Severns v. N.M. Taxation & Revenue Dep't
| Decision Date | 01 April 2013 |
| Docket Number | NO. 31,817,31,817 |
| Court | Court of Appeals of New Mexico |
| Parties | WILLIAM C. SEVERNS, Protestant-Appellant/Cross-Appellee, v. NEW MEXICO TAXATION AND REVENUE DEPARTMENT, Respondent-Appellee/Cross-Appellant. IN THE MATTER OF THE PROTEST OF WILLIAM C. SEVERNS & DIANE SEVERNS TO ASSESSMENT ISSUED UNDER LETTER ID NO. L1943398784, L0715680128, L2080205184, LI074899328, L0384412032, LI25551040, and LI308387712. |
This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
APPEAL FROM THE TAXATION AND REVENUE DEPARTMENT
Brian VanDenzen, Hearing Officer
Tax Estate & Business Law, Ltd.
Clinton W. Marrs
Albuquerque, NM
Mendel Blumenfeld LLP
David J. Abell
Albuquerque, NM
for Appellant/Cross-AppelleeGary K. King, Attorney General
Tonya Noonan Herring, Special Assistant Attorney General
Santa Fe, NM
for Appellee/Cross-Appellant
{1} William C. Severns (Severns) appeals from the decision and order of a hearing officer affirming the New Mexico Taxation and Revenue Department's (the Department) assessment of unpaid personal tax and interest for tax years 2001-2004 and 2006-2007. The main issue on appeal is whether the hearing officer correctly determined that Severns was a New Mexico resident during the tax years at issue. In addition, the Department cross-appeals the hearing officer's decision to abate the Department's assessment of penalties. Having considered the arguments raised in each appeal, we remain unpersuaded and therefore affirm the decision and order of the hearing officer.
{2} For tax years 1977 through 2000, Severns and his wife, Diane Severns, were residents of New Mexico and filed joint New Mexico personal income tax returns. From tax year 2001 onwards, the Severns did not file personal income tax returns in New Mexico or in any other state. On June 13, 2008, the Department issued seven notices of assessment for unpaid personal income tax, penalties, and interest for taxyears 2001 through 2007. Mr. Severns was the only party named in the seven notices of assessment.
{3} Severns timely filed a written protest to the assessments, claiming that he and his wife were not New Mexico residents during the tax years at issue and that they had in fact changed their residency from New Mexico to Nevada in 2001. Severns' protest was heard by a Department hearing officer over the course of a two-day evidentiary hearing. During the hearing, Severns withdrew his protest with respect to tax year 2005, conceding that he was a New Mexico resident during that year. See NMSA 1978, § 7-2-2(S) (2007) (amended 2010) (providing that an individual is a New Mexico resident for purposes of taxation if he or she is physically present in the state for one hundred eighty-five days or more during the taxable year). After the hearing, the hearing officer entered a decision and order finding that Severns and his wife were New Mexico residents for all remaining tax years at issue and that there was insufficient evidence to establish a change of domicile from New Mexico to Nevada. On this basis, the hearing officer affirmed the assessment of personal income taxes plus interest for tax years 2001-2004 and 2006-2007. However, the hearing officer reversed the Department's assessment of penalties based on his finding that Severns was not negligent in failing to file personal income tax returns for these tax years. In addition, the hearing officer determined that Severns was not entitled to recover attorney fees.
{4} Severns timely appealed the hearing officer's residency determination and the failure to award attorney fees to this Court. See NMSA 1978, § 7-1-25(A) (1989) (). The Department filed a cross-appeal of the hearing officer's decision to abate the assessment of the penalties. We address the arguments raised in each appeal in turn.
{5} On appeal, this Court shall set aside a decision and order of the hearing officer only if it is (1) arbitrary, capricious, or an abuse of discretion; (2) not supported by substantial evidence in the record; or (3) otherwise not in accordance with the law. Section 7-1-25(C); Holt v. N.M. Dep't of Taxation & Revenue, 2002-NMSC-034, ¶ 4, 133 N.M. 11, 59 P.3d 491. "While we employ the whole record standard of review, the evidence is viewed in the light most favorable to the decision of the hearing officer." Brim Healthcare, Inc. v. Taxation & Revenue Dep't, 119 N.M. 818, 819, 896 P.2d 498, 499 (Ct. App. 1995); see Kewanee Indus., Inc. v. Reese, 114 N.M. 784, 786-87, 845 P.2d 1238, 1240-41 (1993). "If more than one inference can be drawn from the evidence[,] then the inference drawn by the hearing officer is conclusive." Kewanee Indus., 114 N.M. at 787, 845 P.2d at 1241. In reviewing the hearing officer's decision, we also take into account the statutory presumption that an assessment of taxes by the Department is correct, see NMSA 1978, § 7-1-17(C)(1992) (amended 2007), and that Severns had the burden of overcoming this presumption of correctness. See Holt, 2002-NMSC-034, ¶ 4 .
{6} Severns appeals the hearing officer's determination that he was a New Mexico resident during tax years 2001-2004 and 2006-2007 and that there was insufficient evidence to establish a change in domicile from New Mexico to Nevada in 2001. Severns specifically contends that the hearing officer (1) misapplied New Mexico law on domicile by requiring Severns to show that he maintained a continuous physical presence in Nevada during the tax years at issue; (2) erred in holding that Severns failed to rebut the statutory presumption that the Department's assessments were correct; and (3) misapplied the factors for determining domicile, as set forth in 3.3.1.9(C)(4) NMAC (12/15/2010). We turn first to the applicable law and then address the arguments raised by Severns.
{7} Under NMSA 1978, Section 7-2-3 (1981), "[a] tax is imposed at the rates specified in the Income Tax Act upon the net income of every resident individual" unless otherwise exempted by law. Prior to 2003, "resident" was defined in the Income Tax Act as "an individual who was domiciled in [New Mexico] during any part of the taxable year." Section 7-2-2(S) (1993). An individual was not a resident if he or she, "on or before the last day of the taxable year, changed his place of abode to a place" outside of New Mexico "with the bona fide intention of continuing actually to abide permanently [there.]" Id.
{8} In 2003, the Legislature amended the definition of resident to include "an individual who is physically present in [New Mexico] for one hundred eighty-five days or more during the taxable year[.]" Section 7-2-2(S) (2003). Thus, following the amendment, an individual is considered a New Mexico resident if he or she was domiciled in New Mexico during any part of the taxable year or if he or she was physically present in New Mexico for one hundred eighty-five days or more during the taxable year. Id. The Legislature further indicated that "any individual, other than someone who was physically present in the state for one hundred eighty-five days or more during the taxable year, who, on or before the last day of the taxable year, changed his place of abode to a place" outside of New Mexico "with the bona fide intention of continuing actually to abide permanently [there]" was not a resident for purposes of taxation. Id.{9} Our Supreme Court has stated that the definition of residency is substantially synonymous with domicile for income tax purposes. Hagan v. Hardwick, 95 N.M. 517, 518, 624 P.2d 26, 27 (1981); see Murphy v. Taxation & Revenue Dep't, 94 N.M. 54, 55, 607 P.2d 592, 593 (1980) (). "Domicile" has been defined in the Department's regulations as "the place where an individual has a true, fixed home, is a permanent establishment to which the individual intends to return after an absence, and is where the individual has voluntarily fixed habitation of self and family with the intention of making a permanent home." 3.3.1.9(C)(1) NMAC. "Every individual has a domicile somewhere, and each individual has only one domicile at a time." Id.
{10} In In re Estate of Peck, 80 N.M. 290, 292, 454 P.2d 772, 774 (1969), our Supreme Court provided that "a change of domicile requires both physical presence in the new locality and an intention to abandon the old domicile and to make a home in the new dwelling place without a present intention to leave it[.]" Later, in Hagan, our Supreme Court set forth the following standard for determining a change in domicile:
To effect a change from an old and established domicile to a new one, there must be a fixed purpose to remain in the new location permanently or indefinitely. For domicile once acquired is presumed to continue untilit is shown to have changed, and to show the change two things are indispensable,—"First, residence in the new locality; and, second, the intention to remain there[.]
95 N.M. at 519, 624 P.2d at 28 (alterations, internal quotation marks, and citation omitted); see 3.3.1.9(C)(2) NMAC (...
To continue reading
Request your trial