A. To determine the correct amount of tax due, the department shall cause the records and books of account of taxpayers to be inspected or audited at such times as the department deems necessary for the effective execution of the department's responsibilities.
B. The department shall audit a marketplace provider, but not a marketplace seller, with respect to gross receipts from transactions facilitated by a marketplace provider and for which the marketplace seller may claim a deduction pursuant to Section 36 of this 2019 act, unless an audit of the marketplace seller is necessary to determine the correct amount of tax due, including examining the marketplace seller:
(1) to determine compliance with Section 36 [7-9-117 NMSA 1978] of this 2019 act;
(2) to determine if the marketplace provider should be relieved of liability pursuant to Subsection C of Section 7-9-5 NMSA 1978; or
(3) to enforce any other provision of the Tax Administration Act.
C. Auditors and other officials of the department designated by the secretary are authorized to request and require the production for examination of the records and books of account of a taxpayer. Auditors and officials of the department designated by the secretary shall be furnished with credentials identifying them as such, which they shall display to any taxpayer whose books are sought to be examined.
D. Taxpayers shall upon request make their records and books of account available for inspection at reasonable hours to the secretary or the secretary's delegate who presents proper identification to the taxpayer.
E. If the taxpayer's records and books of account do not exist or are insufficient to determine the taxpayer's tax liability, if any, the department may use any reasonable method of estimating the tax liability, including using information about similar persons, businesses or industries to estimate the taxpayer's liability.
F. The secretary or the secretary's delegate shall develop and maintain written audit policies and procedures for all audit programs in which the department routinely conducts field audits of taxpayers, including policies and procedures concerning audit notification, scheduling, records that may be examined, analysis that may be done, sampling procedures, gathering information or evidence from third parties, policies concerning the rights of taxpayers under audit and related matters. Department audit policies and procedures shall be made available to a person who requests them, at a reasonable charge to defray the cost of preparing and distributing those policies and procedures.
G. Nothing in this section shall be construed to require the department to provide the following:
(1) information that is confidential pursuant to Section 7-1-8 NMSA 1978; or
(2) methods, techniques and analysis used to select taxpayers for audit, including the use of:
(a) data analytics;
(b) data mining;
(c) a scoring model;
(d) internal controls; and
(e) metadata used to detect fraud and noncompliance.
H. For purposes of this section:
(1) "data analytics" means the science of examining data with the purpose of drawing conclusions about the information;
(2) "data mining" means the process of analyzing data from different perspectives and summarizing it into useful information by collecting data into data sets for the purpose of discovering patterns;
(3) "scoring model" means a predictive model that can predict the chance of occurring of a fact and its occurrence;
(4) "methods, techniques and analysis" means a systematic way to accomplish a tactic, qualitative or quantitative component of research and the use of a specific method;
(5) "internal controls" means a process of assuring achievement of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting and compliance with laws, regulations and policies;
(6) "marketplace provider" means a "marketplace provider", as that term is used in the Gross Receipts and Compensating Tax Act [Chapter 7, Article 9 NMSA 1978];
(7) "marketplace seller" means a "marketplace seller", as that term is used in the Gross Receipts and Compensating Tax Act; and
(8) "metadata" means data that provides information about other data.
History: 1953 Comp., § 72-13-28, enacted by Laws 1965, ch. 248, § 16; 1979, ch. 144, § 10; 1993, ch. 30, § 6; 2001, ch. 16, § 4; 2001, ch. 56, § 4; 2007, ch. 262, § 1; 2017, ch. 63, § 21; 2019, ch. 270, § 10.
Repeals. — Laws 2007, ch. 262, § 5 repealed Laws 2001, ch. 16, § 4, effective July 1, 2007.
Cross references. — For accounting methods and reporting methods of taxpayers, see 7-1-10 NMSA 1978.
For managed audits, see 7-1-11.1 NMSA 1978.
The 2019 amendment, effective July 1, 2019, provided an exception to the audit provisions of the section; in the heading, added "exception for marketplace providers and marketplace sellers"; added a new Subsection B and redesignated former Subsections B through G as Subsections C through H, respectively; and in Subsection H, Paragraph H(4), after "techniques and", deleted "methodology", and added new Paragraphs H(6) and H(7) and redesignated former Paragraph H(6) as Paragraph H(8).
The 2017 amendment, effective June 16, 2017, set forth additional audit information that is confidential, and provided definitions for terms used in the section; in Subsection A, added "To determine the correct amount of tax due"; designated the last sentence of Subsection E as new Subsection F; in Subsection F, after "require the department to provide", deleted "information that is confidential pursuant to Section 7-1-8 NMSA 1978, nor shall the department be required to provide information concerning how taxpayers are selected for audit" and added "the following:", and added Paragraphs F(1) and F(2); and added Subsection G.
The 2007 amendment, effective July 1, 2007, required auditors to present proper identification to taxpayers.
The 2001 amendment, effective July 1, 2001, added Subsections D and E.
The 1993 amendment, effective June 18, 1993, substituted "department" for "director or his delegate" in Subsection A and for "division" in two places in Subsection B; substituted "secretary" for "director" in two places in Subsection B and "secretary or the secretary's delegate" for "director or his delegate" in Subsection C; and made related stylistic changes.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation §§ 110, 136, 603; 72 Am. Jur. 2d State and Local Taxation § 729.
Constitutionality of statutory provision for examination of records, books or documents for taxation purposes, 103 A.L.R. 522.
Structure New Mexico Statutes
Section 7-1-2 - Applicability.
Section 7-1-4 - Investigative authority and powers.
Section 7-1-4.1 - New Mexico taxpayer bill of rights created; purpose.
Section 7-1-4.2 - New Mexico taxpayer bill of rights.
Section 7-1-4.3 - New Mexico taxpayer bill of rights; notice to the public.
Section 7-1-4.4 - Notice of potential eligibility required.
Section 7-1-6 - Receipts; disbursements; funds created.
Section 7-1-6.1 - Identification of money in tax administration suspense fund; distribution.
Section 7-1-6.2 - Distribution; small cities assistance fund.
Section 7-1-6.4 - Distribution; municipality from gross receipts tax.
Section 7-1-6.5 - Distribution; small counties assistance fund.
Section 7-1-6.6 - Distribution; game protection fund.
Section 7-1-6.7 - Distributions; state aviation fund.
Section 7-1-6.8 - Distribution; motorboat fuel tax fund.
Section 7-1-6.9 - Distribution of gasoline taxes to municipalities and counties.
Section 7-1-6.10 - Distributions; state road fund.
Section 7-1-6.11 - Distributions of cigarette taxes.
Section 7-1-6.15 - Adjustments of distributions or transfers to municipalities or counties.
Section 7-1-6.16 - County equalization distribution.
Section 7-1-6.18 - Distribution; veterans' state cemetery fund.
Section 7-1-6.19 - Distribution; county government road fund created.
Section 7-1-6.20 - Identification of money in extraction taxes suspense fund; distribution.
Section 7-1-6.21 - Distribution to oil and gas reclamation fund.
Section 7-1-6.23 - Distribution to severance tax bonding fund.
Section 7-1-6.24 - Distribution; substance abuse education fund.
Section 7-1-6.26 - County government road fund; distribution.
Section 7-1-6.27 - Distribution; municipal roads.
Section 7-1-6.28 - Distribution; municipal arterial program of local governments road fund.
Section 7-1-6.29 - Money in workers' compensation collections suspense fund; distribution.
Section 7-1-6.30 - Distribution; retiree health care fund.
Section 7-1-6.31 - Distributions; enhanced 911 fund; network and database surcharge fund.
Section 7-1-6.32 - Distribution; solid waste assessment fee.
Section 7-1-6.33 - Distribution to county-supported medicaid fund.
Section 7-1-6.34 - Distribution; conservation planting revolving fund.
Section 7-1-6.35 - Distribution; contributions to state political party.
Section 7-1-6.36 - Distribution; interstate telecommunications gross receipts tax.
Section 7-1-6.38 - Distribution; governmental gross receipts tax.
Section 7-1-6.39 - Distribution of special fuel excise tax to local governments road fund.
Section 7-1-6.41 - Administrative fee imposed; appropriation.
Section 7-1-6.42 - Distribution; state building bonding fund; gross receipts tax.
Section 7-1-6.44 - Distribution; gasoline tax sharing agreement.
Section 7-1-6.49 - Distribution; contributions to the state parks division.
Section 7-1-6.50 - Distribution; contributions for national guard member and family assistance.
Section 7-1-6.51 - Distribution; municipal event center surcharge.
Section 7-1-6.54 - Distributions; tax increment development districts.
Section 7-1-6.58 - Distribution; public election fund.
Section 7-1-6.59 - Distribution; Vietnam veterans memorial operation, maintenance and improvement.
Section 7-1-6.60 - Distribution; county business retention gross receipts tax.
Section 7-1-6.62 - Distribution; premium tax.
Section 7-1-6.66 - Distribution; offset for food and beverage establishments deduction.
Section 7-1-6.67 - Distribution; Local Economic Development Act Fund.
Section 7-1-6.68 - Distribution; cannabis excise tax; municipalities and counties.
Section 7-1-8 - Confidentiality of returns and other information.
Section 7-1-8.2 - Information required to be revealed.
Section 7-1-8.3 - Information that may be revealed to public.
Section 7-1-8.5 - Information that may be revealed to national governments or their agencies.
Section 7-1-8.6 - Information that may be revealed to certain tribal governments.
Section 7-1-8.8 - Information that may be revealed to other state agencies.
Section 7-1-8.9 - Information that may be revealed to local governments and their agencies.
Section 7-1-8.10 - Information that may be revealed to private persons other than the taxpayer.
Section 7-1-8.11 - Information that may be revealed to a water and sanitation district.
Section 7-1-9 - Address of notices and payments; timely mailing constitutes timely filing or making.
Section 7-1-11.1 - Managed audits.
Section 7-1-11.2 - Required audit notices.
Section 7-1-12 - Identification of taxpayers.
Section 7-1-13 - Taxpayer returns; payment of taxes; extension of time.
Section 7-1-13.1 - Method of payment of certain taxes due.
Section 7-1-13.4 - Electronic payments; reversals.
Section 7-1-15 - Secretary may set tax reporting and payment intervals.
Section 7-1-15.1 - Secretary may permit or require rounding.
Section 7-1-15.2 - Agreements; collection of compensating tax.
Section 7-1-16 - Delinquent taxpayer.
Section 7-1-17 - Assessment of tax; presumption of correctness.
Section 7-1-17.1 - Tax liability; spouse or former spouse.
Section 7-1-18 - Limitation on assessment by department.
Section 7-1-19 - Limitation of actions.
Section 7-1-20 - Compromise of taxes; closing agreements.
Section 7-1-21 - Installment payments of taxes; installment agreements.
Section 7-1-21.1 - Special agreements; alternative gross receipts taxpayer.
Section 7-1-22 - Exhaustion of administrative remedies.
Section 7-1-23 - Disputing liabilities; election of remedies.
Section 7-1-24 - Disputing liabilities; administrative protest.
Section 7-1-25 - Appeals from hearing officer's decision and order.
Section 7-1-26 - Disputing liabilities; claim for credit, rebate or refund.
Section 7-1-27 - Conclusiveness of court order on liability for payment of tax.
Section 7-1-28 - Authority for abatements of assessments of tax.
Section 7-1-29 - Authority to make refunds or credits.
Section 7-1-29.1 - Awarding of costs and fees.
Section 7-1-29.2 - Credit claims.
Section 7-1-30 - Collection of penalties and interest.
Section 7-1-31 - Seizure of property by levy for collection of taxes.
Section 7-1-32 - Contents of warrant of levy.
Section 7-1-33 - Successive seizures.
Section 7-1-34 - Surrender of property subject to levy; penalty.
Section 7-1-35 - Stay of levy.
Section 7-1-36 - Property exempt from levy.
Section 7-1-37 - Assessment as lien.
Section 7-1-38 - Notice of lien.
Section 7-1-39 - Release or extinguishment of lien; limitation on actions to enforce lien.
Section 7-1-40 - Foreclosure of lien.
Section 7-1-41 - Notice of seizure.
Section 7-1-42 - Notice of sale.
Section 7-1-43 - Sale of indivisible property.
Section 7-1-44 - Requirements of sale.
Section 7-1-45 - Manner of sale or conversion to money.
Section 7-1-46 - Minimum prices.
Section 7-1-47 - Redemption before sale.
Section 7-1-48 - Documents of title.
Section 7-1-49 - Legal effect of certificate of sale.
Section 7-1-50 - Legal effect of deed to real property.
Section 7-1-51 - Proceeds of levy and sale.
Section 7-1-52 - Release of levy.
Section 7-1-53 - Enjoining delinquent taxpayer from continuing in business.
Section 7-1-54 - Security for payment of tax.
Section 7-1-55 - Contractor's bond for gross receipts; tax; penalty.
Section 7-1-56 - Sale of or proceedings against security.
Section 7-1-57 - Surety bonds.
Section 7-1-58 - Permanence of tax debt; civil actions to collect tax.
Section 7-1-59 - Jeopardy assessments.
Section 7-1-60 - Estoppel against state.
Section 7-1-61 - Duty of successor in business.
Section 7-1-62 - Duty of secretary; release of successor.
Section 7-1-63 - Assessment of tax due; application of payment.
Section 7-1-65 - Reciprocal enforcement of tax judgments.
Section 7-1-66 - Immunity of property of Indian nations, tribes or pueblos and of the United States.
Section 7-1-67 - Interest on deficiencies.
Section 7-1-68 - Interest on overpayments.
Section 7-1-69 - Civil penalty for failure to pay tax or file a return.
Section 7-1-69.1 - Civil penalty for failure to file an information return.
Section 7-1-69.2 - Civil penalty for failure to correctly file certain deductions.
Section 7-1-70 - Civil penalty for bad checks.
Section 7-1-71 - Civil penalty for failure to collect and pay over tax.
Section 7-1-71.1 - Tax return preparers; requirements; penalties.
Section 7-1-71.3 - Willful failure to collect and pay over taxes.
Section 7-1-71.4 - Tax return preparer; electronic filing requirement; penalty.
Section 7-1-72 - Attempts to evade or defeat tax.
Section 7-1-72.1 - Civil penalty; willful attempt to cause evasion of another's tax.
Section 7-1-75 - Assault and battery of a department employee.
Section 7-1-76 - Revealing information concerning taxpayers.
Section 7-1-78 - Burden of proof in fraud cases.
Section 7-1-79 - Enforcement officials.
Section 7-1-80 - Dissolution or withdrawal of corporation.
Section 7-1-82 - Transfer, assignment, sale, lease or renewal of liquor license.
Section 7-1-83 - Business and employee status during disaster response period.