2023 New Mexico Statutes › Chapter 7 - Taxation › Article 2 - Income Tax General Provisions › Section 7-2-12.2 - Estimated tax due; payment of estimated tax; penalty.

A. Except as otherwise provided in this section, an individual who is required to file an income tax return under the Income Tax Act shall pay the required annual payment in installments through either withholding or estimated tax payments.
B. For the purposes of this section:
(1) "required annual payment" means the lesser of:
(a) ninety percent of the tax shown on the return of the taxable year or, if no return is filed, ninety percent of the tax for the taxable year; or
(b) one hundred percent of the tax shown on the return for the preceding taxable year if the preceding taxable year was a taxable year of twelve months and the taxpayer filed a New Mexico tax return for that preceding taxable year; and
(2) "tax" means the tax imposed under Section 7-2-3 NMSA 1978 less any amount allowed for applicable credits and rebates provided by the Income Tax Act.
C. There shall be four required installments for each taxable year. If a taxpayer is not liable for estimated tax payments on March 31, but becomes liable for estimated tax at some point after March 31, the taxpayer must make estimated tax payments as follows:
(1) if the taxpayer becomes required to pay estimated tax after March 31 and before June 1, fifty percent of the required annual payment must be paid on or before June 15, twenty-five percent on September 15 and twenty-five percent on or before January 15 of the following taxable year;
(2) if the taxpayer becomes required to pay estimated tax after May 31, but before September 1, the taxpayer must pay seventy-five percent of the required annual payment on or before September 15 and twenty-five percent on or before January 15 of the following taxable year; and
(3) if the taxpayer becomes required to pay estimated tax after August 31, the taxpayer must pay one hundred percent of the required annual payment on or before January 15 of the following taxable year.
D. Except as otherwise provided in this section, for taxpayers reporting on a calendar year basis, estimated payments of the required annual payment are due on or before April 15, June 15 and September 15 of the taxable year and January 15 of the following taxable year. For taxpayers reporting on a fiscal year other than a calendar year, the due dates for the installments are the fifteenth day of the fourth, sixth and ninth months of the fiscal year and the fifteenth day of the first month following the fiscal year.
E. A rancher or farmer who expects to receive at least two-thirds of the rancher's or farmer's gross income for the taxable year from ranching or farming, or who has received at least two-thirds of the rancher's or farmer's gross income for the previous taxable year from ranching or farming, may:
(1) pay the required annual payment for the taxable year in one installment on or before January 15 of the following taxable year; or
(2) on or before March 1 of the following taxable year, file a return for the taxable year and pay in full the amount computed on the return as payable.
A penalty under Subsection G of this section shall not be imposed unless the rancher or farmer underpays the tax by more than one-third. If a joint return is filed, a rancher or farmer must consider the rancher's or farmer's spouse's gross income in determining whether at least two-thirds of gross income is from ranching or farming.
F. For the purposes of this section, the amount of tax deducted and withheld with respect to a taxpayer under the Withholding Tax Act [Chapter 7, Article 3 NMSA 1978] or the Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act [Chapter 7, Article 3A NMSA 1978] shall be deemed a payment of estimated tax. An equal part of the amount of withheld tax shall be deemed paid on each due date for the applicable taxable year unless the taxpayer establishes the dates on which all amounts were actually withheld. In that case, the amounts withheld shall be deemed payments of estimated tax on the dates on which the amounts were actually withheld. The taxpayer may apply the provisions of this subsection separately to wage withholding and any other amounts withheld under the Withholding Tax Act or the Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act. Amounts of tax paid by taxpayers pursuant to Section 7-3A-3 NMSA 1978 shall not be deemed a payment of estimated tax.
G. Except as otherwise provided in this section, in the case of an underpayment of the required annual payment by a taxpayer, there shall be added to the tax a penalty determined by applying the rate specified in Subsection B of Section 7-1-67 NMSA 1978 to the amount of the underpayment for the period of the underpayment, provided:
(1) the amount of the underpayment shall be the excess of the amount of the required annual payment over the amount, if any, paid on or before the due date for the installment;
(2) the period of the underpayment runs from the due date for the installment to whichever of the following dates is earlier:
(a) the fifteenth day of the fourth month following the close of the taxable year; or
(b) with respect to any portion of the underpayment, the date on which the portion was paid; and
(3) a payment of estimated tax shall be credited against unpaid or underpaid installments in the order in which the installments are required to be paid.
H. No penalty shall be imposed under Subsection G of this section for any taxable year if:
(1) the difference between the following is less than one thousand dollars ($1,000):
(a) the tax shown on the return for the taxable year or, when no return is filed, the tax for the taxable year; and
(b) any amount withheld under the provisions of the Withholding Tax Act or the Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act for that taxpayer for that taxable year;
(2) the taxpayer's preceding taxable year was a taxable year of twelve months, the taxpayer did not have a tax liability for the preceding taxable year and the taxpayer was a resident of New Mexico for the entire taxable year;
(3) through either withholding or estimated tax payments, the taxpayer paid the required annual payment as defined in Subsection B of this section; or
(4) the secretary determines that the underpayment was not due to fraud, negligence or disregard of rules and regulations.
I. If on or before January 31 of the following taxable year the taxpayer files a return for the taxable year and pays in full the amount computed on the return as payable, then a penalty under Subsection G of this section shall not be imposed on an underpayment of the fourth required installment for the taxable year.
J. This section applies to taxable years of less than twelve months and to taxpayers reporting on a fiscal year other than a calendar year in the manner determined by regulation or instruction of the secretary.
K. Except as otherwise provided in Subsection L of this section, this section applies to any estate or trust.
L. This section does not apply to any trust that is subject to the tax imposed by Section 511 of the Internal Revenue Code or that is a private foundation. For a taxable year that ends before the date two years after the date of the decedent's death, this section does not apply to:
(1) the estate of the decedent; or
(2) any trust all of which was treated under Subpart E of Part I of Subchapter J of Chapter 1 of the Internal Revenue Code as owned by the decedent and to which the residue of the decedent's estate will pass under the decedent's will or, if no will is admitted to probate, that is the trust primarily responsible for paying debts, taxes and expenses of administration.
M. The provisions of this section do not apply to first-year residents.
History:
Laws 1996, ch. 17, § 1; 1997, ch. 63, § 1; 1999, ch. 47, § 2; 2003, ch. 275, § 3; 2010, ch. 53, § 1; 2011, ch. 116, § 1.
ANNOTATIONS
Cross references.
— For the Internal Revenue Code,
see
Title 26 of the United States Code.
The 2011 amendment,
effective July 1, 2011, in Subsection H, increased the threshold amount for imposition of a penalty for underpayment of estimated taxes.
Applicability.
— Laws 2011, ch. 116, § 2 provided that the provisions of Laws 2011, ch. 116, § 1 shall apply to taxable years beginning on or after January 1, 2012.
The 2010 amendment,
effective May 19, 2010, in Subsection F, in the first and fourth sentences, after "Withholding Tax Act", added "or the Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act"; and added the last sentence; and in Subsection H(1)(b), after "Withholding Tax Act", added "or the Oil and Gas Proceeds and Pass-Through Entity Withholding Tax Act".
Applicability.
— Laws 2010, ch. 53, § 19 provided that the provisions of this act are applicable to taxable years beginning on or after January 1, 2011.
Temporary provisions.
— Laws 2010 (2nd S.S.), ch. 7, § 12 provided that for the 2010 taxable year, a taxpayer is deemed to have complied with the provisions of Section 7-2-12.2 NMSA 1978 if the taxpayer has made the required annual payments of estimated taxes due for taxable year 2010 based on the definition of net income in Section 7-2-2 NMSA 1978 applicable prior to January 1, 2010.
The 2003 amendment,
effective June 20, 2003, substituted "applicable credits and" for "credits provided by Sections 7-2-13 and 7-2-18.1 through and 7-2-18.4 NMSA 1978 and for any applicable tax" following "amount allowed for" in Paragraph B(2); in Paragraphs C(2) and (3), inserted "the taxpayer must pay", deleted "must be paid" preceding "on or before"; substituted "a" for "an amount as" preceding "penalty determined by"; substituted "on an" for "with respect to any" preceding "underpayment of the"; substituted "applies" for "shall be applied" near the beginning of Subsection J; and substituted "For a taxable year that ends" for "With respect to any taxable year ending" preceding "before the date" in Subsection L.
The 1999 amendment,
effective June 18, 1999, added Subsection M.
The 1997 amendment,
effective April 8, 1997, in Subsection A, added "through either withholding or estimated tax payments" and deleted the former last sentence relating to installment payments of 25% of annual payment; added the last sentence in Subsection C and added paragraphs C(1) to (3); in Subsection D, added the exception at the beginning and substituted "estimated payments of the required annual payment are due on or before" for "the due dates for the installments are"; added Subsection E and redesignated the following subsections accordingly; substituted "required annual payment" for "estimated tax" in Subsection G; substituted "annual payment" for "installment" and deleted "of the installment" before "paid" in Paragraph G(1); rewrote Paragraph G(3); added Paragraph H(3) and redesignated the following paragraph accordingly; inserted "and to taxpayers reporting on a fiscal year other than a calendar year" in Subsection J; and made stylistic changes throughout the section.