STATE EX REL. SHELL WESTERN v. Chavez

Decision Date21 November 2001
Docket NumberNo. 21,225.,21,225.
Citation38 P.3d 886,131 N.M. 445,2002 NMCA 5
CourtCourt of Appeals of New Mexico
PartiesSTATE of New Mexico ex rel. SHELL WESTERN E & P, INC., Petitioners-Appellants, v. John J. CHAVEZ, Secretary of the Department of Taxation and Revenue, Respondent-Appellee.

Harold L. Hensley, Jr., Richard E. Olson, Andrew J. Cloutier, Joel M. Carson, III, Hinkle, Hensley, Shanor & Martin, L.L.P., Roswell, NM, for Appellants.

Patricia A. Madrid, Attorney General, Gail MacQuesten, Special Assistant Attorney General, Santa Fe, NM, for Appellee.

Certiorari Denied, No. 27,262, January 9, 2002.

OPINION

CASTILLO, Judge.

{1} Shell Western E & P, Inc. (Shell) appeals from the order of the district court quashing an alternative writ of mandamus. The question before us is whether the Secretary of the Department of Taxation and Revenue properly excluded Shell from participation in a tax amnesty program enacted by the legislature. We hold that Shell should have been allowed to participate in the program and therefore reverse.

FACTS AND PROCEDURE

{2} Shell explores for and produces crude oil, natural gas, and natural gas condensate in New Mexico. Late in 1998 the Department of Taxation and Revenue (the Department) determined that Shell had underpaid severance taxes by undervaluing its crude oil and natural gas condensate, and assessed it tax of $989,778.40 and interest then accrued of $660,052.56. Believing that Shell had deliberately undervalued these products, the Department also assessed a civil fraud penalty of $498,406.79, pursuant to NMSA 1978, § 7-1-69(C) (2001). Shell filed a formal protest with the Department.

{3} During the pendency of the protest, the legislature passed the Amnesty Act (the Act), providing for a temporary amnesty for certain taxpayers. 1999 N.M. Laws, ch. 10. We set forth the full text of the Act since it does not appear in the New Mexico Statutes Annotated:

AN ACT

DIRECTING THE TAXATION AND REVENUE DEPARTMENT TO CONDUCT A TEMPORARY TAX AMNESTY PROGRAM; EARMARKING CERTAIN TAX AMNESTY REVENUES FOR THE TAXATION AND REVENUE INFORMATION MANAGEMENT SYSTEMS PROJECT; MAKING APPROPRIATIONS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. TEMPORARY TAX AMNESTY PROGRAM—DISTRIBUTION OF REVENUES—APPROPRIATIONS.—
A. Two hundred thousand dollars ($200,000) is appropriated from the general fund to the taxation and revenue department for expenditure in fiscal year 2000 for the purpose of conducting a tax amnesty program as provided in Subsection B of this section. Any unexpended or unencumbered balance remaining at the end of fiscal year 2000 shall revert to the general fund.
B. For the taxes and tax acts administered under the Tax Administration Act, the secretary of taxation and revenue, with the concurrence of the governor, is authorized to declare an amnesty period of no more than ninety days, provided that any amnesty period occur within fiscal year 2000. All revenue collected as a result of the tax amnesty shall be identified specifically and reported to the first session of the forty-fifth legislature.
C. The secretary of taxation and revenue is authorized to waive, during the amnesty period only, the interest and penalty provisions under Sections 7-1-67 and 7-1-69 NMSA 1978 on taxes that are:
(1) due and not assessed prior to the day the amnesty period begins; and
(2) due, assessed and not paid on the day the amnesty period begins, but that are paid by the taxpayer or that the taxpayer agrees to pay pursuant to an installment payment agreement entered into with the taxation and revenue department on or before the last day of the amnesty period.
D. Upon deposit into the tax administration suspense fund of tax revenue identified specifically as revenue from taxes paid during the amnesty period attributable to the provisions of this section, and after all necessary distributions and transfers as provided by law, except to the general fund, have been made pursuant to Section 7-1-6.1 NMSA 1978, the first two hundred thousand dollars ($200,000) of the remaining amount shall be distributed to the general fund and the remainder, notwithstanding the provisions of Section 7-1-6.1 NMSA 1978, shall be transferred to the taxation and revenue department and is appropriated for expenditure by the department for the taxation and revenue information management systems project; provided that when the total amount transferred pursuant to this subsection reaches fifteen million dollars ($15,000,000), the remaining revenue from taxes paid during the amnesty period attributable to the provisions of this section shall be distributed pursuant to the provisions of Section 7-1-6.1 NMSA 1978.
Section 2. DELAYED REPEAL.— The provisions of this act are repealed effective July 1, 2001.

{4} After the Governor signed the legislation, the Secretary announced that a tax amnesty program would be in effect from August 16, 1999, through November 12, 1999. The Secretary then issued guidelines for the program which included certain eligibility requirements eliminating participation by taxpayers who had been assessed a civil fraud penalty or who had "formally filed a protest" but did not withdraw "the protest during the tax amnesty period."

{5} Shell disagreed with the Secretary's interpretation of the Act allowing him to limit eligibility. Accordingly, on November 11, 1999, Shell delivered a check to the Department in the amount of $989,778.40, the full principal assessment against it. Shell admitted no fraud or wrongdoing, but offered to dismiss its protest if the Department accepted its payment and accorded its participation in the amnesty program. On December 1, 1999, the Department returned Shell's check and stated that Shell did not qualify for amnesty.

{6} Shell sought an alternative writ of mandamus in the district court compelling the Secretary to accept its tender under the amnesty program. The district court granted the writ, ordering the Secretary to grant amnesty or to show cause why he should not do so. After considering the Secretary's answer to the writ and briefs filed by both parties, and after a hearing, the court quashed the alternative writ and dismissed the proceedings. Shell appeals.

STANDARD OF REVIEW

{7} The interpretation of a statute is a question of law which an appellate court reviews de novo. State v. Cleve, 1999-NMSC-017, ¶ 7, 127 N.M. 240, 980 P.2d 23. Our primary concern is to implement the intent of the legislature. Unisys Corp. v. N.M. Taxation & Revenue Dep't, 117 N.M. 609, 611, 874 P.2d 1273, 1275 (Ct.App.1994). "In determining this intent, we look primarily to the language of the act and the meaning of the words, and when they are free from ambiguity, we will not resort to any other means of interpretation." Sec. Escrow Corp. v. State Taxation & Revenue Dep't, 107 N.M. 540, 543, 760 P.2d 1306, 1309 (Ct.App.1988).

THE SECRETARY'S DISCRETION

{8} We must first determine whether the legislature gave the Secretary discretion to determine which classes of tax-payers were eligible for the program. "Mandamus is a drastic remedy to be invoked only in extraordinary circumstances." Brantley Farms v. Carlsbad Irrigation Dist., 1998-NMCA-023, ¶ 12, 124 N.M. 698, 954 P.2d 763. It "lies only to force a clear legal right against one having a clear legal duty to perform an act and where there is no other plain, speedy and adequate remedy in the ordinary course of law." Id. ¶ 16. The issue before us is whether the Secretary had a statutory duty to include Shell in the amnesty program. "Mandamus is appropriate to compel the performance of a statutory duty only when that duty is clear and indisputable." Id. If the legislature gave the Secretary the discretion to further define taxpayer eligibility or the power to choose between alternatives, mandamus will not lie. See Perea v. Baca, 94 N.M. 624, 626-27, 614 P.2d 541, 543-44 (1980)

(stating that when transferor meets the requirements of a statute regarding transfer of liquor license, director's duty becomes ministerial and subject to enforcement by mandamus) El Dorado at Santa Fe, Inc. v. Bd. of County Comm'rs, 89 N.M. 313, 317, 551 P.2d 1360, 1364 (1976) (holding that mandamus is not appropriate to "direct the performance of the particular act from among two or more allowed alternatives"). To make this determination, we must construe the meaning of the statute.

{9} According to Section 1(B) of the Act, once the tax amnesty program is established, the Secretary is given discretion to decide how long the amnesty program would be in effect. He is "authorized to declare an amnesty period of no more than ninety days, provided that any amnesty period occur within fiscal year 2000." 1999 N.M. Law ch. 10-1(B). Clearly this language gave the Secretary the power to choose how long the program lasted, so long as it did not exceed ninety days. See Unisys Corp., 117 N.M. at 612, 874 P.2d at 1276 (holding that where legislation gave Secretary choice to act or not to act he had discretion to decide what to do).

{10} Similarly, the Act gives the Secretary authority to waive, during the amnesty period only, the interest and penalty provisions under NMSA 1978, §§ 7-1-67 and 69 (2001). Section 7-1-67 sets the rate of interest to be charged on taxes imposed and not paid. Section 7-1-69 relates to the imposition of civil penalties for failure to pay taxes or file a return. Section 7-1-69(C) assesses a civil fraud penalty and states as follows:

C. In the case of failure, with willful intent to evade or defeat a tax, to pay when due the amount of tax required to be paid, there shall be added to the amount fifty percent of the tax or a minimum of twenty-five dollars ($25.00), whichever is greater, as penalty.

The Secretary's eligibility guidelines prohibited persons or businesses that had been assessed a civil fraud penalty as per Section 7-1-69(C) from participating in the program. The Secretary is not, however, given...

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