2023 New Mexico Statutes › Chapter 7 - Taxation › Article 1 - Administration › Section 7-1-17.1 - Tax liability; spouse or former spouse.

A. If the secretary or the secretary's delegate determines that, taking into account the facts and circumstances in Subsections F and G of this section, it is inequitable to hold a spouse liable for payment of all or part of any unpaid tax, assessment or other deficiency for a tax, the secretary may decline to bring an action or proceeding to collect such taxes from the spouse, including collection from the spouse's interest in community property.
B. The secretary or the secretary's delegate may grant innocent spouse relief to a spouse who files a joint tax return and all or part of the spouse's portion of any overpayment was, or is expected to be, applied to the tax liability for which the spouse is not liable because the liability is determined to be separate debt, as defined in Subsection A of Section 40-3-9 NMSA 1978.
C. If on review it is determined that the information relied on to make the innocent spouse relief determination was incorrect or fraudulent, the department may rescind the innocent spouse relief and proceed to collect the affected taxes from the spouse.
D. Innocent spouse relief does not authorize the abatement of taxes or enforcement of any provisions of the Tax Administration Act against the taxpayer.
E. A lien or levy imposed on a spouse or property of a spouse who qualifies for innocent spouse relief may be released as to taxes deemed inequitable to collect pursuant to this section.
F. If the federal internal revenue service granted the spouse relief pursuant to 26 U.S.C. Section 6015, the spouse may request similar relief from the department on a form prescribed by the department, regardless of whether the spouse is a joint or separate filer for New Mexico income tax. The spouse shall provide a copy of the federal internal revenue service's determination with the request that the secretary or the secretary's delegate cease collection activity against the spouse to the extent relief was allowed by the federal internal revenue service. The department shall grant innocent spouse relief for the same tax periods and tax programs granted relief by the federal internal revenue service; provided that the request for relief is submitted on the form prescribed by the department. The secretary or the secretary's delegate may decline to pursue collection activity against a spouse while an application for relief is pending before the federal internal revenue service, but the failure to seek or obtain relief shall not preclude the secretary or secretary's delegate from declining to collect tax from a spouse when collection would be inequitable. An item giving rise to a deficiency on a joint return shall be allocated to an individual filing the return in the same manner as it would have been allocated if the individual had filed separate returns for the taxable year.
G. The secretary or the secretary's delegate shall consider at least the following facts and circumstances when determining whether to grant innocent spouse relief if the federal internal revenue service has not granted the spouse personal income tax relief pursuant to 26 U.S.C. Section 6015:
(1) whether the spouse had knowledge of the tax liability at the time the liability arose;
(2) whether the spouse had a meaningful opportunity to contest the assessment of tax at the time the assessment was made;
(3) whether the spouse cooperated with the department in collection and compliance efforts, to the extent the spouse had knowledge of collection and compliance efforts;
(4) whether the state can protect its interests without pursuing active collection efforts against the spouse, including collection efforts against the taxpayer;
(5) whether the spouse benefited from the transfer of income, receipts or significant amounts of property from the taxpayer;
(6) whether the spouse participated in the business and financial decisions of the household during the periods when the tax liability arose;
(7) whether the spouse participated in operating a business with the taxpayer;
(8) whether the spouse had responsibility for the finances of a business for which the spouse participated;
(9) whether the spouse had responsibility for payment of taxes for a business for which the spouse participated; and
(10) whether the spouse knew that the taxpayer engaged in business.
H. No one factor contemplated to Subsection G of this section shall be considered determinative in considering whether tax collection from a spouse would be inequitable. Each factor may be given different relative weight, depending on the facts and circumstances presented; therefore, the presence of a majority of factors considered tending to support innocent spouse relief in a particular case may not necessarily indicate that the spouse in question qualifies for innocent spouse relief for New Mexico tax purposes.
I. The secretary shall adopt and promulgate regulations as necessary for making the determinations pursuant to this section.
J. As used in this section:
(1) "innocent spouse relief" means the relief from collection of tax liabilities pursuant to this section;
(2) "spouse" means a current or former spouse of a taxpayer; and
(3) "taxpayer" means a taxpayer who is or was married to a spouse who is seeking innocent spouse relief pursuant to this section.
History:
Laws 2003, ch. 398, § 15; 2021, ch. 65, § 3.
ANNOTATIONS
The 2021 amendment,
effective July 1, 2021, clarified provisions related to innocent spouse tax relief, required the taxation and revenue department to grant innocent spouse relief in instances where the IRS has already granted a taxpayer innocent spouse relief for the same tax period, provided factors that the secretary of the taxation and revenue department must consider when determining whether to grant innocent spouse relief if the IRS has not granted the spouse personal income tax relief; in Subsection A, after "secretary", added "or the secretary's delegate", after "facts and circumstances", added "in Subsections F and G of this section", after the first occurrence of "spouse", deleted "or former spouse of a taxpayer", after "deficiency for a tax", deleted "administered under the Tax Administration Act", after "proceeding to collet such taxes", deleted "against the spouse or former spouse of the taxpayer"; deleted former subsection designation "B." and the language "Nothing in Subsection A of this section shall be construed to" and added "from the spouse, including collection from the spouse's interest in community property"; added new Subsections B through H and redesignated former Subsection C as Subsection I; and added Subsection J.