New Mexico – Taxpayer’s Alternative Energy Product Tax Credit Denied

SALT Report 2855 – A New Mexico Department of Taxation and Revenue hearing officer issued a ruling regarding a Taxpayer’s application for the alternative energy product manufacturer’s credit against its combined tax liabilities because the Taxpayer did not meet the credit’s employment requirements.

In this case, the Taxpayer prepared and signed an application for the tax credit on July 24, 2011. However, the Taxpayer did not submit the application to the Department until December 21, 2011 as the application was under review by the Taxpayer’s accountant. On January 6, 2012, the Department sent the Taxpayer a letter acknowledging receipt of the Application for Alternative Energy Product Manufacturer’s Tax Credit. In that letter, the Department requested a copy of the Taxpayer’s payroll registers which included those from the date the application was signed, and as statutorily required, those from one year and one day prior to the date the application was signed.

The Taxpayer submitted the requested payroll registers, which indicated that at the time the application was signed in July 2011 the Taxpayer had an increase in employees.  However, for the one-year period that began on December 21, 2010 and ended on the December 21, 2011 mailing of the credit application the Taxpayer had a net reduction of 146 employees.  As a result of that reduction, the Department denied the Taxpayer’s application.

The Taxpayer filed a formal appeal of that decision.  Upon review, the hearing officer stated that the issue in this case is which date controls the statutorily required one-year increased employment look-back period: the July 24, 2011 date on which the Taxpayer signed the application, or the December 21, 2011 date on which the Taxpayer mailed the application to the Department.

The Taxpayer argued that the date of the signature on the application determined when the application was filed. However, the hearing officer ruled that the Taxpayer did not actually apply for the credit until it mailed the application to the Department on December 21, 2011.  Additionally, the hearing officer noted the Department has consistently ruled that the timeliness of any submission is determined by the date of mailing.

As a result, the Taxpayer’s appeal was denied, based on the fact that the Taxpayer had a net reduction in employees in the year before the application was mailed.  Further, the hearing officer determined that the Department properly denied the credit because the Taxpayer did not satisfy the credit’s eligibility requirements.

For Further Information

New Mexico Taxation and Revenue Department – Decision and Order No. 13-20