AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• The Taxpayers, Joseph and Jennifer Cervantes, were penalized by the New Mexico Taxation and Revenue Department for the late payment of their 2019 personal income taxes. They filed a formal protest against the civil negligence penalty and interest assessed. The administrative hearing officer (AHO) abated the civil penalty but affirmed the interest owed, leading to the Department's appeal of the penalty abatement.

Procedural History

• Appeal from the Administrative Hearings Office: The AHO abated the civil negligence penalty but affirmed the interest owed (para 1).

Parties' Submissions

• Taxpayers: Argued that their late payment was due to a mistake of law made in good faith and on reasonable grounds, specifically misunderstanding the tax payment deadline due to changes announced for the 2020 tax year and a breakdown in communication with their certified public accountant (CPA) (paras 7-10).
• Respondent-Appellant (New Mexico Taxation & Revenue Department): Contended that the AHO's abatement of the civil penalty was not supported by substantial evidence, arguing that the Taxpayers' mistake did not qualify as a mistake of law and that their reliance on their CPA's silence was unreasonable (paras 4, 8, 10).

Legal Issues

• Whether the AHO erred in abating the civil negligence penalty under NMSA 1978, Section 7-1-69(B) and 3.1.11.11(D) NMAC for the Taxpayers' late payment of 2019 personal income taxes (para 1).
• Whether the Taxpayers' late payment due to a mistake of law made in good faith and on reasonable grounds qualifies for penalty abatement under Section 7-1-69(B) (paras 4, 6-10).

Disposition

• The decision of the Administrative Hearing Officer to abate the civil negligence penalty was affirmed (para 11).

Reasons

• The Court, comprising Judges Zachary A. Ives, Shammara H. Henderson, and Gerald E. Baca, unanimously affirmed the AHO's decision. The Court applied a whole-record standard of review and found no reversible error in the AHO's decision. It was determined that the Department did not challenge the AHO's legal reasoning regarding the relationship between Subsections A and B of Section 7-1-69 effectively. The Court concluded that substantial evidence supported the AHO's findings that the Taxpayers made a mistake of law in good faith and on reasonable grounds. The Taxpayers mistook the filing deadline based on changes announced for the 2020 tax year and a breakdown in their long-standing communication practice with their CPA. The Department's arguments were found to lack persuasive authority or explanation to overturn the AHO's understanding of the statute or its application to the facts. Thus, the Court held that the Taxpayers met all requirements for abatement under Section 7-1-69(B), supporting the AHO's decision (paras 2-11).