2023 New Mexico Statutes › Chapter 7 - Taxation › Article 2C - Tax Refund Intercept Program › Section 7-2C-6 - Procedures for setoff; notifications to debtor.

A. Each year a claimant agency seeking to collect a debt through setoff shall notify the department in the manner and by the date required by the department, which date shall be in the period from November 1 through December 15. The notice to the department shall include the amount of the debt, the name and identification number of the debtor and such other information as the department may require. The notice shall also include certification that the debt is due and owing the claimant agency or that the claimant agency is obligated by law to collect the debt. This notice shall be effective only to initiate setoff against refunds that would be made in the calendar year subsequent to the year in which notification is made to the department.
B. The claimant agency shall inform the department within one week of any changes in the status of any debt submitted by the claimant agency for setoff.
C. Upon proper and timely notification from the claimant agency, the department shall determine whether the debtor is entitled to a refund of at least fifty dollars ($50.00). The department shall notify the claimant agency in writing, or in such other manner as the department and the claimant agency may agree, with respect to each debt accepted for setoff whether the debtor is due a refund of fifty dollars ($50.00) or more and, if so, the amount of refund, the address of the debtor entered upon the return and, if the refund arises from a joint return, the name and address of the spouse as entered upon the return.
D. Within ten days after receiving the notification from the department pursuant to Subsection C of this section, the claimant agency shall send a notice by first class mail to the debtor at the debtor's last known address. The notice required by this subsection shall include:
(1) a statement that a transfer of the refund will be made and that the claimant agency intends to set off the amount of the transfer against a claimed debt;
(2) the amount of the debt asserted and a description of how the debt asserted arose;
(3) the name, address and telephone number of the claimant agency;
(4) the amount of refund to be set off against the debt asserted;
(5) a statement that the debtor has thirty days from the date indicated on the notice to contest the setoff by applying to the claimant agency for a hearing with respect to the validity of the debt asserted by that agency; and
(6) a statement that failure of the debtor to apply for a hearing within thirty days will be deemed a waiver of the opportunity to contest the setoff and to a hearing.
E. If the refund against which a debt is intended to be set off results from a joint tax return, the claimant agency shall send a notice by first class mail to the spouse named on the return within ten days after receiving the notification from the department pursuant to Subsection C of this section. The notice to the spouse shall contain the following information:
(1) a statement that a transfer of the refund will be made and that the claimant agency intends to set off the amount of the transfer against a claimed debt;
(2) the total amount of the refund and the amount of each claimed debt;
(3) the name, address and telephone number of the claimant agency;
(4) a statement that no debt is claimed against the spouse and that the spouse may be entitled to receive all or part of the refund regardless of the claimed debt against the debtor spouse;
(5) a statement that to assert a claim to all or part of the refund, the spouse shall apply to the claimant agency for a hearing within thirty days from the date indicated on the notice with respect to the entitlement of the spouse to all or part of the refund from which a transfer will be made at the request of the claimant agency; and
(6) a statement that failure of the spouse to apply for a hearing within thirty days may be deemed a waiver of any claim of the spouse with respect to the refund.
F. A debtor may contest the setoff of a debt by applying to the claimant agency for a hearing within thirty days of the date the notice required by Subsection D of this section is sent to the debtor. Failure of the debtor to apply for a hearing within the time required shall constitute a waiver of the right to contest the debt or the setoff of the debt.
G. A spouse may contest the setoff of a debt against a refund to which the spouse claims entitlement in whole or in part by applying to the claimant agency for a hearing within thirty days of the date the notice required by Subsection E of this section was sent to the spouse. Failure of the spouse to apply for a hearing within the time required shall constitute a waiver of the right to contest the setoff of the debt against a refund to which the spouse may claim entitlement.
H. The department shall apply against the refund the amount of the claimed debt, not to exceed the amount of the refund, and shall transfer that amount to the claimant agency with an accounting of the amount transferred. When the amount of refund due exceeds the amount of all applied debts, the department shall treat the excess as it does other refunds relating to income taxes.
I. Whether or not the refund due the debtor exceeds the amount of the applied debt, the department shall notify the debtor at the time of the transfer to the claimant agency of:
(1) the fact of the transfer and that the claimant agency intends to set off the amount of the transfer against the asserted debt;
(2) the total amount of the refund;
(3) the amount of debt asserted by the claimant agency; and
(4) the name, address and telephone number of the claimant agency.
J. Once the department has sent to the debtor the notice required by Subsection I of this section, together with any excess of the amount of refund over the amount of asserted debts, the department shall be deemed to have made the refund required by the Income Tax Act [Chapter 7, Article 2 NMSA 1978] or the Corporate Income and Franchise Tax Act [Chapter 7, Article 2A NMSA 1978].
History:
Laws 1985, ch. 106, § 6; 1994, ch. 56, § 3; 2006, ch. 52, § 3; 2006, ch. 53, § 3.
ANNOTATIONS
The 2006 amendment,
effective May 17, 2006, provided in Subsection J that when the department has sent to the debtor the notice and any excess amount of refund, the department shall be deemed to have made the refund required by the Corporate Income and Franchise Tax Act.
Duplicate laws.
— Laws 2006, ch. 52, § 3 and Laws 2006, ch. 53, § 3 enacted identical amendments to this section. The section was set out as amended by Laws 2006, ch. 53, § 3.
See
12-1-8 NMSA 1978.
Applicability.
Laws 2006, ch. 53, § 5, effective May 17, 2006, provided that Laws 2006, ch. 53, § 3 apply to tax refunds issued on or after January 1, 2007.
The 1994 amendment,
effective May 18, 1994, substituted "department" for "division" throughout the section; and, in Subsection H, deleted the former first two sentences, relating to confirmation that the claimant agency has met the requirements of Subsection D, and deleted "If the division receives timely confirmation from the claimant agency" at the beginning of the first sentence.