HOUSE BILL 115

55th legislature - STATE OF NEW MEXICO - first session, 2021

INTRODUCED BY

Javier Mart  nez

 

 

 

 

 

AN ACT

RELATING TO TAX RETURN PREPARERS; AMENDING THE DEFINITION OF "TAX RETURN PREPARER" IN THE TAX ADMINISTRATION ACT; PROVIDING CERTAIN REQUIREMENTS FOR TAX RETURN PREPARERS; REQUIRING CERTAIN TAX RETURN PREPARERS TO BE PERMITTED BY THE TAXATION AND REVENUE DEPARTMENT; IMPOSING CIVIL PENALTIES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

         SECTION 1. Section 7-1-3 NMSA 1978 (being Laws 1965, Chapter 248, Section 3, as amended by Laws 2019, Chapter 270, Section 2 and by Laws 2019, Chapter 274, Section 10) is amended to read:

         "7-1-3. DEFINITIONS.--Unless the context clearly indicates a different meaning, the definitions of words and phrases as they are stated in this section are to be used, and whenever in the Tax Administration Act these words and phrases appear, the singular includes the plural and the plural includes the singular:

                   A. "automated clearinghouse transaction" means an electronic credit or debit transmitted through an automated clearinghouse payable to the state treasurer and deposited with the fiscal agent of New Mexico;

                   B. "business location" means the location where a taxpayer's gross receipts and deductions are required to be reported pursuant to Section 7-1-14 NMSA 1978;

                   C. "department" means the taxation and revenue department, the secretary or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

                   D. "electronic payment" means a payment made by automated clearinghouse deposit, any funds wire transfer system or a credit card, debit card or electronic cash transaction through the internet;

                   E. "employee of the department" means any employee of the department, including the secretary, or any person acting as agent or authorized to represent or perform services for the department in any capacity with respect to any law made subject to administration and enforcement under the provisions of the Tax Administration Act;

                   F. "financial institution" means any state or federally chartered, federally insured depository institution;

                   G. "hearing officer" means a person who has been designated by the chief hearing officer to serve as a hearing officer and who is:

                               (1) the chief hearing officer;

                               (2) an employee of the administrative hearings office; or

                               (3) a contractor of the administrative hearings office;

                   H. "Internal Revenue Code" means the Internal Revenue Code of 1986, as that code may be amended or its sections renumbered;

                   I. "levy" means the lawful power, hereby invested in the secretary, to take into possession or to require the present or future surrender to the secretary or the secretary's delegate of any property or rights to property belonging to a delinquent taxpayer;

                   J. "local option gross receipts tax" means a tax authorized to be imposed by a county or municipality upon a taxpayer's gross receipts, as that term is defined in the Gross Receipts and Compensating Tax Act, and required to be collected by the department at the same time and in the same manner as the gross receipts tax;

                   K. "managed audit" means a review and analysis conducted by a taxpayer under an agreement with the department to determine the taxpayer's compliance with a tax administered pursuant to the Tax Administration Act and the presentation of the results to the department for assessment of tax found to be due;

                   L. "net receipts" means the total amount of money paid by taxpayers to the department in a month pursuant to a tax or tax act less any refunds disbursed in that month with respect to that tax or tax act;

                   M. "overpayment" means an amount paid, pursuant to any law subject to administration and enforcement under the provisions of the Tax Administration Act, by a person to the department or withheld from the person in excess of tax due from the person to the state at the time of the payment or at the time the amount withheld is credited against tax due;

                   N. "paid" includes the term "paid over";

                   O. "pay" includes the term "pay over";

                   P. "payment" includes the term "payment over";

                   Q. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, limited liability partnership, joint venture, syndicate, other association or gas, water or electric utility owned or operated by a county or municipality; "person" also means, to the extent permitted by law, a federal, state or other governmental unit or subdivision, or an agency, department or instrumentality thereof; and "person", as used in Sections 7-1-72 through 7-1-74 NMSA 1978, also includes an officer or employee of a corporation, a member or employee of a partnership or any individual who, as such, is under a duty to perform any act in respect of which a violation occurs;

                   R. "property" means property or rights to property;

                   S. "property or rights to property" means any tangible property, real or personal, or any intangible property of a taxpayer;

                   T. "return" means any tax or information return, application or form, declaration of estimated tax or claim for refund, including any amendments or supplements to the return, required or permitted pursuant to a law subject to administration and enforcement pursuant to the Tax Administration Act and filed with the secretary or the secretary's delegate by or on behalf of any person;

                   U. "return information" means a taxpayer's name, address, government-issued identification number and other identifying information; any information contained in or derived from a taxpayer's return; any information with respect to any actual or possible administrative or legal action by an employee of the department concerning a taxpayer's return, such as audits, managed audits, denial of credits or refunds, assessments of tax, penalty or interest, protests of assessments or denial of refunds or credits, levies or liens; or any other information with respect to a taxpayer's return or tax liability that was not obtained from public sources or that was created by an employee of the department; but "return information" does not include statistical data or other information that cannot be associated with or directly or indirectly identify a particular taxpayer;

                   V. "secretary" means the secretary of taxation and revenue and, except for purposes of Subsection B of Section 7-1-4 NMSA 1978, also includes the deputy secretary or a division director or deputy division director delegated by the secretary;

                   W. "secretary or the secretary's delegate" means the secretary or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

                   X. "security" means money, property or rights to property or a surety bond;

                   Y. "state" means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico and any territory or possession of the United States;

                   Z. "tax" means the total amount of each tax imposed and required to be paid, withheld and paid or collected and paid under provision of any law made subject to administration and enforcement according to the provisions of the Tax Administration Act, including the amount of any interest or civil penalty relating thereto; "tax" also means any amount of any abatement of tax made or any credit, rebate or refund paid or credited by the department under any law subject to administration and enforcement under the provisions of the Tax Administration Act to any person contrary to law, including the amount of any interest or civil penalty relating thereto;

                   AA. "tax return preparer" means a person who prepares for others for compensation, or who employs one or more persons to prepare for others for compensation, [any return of income tax, a substantial portion of any return of income tax, any claim for refund with respect to income tax or a substantial portion of any claim for refund with respect to income tax; provided that a person shall not be a "tax return preparer" merely because such person] an income tax return or claim for refund of income tax or a substantial portion of an income tax return or claim for refund of income tax. "Tax return preparer" does not include:

                               (1) a person or firm licensed or permitted to practice public accountancy pursuant to the 1999 Public Accountancy Act;

                               (2) an employee of a person or firm described in Paragraph (1) of this subsection that prepares a return under the supervision of a person described in that paragraph;

                                 [(1)] (3) a person who furnishes typing, reproducing or other mechanical assistance;

                               [(2) is] (4) an employee who prepares an income tax return or claim for refund with respect to an income tax return of the employer, or of an officer or employee of the employer, by whom the person is regularly and continuously employed; or

                               [(3)] (5) a person who prepares as a trustee or other fiduciary an income tax return or claim for refund with respect to income tax for any person; and

                   BB. "taxpayer" means a person liable for payment of any tax; a person responsible for withholding and payment or for collection and payment of any tax; a person to whom an assessment has been made, if the assessment remains unabated or the amount thereof has not been paid; or a person who entered into a special agreement pursuant to Section 7-1-21.1 NMSA 1978 to assume the liability of gross receipts tax or governmental gross receipts tax of another person and the special agreement was approved by the secretary pursuant to the Tax Administration Act."

         SECTION 2. Section 7-1-71.1 NMSA 1978 (being Laws 1985, Chapter 65, Section 19, as amended) is amended to read:

         "7-1-71.1. TAX RETURN PREPARERS--REQUIREMENTS--CIVIL PENALTIES.--

                   A. The secretary [may] shall require by [regulation any] rule a tax return preparer, with respect to any return of income tax or claim for refund with respect to income tax, to:

                               (1) sign [such] the return or claim for refund; and

                   [B. The secretary may require by regulation any tax return preparer with respect to any return of income tax or claim for refund with respect to income tax to]

                               (2) furnish the tax return preparer's federal preparer tax identification number on [such] the return or claim for refund.

                   [C. Any] B. A tax return preparer [with respect to any return of income tax or claim for refund with respect to income tax who is required by regulations promulgated by the secretary to sign a return or claim for refund or to furnish an identification number on such return or claim for refund and] who fails to sign such return or claim for refund or to furnish an identification number on such return or claim for refund pursuant to Subsection A of this section shall pay a penalty of [twenty-five dollars ($25.00)] fifty dollars ($50.00) for such failure unless it is shown that such failure is due to reasonable cause and not due to willful [neglect] or reckless conduct. The penalty that may be imposed on a tax return preparer with respect to income tax returns or claims for refund filed during any calendar year shall not exceed twenty-five thousand dollars ($25,000) per tax return preparer.

                   C. In a court of competent jurisdiction, the secretary may commence suit to enjoin a tax return preparer from further engaging in conduct described in Subsection B of this section or from further action as a tax return preparer.

                   D. In an action commenced pursuant to Subsection C of this section, the court may enjoin the tax return preparer from further engaging in conduct specified in Subsection B of this section if the court finds that injunctive relief is appropriate to prevent the recurrence of the conduct. The court may enjoin conduct when a tax return preparer has been shown to have:

                               (1) prepared an income tax return or claim for refund that includes an understatement of a taxpayer's liability due to an unreasonable position;

                               (2) prepared an income tax return or claim for refund that includes an understatement of a taxpayer's liability due to the tax return preparer's willful or reckless conduct;

                               (3) where required, failed to furnish a copy of the income tax return or claim for refund;

                               (4) where required, failed to sign the income tax return or claim for refund;

                               (5) where required, failed to furnish the tax return preparer's identification number;