or demands of the Department and does not extend to protests of the Department’s denial of or failure to act upon claims for refund filed pursuant to § 7-1-26(A)(1) NMSA 1978.

The result:

IT IS HEREBY ORDERED that the Department’s Motion for Summary Judgment IS HEREBY GRANTED and the Taxpayer’s Motion for Summary Judgment IS HEREBY DENIED. Because this ruling also disposes of the Taxpayer’s protest, the Taxpayer’s protest IS HEREBY DENIED.

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Dain Rauscher, Inc. (Formerly Known as Rauscher Pierce Refsnes, Inc.)
• Decision PDF: D&O 98-46

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
DAIN RAUSCHER, INC., FORMERLY KNOWN
AS RAUSCHER PIERCE REFSNES, INC., NO. 98-46
ID. NO. 01-718277-00 8, PROTEST TO
DENIAL OF REQUEST FOR EXTENSION OF TIME

DECISION AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

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

Officer, upon cross-motions for summary judgment filed by the parties. Dain Rauscher,

Inc, formerly known as Rauscher Pierce Refsnes, Inc., hereinafter, “Taxpayer”, is

represented by Mary E. McDonald, Esq. of Sutin, Thayer & Browne, P.C. The Taxation

& Revenue Department, hereinafter, “Department”, is represented by Frank D. Katz,

Esq., Chief Counsel. Based upon the undisputed facts, set forth below, and the arguments

of the parties, IT IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. On December 23, 1996, the Taxpayer filed a claim for refund of gross

receipts tax paid to the Department in 1993.

2. The Department neither granted nor denied the claim for refund within

120 days after the claim for refund was filed.

3. July 21, 1997, was the date which was 90 days after 120 days after the

Taxpayer’s claim for refund was filed.

4. On July 31, 1997, the Taxpayer filed a request for a retroactive extension

of time, pursuant to the authority granted the Secretary in § 7-1-24(B), to file a protest to

the Department’s failure to either grant or deny the Taxpayer’s claim for refund. The

same day, along with the request for extension of time, the Taxpayer filed a protest of the

Department’s failure to either grant or deny the claim for refund, pursuant to § 7-1-24(A)

NMSA 1978 (1995 Repl. Pamp.) and § 7-1-26(B)(1) NMSA 1978 (1997 Cum. Supp.).

5. By letter dated August 18, 1997, the Department denied Rauscher’s

request for an extension of time within which to protest the Department’s failure to grant

or deny the claim for refund, stating the basis for the denial as:

Paragraph B of § 7-1-24 states that...Any protest by a
taxpayer shall be filed within thirty days of the date of
mailing of the notice of assessment or mailing to, or
service upon, the taxpayer of other peremptory notice
or demand, or the date of mailing or filing a return. In
order to qualify for a retroactive extension as spelled out in
Paragraph B, the incident under question must fall within
the criteria set in the statute as bolded above. Since you did
not receive a notice of assessment or other peremptory
notice or demand, Paragraph B of § 7-1-24 does not apply.
The authority to protest the department’s failure to take
action on the refund claim, and period of time for protest is
controlled by § 7-1-26.

By letter dated August 28, 1997, The Taxpayer protested the Department’s denial of

Rauscher’s request for an extension of time and rejection of Rauscher’s protest.

DISCUSSION

2
This issue to be determined herein is the jurisdiction of this administrative forum

to consider the protest1 filed by the Taxpayer to the Department’s denial of its claim for

refund. It is beyond dispute that the Taxpayer’s protest was not filed within the 90-day

time limit provided for in Section 7-1-26(B)(1) NMSA 1978 (1997 Cum. Supp.) for filing

a protest to the Department’s failure to take action on a claim for refund within 120 days.

It is also beyond dispute that the Taxpayer filed a written request with the Secretary of the

Department for an extension of time to file its protest pursuant to Section 7-1-24 (B)

NMSA 1978 (1995 Repl. Pamp.), and such request was made within the 60-day time

limit for making such requests. What is in dispute, however, is whether the provisions of

Section 7-1-24(B) NMSA 1978 (1995 Repl. Pamp.) apply to allow extensions of time to

be granted, at the discretion of the Secretary, when the matter in protest is the denial of a

claim for refund. The parties have ably briefed the issue and the legislative history of the

statutory provisions at issue, and their efforts have been very helpful to my understanding

of this complex and difficult matter.

Section 7-1-24(B) NMSA 1978 (1995 Repl. Pamp.)2 provides as follows:

Any protest by a taxpayer shall be filed within thirty days of
the date of the mailing to the taxpayer by the department of
the notice of assessment or mailing to, or service upon, the
taxpayer of other peremptory notice or demand, or the date
of mailing or filing a return. Upon written request of the
taxpayer made within the time permitted for filing a protest,
the secretary may grant an extension of time, not to exceed
sixty days, within which to file the protest. If a protest is
not filed within the time required for filing a protest, or if
an extension has not been granted within the extended time,
the secretary may proceed to enforce collection of any tax if
the taxpayer is delinquent within the meaning of Section 7-

1
Because this issue is jurisdictional, the merits of the Taxpayer’s protest are irrelevant to the issues raised
on summary judgment and are not considered herein.
2
This version was enacted by Laws 1993, ch. 5, §8.

3
1-16 NMSA 1978. Upon written request of the taxpayer
made after the time for filing a protest but not more than
sixty days after the expiration of the time for filing a
protest, the secretary may grant a retroactive extension of
time, not to exceed sixty days, within which to file the
protest provided that the taxpayer demonstrates to the
secretary’s satisfaction that the taxpayer was not able to file
a protest or to request an extension with the time to file the
protest and that the grounds for the protest have substantial
merit. The fact that the department did not mail the
assessment or other peremptory notice or demand by
certified or registered mail or otherwise demand and
receive acknowledgment of receipt by the taxpayer shall not
be deemed to demonstrate the taxpayer’s inability to protest
or request an extension within the time for filing a protest
within the required time. The secretary shall not grant a
retroactive extension if a levy has already been served
under sections 7-1-31, 7-1-33 and 7-1-34 NMSA 1978 or a
jeopardy assessment under section 7-1-59 NMSA 1978.
No proceedings other than those to enforce collection of
any amount assessed as tax and to protect the interest of the
state by injunction, as provided in Sections 7-1-31, 7-1-33,
7-1-34, 7-1-40, 7-1-53, 7-1-56, and 7-1-58 NMSA 1978,
are stayed by timely filing of a protest under this section.

The Taxpayer argues that the language in the provision allowing the Secretary to grant

retroactive extensions of time to file “a protest” is unambiguous and applies to any type

of allowable protest under the provisions of the Tax Administration Act, including the

Taxpayer’s protest to the Department’s failure to act upon its refund claim. The

Department claims that the language in the first sentence of the provision evidences a

legislative intent to limit the Secretary’s authority to grant retroactive extensions of time

in which to file a protest to only those types of protests listed in that sentence, thereby

precluding the Secretary from even considering a request for an extension of time to file

a protest where the denial of a claim for refund or the Department’s failure to act upon

such a claim is at issue. Additionally, the Department points out that the Legislature

4
amended both § 7-1-24(B) and § 7-1-26(A) in the same enactment of the 1993

legislative session, being Laws 1993, ch. 5. At the same time the legislature amended §

7-1-24(B) to allow for retroactive extensions of up to 60 days after the 30-day time

limit for filing protests had passed, it also amended § 7-1-26(A) to increase the time for

filing a protest to a denial or failure to act upon a claim for refund from 30 to 90 days.

The Department argues that this provides an identical maximum of 90 days for filing a

protest, whether it is a protest to an assessment of tax, a protest to some other

peremptory demand or notice from the Department, or a protest to a denial of or failure

to act upon a refund claim. Arguing that there is no evident reason to provide a longer

period of time for contesting the denial of or failure to act upon a refund claim than for

protesting an assessment of tax or other peremptory notice or demand, the Department

suggests that the simultaneous amendment of both §§ 7-1-24 and 7-1-26 supports its

restrictive interpretation of § 7-1-24(B).

Given the language in the first sentence of § 7-1-24(B), which refers to “any”

protest, but then specifically lists only protests to certain enumerated actions, I find the

provision to be ambiguous and in need of construction. In construing the meaning of a

particular statute, the reviewing authority’s central concern is to determine and give

effect to the intention of the legislature. State ex rel. Klineline v. Blackhurst, 106 N.M.

732, 749 P.2d 1111 (1988). Additionally, because both §§ 7-1-24 and 7-1-26 deal with

administrative protests of tax matters and cross reference each other, those statutes should

be construed in pari materia to determine legislative intent. Finally, the evolution of

those two sections is instructive to the analysis of legislative intent.

5
As suggested by the Taxpayer, the starting point in the analysis of §§ 7-1-26 and

7-1-24 is the version of them enacted by Laws, 1986, Ch. 20, §§ 15 and 17. Those

enactments provided two separate protest procedures, depending upon whether a taxpayer

was protesting the Department’s denial of or failure to act upon a claim for refund, or

whether an assessment of tax or other peremptory demand was being protested. Section

7-1-26, which governs claims for refund provided in pertinent part as follows:

A. If any person believes that he has made payment of or
had withheld from him any tax in excess of that for which
he was liable...he may claim a refund by directing to the
secretary, within the time limited by the provisions of
Subsections B and C of this section, a written claim for
refund.

The secretary or the secretary’s delegate may allow the
claim in whole or in part or may deny the claim. If the
claim is denied in whole or in part in writing or if no action
is taken on the claim the person may either:
(1) direct to the secretary, within thirty days after
the mailing of the denial of a claim or within thirty days
after the expiration of one hundred twenty days after the
mailing of a claim on which no action has been taken, a
written request for hearing of his claim, which shall be
granted and set for hearing by a hearing officer designated
by the secretary within thirty days after the receipt of the
request in accordance with the provisions of Section 7-1-24
NMSA 1978 and pursue the remedies of appeal from
decisions adverse to him as provided in Section 7-1-25
NMSA 1978, or
(2) commence a civil action...in the district court
for Santa Fe county...demanding the refund....

Laws 1986, ch. 20, § 17. Thus, the way in which a taxpayer administratively contested

the denial of or failure to act upon its refund claim was to make a written request for a

hearing, which was then granted and the hearing was to be conducted in accordance with

the procedures for an administrative hearing set out in § 7-1-24.

6
Section 7-1-24 provided in pertinent part as follows:

A. Any taxpayer may dispute the assessment to him or
payment by him of any amount of tax or the application to
him of any provision of the Tax Administration Act by
filing with the secretary a written protest against the
assessment or against the application to him of the
provision or a written claim for refund in the amount
claimed to have been erroneously paid as tax. Every
protest shall state the nature of the taxpayer’s complaint
and the affirmative relief requested. The secretary may, in
appropriate cases, provide for an informal conference
before setting a hearing of the protest or acting on any
claim for refund.
B. Any protest by a taxpayer shall be filed within thirty
days of the date of the mailing to him by the department of
the notice of assessment or mailing to, or service upon, him
of other peremptory notice or demand, or the date of
mailing or filing his return, and if not filed within that time
or such other reasonable time, not to exceed thirty
additional days, as the secretary may grant as an extension
of time for filing of a written protest, the secretary may
proceed to enforce collection of any tax if the taxpayer is
delinquent within the meaning of Section 7-1-16 NMSA
1978. To be effective, any notice of assessment or other
peremptory notice or demand shall briefly inform the
taxpayer of his rights of appeal under this section and of the
consequences of his failure to appeal. No proceedings
other than those to enforce collection of any amount
assessed as tax and to protect the interest of the state by
injunction, as provided in Sections 7-1-31, 7-1-33, 7-1-34,
7-1-40, 7-1-53, 7-1-56 and 7-1-58 NMSA 1978, are stayed
by timely filing of a protest under this section.
C. Claims for refund shall be filed as provided for in
Section 7-1-26 NMSA 1978.

(emphasis added.)

Laws 1986, ch. 20, 15. It should also be noted that the remaining subsections of § 7-1-24,

that is, subsections D through I, dealt with the conduct of the administrative hearing. As

written, the 1986 version of § 7-1-24 did not cover the method for protesting the denial of

or failure to act upon a claim for refund. Subsection A provided that a taxpayer could

7
dispute the payment of any amount of tax by filing a written claim for refund, and it

allowed the Secretary to set an informal conference before acting on any claim for refund.

Subsection B only referenced protests to notices of assessment or of other peremptory

notice or demand or of filing a return, which is another method of assessing a tax. See, §

7-1-17(B)(1) NMSA 1978 (1983 Repl. Pamp.) By the Taxpayer’s own admission, under

the 1986 version of § 7-1-24, the procedure to be followed by a taxpayer disputing the

Department’s denial of, or failure to act upon a claim for refund was not a protest under §

7-1-24, but rather, was to file a request for hearing of its claim for refund under § 7-1-26.3

See, Taxpayer’s Reply brief, p. 3. It is also noteworthy that § 7-1-26 provided for an

absolute 30 day period of time to contest the Department’s denial of a claim for refund or

failure to act on such a claim within 120 days of its filing, while § 7-1-24(B) allowed the

Secretary to extend the time for protesting an assessment or other peremptory notice or

demand by an additional 30 days beyond the standard 30 day time limit.

These sections of law were amended again in 1989. See, Laws 1989, ch. 325, §§

6 and 8. Section 7-1-26(A)(1) was substantially amended. In Subsection A language was

added addressing a matter which the previous versions of the statute had not addressed,

whether a claim for refund could be refiled. The amended statute provided that claims for

refund which were either wholly or partially denied in writing could not be refiled. By

3
In spite of this admission, the Hearing Officer did consider whether denials of claims for refund might be
considered to fall under the categorization of a “peremptory notice” under § 7-1-24(B). Section 7-1-26 is
the more specific provision outlining the procedure for disputing a denial of a claim for refund, however,
which, under rules of statutory construction, would govern over the more general provision of § 7-1-24(B).
Even more persuasive, however, is that sometimes, as in the instant case, the Department takes no action to
either grant or deny a claim for refund. It simply fails to act upon it. In such a case, the Department issues
nothing which could be considered to be a “peremptory notice”. Since the Department’s failure to act upon
a refund claim acts as a de facto denial, it wouldn’t make sense for the legislature to intend that actual
refund denials, but not de facto denials, be covered under the rubric of a peremptory notice.

8
implication, claims that were not acted upon could be refiled, so long as they were refiled

within the statute of limitations for filing refund claims found elsewhere in § 7-1-26.

Additionally, § 7-1-26(A) was reordered somewhat. While retaining the 30 day

time limit for contesting the Department’s denial of a refund claim or for contesting the

Department’s failure to act upon a refund claim after 120 days have expired, it moved

those time limits from subsections (A)1 and (A)2, which apply, respectively to actions

invoking the administrative forum to contest the Department’s actions and actions filed in

District Court, to the main body of Subsection A. Since the same time limits were

applicable, it made some sense to only state them once, rather than twice. Subsection

(A)1 was rewritten to allow a taxpayer wishing to pursue an administrative remedy to

address his dispute over the Department’s denial of or failure to act upon his claim for

refund to4:

(1) direct to the secretary [, within thirty days after the
mailing of the denial of a claim or within thirty days after
the expiration of one hundred twenty days after the mailing
of a claim on which no action has been taken,] a written
[request for hearing of his claim] protest against the denial
of, or failure to either allow or deny, the claim, which shall
be [granted and] set for hearing by a hearing officer
designated by the secretary within thirty days after the
receipt of the [request] protest in accordance with the
provisions of Section 7-1-24 NMSA 1978 and pursue the
remedies of appeal from decisions adverse to [him] the
protestant as provided in Section 7-1-25 NMSA 1978;

Thus, the method for contesting a refund denial or the Department’s failure to act upon a

claim for refund was changed from filing a request for a hearing on the taxpayer’s claim

for refund, to filing a protest with the Secretary. Now, any taxpayer choosing the

9
administrative forum to contest the Department’s actions, whether it be an assessment of

tax, the application of the Tax Administration Act, a peremptory notice or demand, or a

denial of or failure to act upon a refund claim does so by filing a written protest with the

Secretary.

Section 7-1-24(A) was amended to reflect this change as well, providing in

pertinent part5:

A. Any taxpayer may dispute the assessment to [him or
payment by him] the taxpayer of any amount of tax [or] ,
the application to [him] the taxpayer of any provision of the
Tax Administration Act or the denial of or failure to either
allow or deny, a claim for refund made in accordance with
Section 7-1-26 NMSA 1978 by filing with the secretary a
written protest against the assessment or against the
application to him of the provision or a written claim for
refund of the amount claimed to have been erroneously paid
as tax.

Unfortunately, although language was added to include the denial of or failure to act upon

a refund claim to the actions of the Department which a taxpayer could dispute, the old

language referring to the claim for refund, rather than to a written protest, was retained.

Although somewhat confusing, when read in pari materia with the more specific

provisions of § 7-1-26, it was sufficiently clear that a written protest was the means now

provided for administratively contesting the denial of or failure to act upon a refund

claim. It should also be noted that even though the means for contesting the

Department’s denial of or failure to act upon a claim for refund changed to filing a

protest, no amendments were made to the language of Subsection B of § 7-1-24 which

4
Legislative drafting style is adopted to show the changes to the statute as amended by placing in brackets
and striking through the language which was deleted by the amendment. Language added by the
amendment is shown by underlining.

10
only referenced protests to notices of assessment, peremptory notices or demands from

the Department, or the filing of a return.

In 1993, the Legislature amended both § 7-1-24 and § 7-1-26 again in the same

act. As noted in the session laws, Ch. 5 of the Laws of 1993 was passed by the

Legislature as House Bill 44, as amended, approved on February 23, 1993.6 Subsection

A of § 7-1-24 was amended to fix the problem created by the 1989 amendment, clarifying

that a taxpayer could contest the Department’s denial of or failure to act upon a claim for

refund by filing a protest to the Department’s denial or failure to act.

Subsection B of § 7-1-24 was substantially amended with respect to extensions of

time for filing protests. The former provision had simply provided the Secretary the

authority to grant an extension of time, not to exceed 30 days, to file a protest. As

amended, Subsection B allowed the Secretary to grant an extension of time of up to 60

additional days to file a protest. The Secretary’s authority was separately addressed,

depending upon whether the request for an extension of time was made within the

original 30 days for filing the protest, or after the 30 days had expired. If requested

within the 30 days, the Secretary is simply given the power to extend the deadline by

5
Legislative drafting style is used.
6
The Taxpayer argued that the Department had failed to prove that House Bill 44 was the bill which
became Ch. 5 of the Laws of 1993, but the reference in the Session Laws is sufficient for this tribunal to
take administrative notice of the fact.

11
another 60 days. If an extension was not requested within the 30 days to file a protest,

then the Secretary can still grant an extension of up to 60 days provided that the taxpayer

demonstrates to the secretary’s satisfaction that the taxpayer was not able to file a protest

or to request an extension of time within the time to file the protest and that the grounds

for the protest have substantial merit. Additionally, the language which provided that to

be effective, the notice of assessment or peremptory notice or demand must inform the

taxpayer of his rights of protest was deleted from the subsection. New language was

added stating that the fact that the Department did not mail the assessment or peremptory

notice or demand by certified or registered mail or otherwise receive acknowledgment of

receipt by the taxpayer would not be deemed to demonstrate a taxpayer’s inability to

protest or request an extension of time to file a protest. Finally, new language was added

prohibiting the Secretary from exercising his or her discretion to grant a retroactive

extension of time where a levy or jeopardy assessment has been issued.

Section 7-1-26(A) was also substantially amended by the same legislation. First,

language was added which expressly recognized the previously implicit right to refile a

claim for refund if the Department has not taken action to either grant or deny any portion

of the claim for refund within 120 days of the filing of the claim, so long as it is refiled

within the time limits of Subsection B of § 7-1-26. More pertinent to this matter, the 30-

day time limit for administratively protesting the denial of or failure to act upon a refund

claim was changed to 90 days from the denial or 90 days after 120 days had passed since

the filing of the claim. Finally, the language in Subsection (A)(1) which had directed that

the administrative hearing be set within thirty days of the filing of the protest was

changed to only require that the hearing be set “promptly”.

12
The Taxpayer argues that the 1993 amendments to § 7-1-24(A) completed the job

which was begun by the 1989 amendments, that is, to make clear that a taxpayer’s dispute

of the Department’s denial of, or failure to grant or deny a claim for refund is to be filed

as a protest and will be subject to the same requirements and procedures as any other

protest under § 7-1-24. While the first part of this proposition, that the filing of a protest

is the means of contesting the Department’s denial or failure to act upon a claim for

refund is undoubtedly true, this was previously made clear by the 1989 amendments to §

7-1-26, and the legislative oversight in failing to change all of the relevant language of §

7-1-24(A) was not critical to this change, since the more specific provisions of § 7-1-26

would govern in any event. It is the second part of this argument, that the 1993

amendments clarified that the legislature intended that a protest to a denial of or failure to

act upon a claim for refund be subject to the same requirements and procedures as any

other protest under § 7-1-24 which remains in dispute.

The Taxpayer, in support of this proposition, relies heavily upon the way that the

legislature amended Subsection B of § 7-1-24 to address extensions of time. The 1989

version of Subsection B contained the requirement that protests to assessments or

peremptory notices or demands be filed within thirty days of the mailing of the

assessment or mailing or service of the peremptory notice and demand and granted the

Secretary the authority to grant a 30 day extension of time for such protests in the same

sentence of the subsection, linking the two provisions with an “and”. The 1993

amendments put the language granting the Secretary the authority to grant an extension of

time into a separate sentence from the first sentence which specifically listed only protests

to assessments and peremptory notices and demands. The Taxpayer argues that by doing

13
so, the Legislature evidenced an intention to de-link the limiting language of the first

sentence of the subsection with respect to types of protests, from the language of the rest

of the subsection dealing with extensions of time.

I think the Taxpayer makes too much of the removal of an “and”. In the first

place, the 1993 amendment not only extended from 30 days to 60 days the Secretary’s

authority to grant extensions of time to file protests, it also made provision for two

different circumstances in which the extensions may be granted, depending upon whether

the extension of time is requested within the original 30 days for filing a protest or after

that time, and it provided for different matters to be considered by the Secretary,

depending upon which type of extension is requested. Rather than indicating a legislative

intention to de-link the restrictive language of the first sentence from the provisions about

extensions of time, it is at least as likely that the revision simply reflected the

Legislature’s intent to avoid creating a incredibly complex run-on sentence which would

have made the subsection unwieldy and difficult to decipher. Besides, the restrictive

language of the first sentence still remains in the same subsection of the statute as the new

provisions allowing the more liberal time limits for extensions of time and would be read

together under ordinary rules of statutory construction. If the legislature had truly

intended the more liberal time limits for extensions expressed in Subsection B to apply to

all protests, no matter what departmental actions were being protested, it would have

been more reasonable to do it expressly, by adding language to the first sentence of

Subsection B, expressly referring to protests of denials of or failure to act upon claims

for refund to overcome the restrictive language in the first sentence.

14
Even more compelling evidence that the 1993 Legislature did not intend the

extensions of time provided for in Subsection B to apply to refund claims is the new

sentence added immediately after the language granting the Secretary additional authority

to extend the time for filing protests. It provides:

The fact that the department did not mail the assessment or
other peremptory notice or demand by certified or
registered mail or otherwise demand and receive
acknowledgement of receipt by the taxpayer shall not be
deemed to demonstrate the taxpayer’s inability to protest
or request an extension within the time for filing a protest
within the required time. (emphasis added).

This language reiterates the restrictive language of the first sentence of Subsection B

limiting the types of protest and it does so in the same sentence that discusses the criteria

for the Secretary to consider in granting the precise type of extension of time this

Taxpayer was seeking under the new law, a retroactive extension of time. This is a clear

indication that the extensions of time referenced in that subsection are limited to those in

which an assessment or other peremptory notice or demand is being protested.

Also persuasive of the legislative intent to restrict the language of Subsection B to

extensions of time for the enumerated types of protest is the fact that at the same time the

legislature added sixty additional days to the time limits for filing protests under § 7-1-

24(B), it also amended § 7-1-26(A) which expressly deals with the time limits for

protesting the Department’s denial of or failure to act upon a claim for refund to add an

identical 60 days. This creates a parity in the time allowed for filing a protest regardless

of the Departmental action (or non-action in the case of a failure to grant or deny a refund

claim) which is being protested. The Taxpayer has failed to posit any reason for the

Legislature to provide for longer periods of time to protest the Department’s denial of or

15
failure to act upon a refund claim than for protesting an assessment of tax or other

peremptory notice or demand of the Department, other than to state that the Legislature

intended to liberalize the protest procedures. While this is true, the protest procedures

would also be liberalized under the Department’s more restrictive view of the effect of

the 1993 amendments, and there still remains no persuasive reasoning to support even

more liberal provisions for protesting refund claims than other types of protests. It would

seem especially unlikely that the Legislature would have intended to provide a longer

amount of time to protest the Department’s denial of or failure to act on refund claims

than it would to assessments by the Department given the requirement that the

Department pay interest on claims for refund which are not granted and upon which the

taxpayer ultimately prevails since it could potentially add to the amount of interest the

state would be required to pay. See, § 7-1-68 (C) NMSA 1978.

Additionally, the differential treatment argued for by the Taxpayer is not

supported by Department’s explanation of the substantive changes which House Bill 44

would create as provided to the Legislature in the Department’s fiscal impact report

submitted for consideration during the legislative process.7

Finally, although not discussed by the parties in their memoranda of law, the

interpretation of § 7-1-24(B) argued by the Taxpayer would create yet another

unexplainable differential treatment of taxpayers under the Tax Administration Act. In

this case, we have been dealing only with administrative protests to the Department’s

7
Because the Department’s fiscal impact report was a contemporaneous document presented to the
Legislature during the course of enactment of House Bill 44, it may properly be considered in determining
legislative intent. State ex rel. Helman v. Gallegos, 117 N.M. 346, 355, 872 P.2d 1352 (1994).

16
denials of or failure to act upon refund claims under §§ 7-1-24 and 7-1-26(A)(1).

Taxpayers may also choose to sue the Department in District Court to contest the

Department’s denial of or failure to act upon a refund claim, pursuant to § 7-1-26(A)(2).

Had the Legislature intended the extension of time language of § 7-1-24(B) to apply to

protests of the Department’s denials of or failure to act upon refund claims, then a

taxpayer choosing the administrative remedy rather than filing suit in District Court

would have sixty more days to contest the Department’s actions than a taxpayer filing in

District Court. If there is a basis for such differential treatment, it is not at all obvious to

this decision maker what that may be.

For all of the above reasons, it is concluded that the Legislature did not intend that

the provisions of § 7-1-24(B) apply to protests to the Department’s denial of or failure to

act upon a claim for refund.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely written protest, pursuant to § 7-1-24 NMSA

1978 to the Department’s application of § 7-1-24(B) of the Tax Administration Act

to determine that the Secretary did not have the authority to consider granting the

Taxpayer an extension of time to file a protest to the Department’s failure to act upon its

claim for refund. Therefore, jurisdiction lies over both the parties and the subject matter

of this protest.

2. The Secretary’s authority, pursuant to § 7-1-24(B) NMSA 1978 (1995

Repl. Pamp.) to grant extensions of time to file protests, is limited to protests of notices

of assessment and other peremptory notices or demands of the Department and does not

17
extend to protests of the Department’s denial of or failure to act upon claims for refund

filed pursuant to § 7-1-26(A)(1) NMSA 1978.

For the foregoing reasons, IT IS HEREBY ORDERED that the Department’s

Motion for Summary Judgment IS HEREBY GRANTED and the Taxpayer’s Motion for

Summary Judgment IS HEREBY DENIED. Because this ruling also disposes of the

Taxpayer’s protest, the Taxpayer’s protest IS HEREBY DENIED.

DONE, this 31st day of August, 1998.

18