N.M. Stat. § 7-1-17 (2026)

A. If the secretary or the secretary's delegate determines that a taxpayer is liable for
taxes in excess of fifty dollars ($50.00) that are due and that have not been previously
assessed to the taxpayer, the secretary or the secretary's delegate shall promptly
assess the amount thereof to the taxpayer.

   B. Assessments of tax are effective:

         (1)     when a return of a taxpayer is received by the department showing a
liability for taxes;

      (2)    when a document denominated "notice of assessment of taxes", issued in
the name of the secretary, is mailed or delivered in person to the taxpayer against
whom the liability for tax is asserted, stating the nature and amount of the taxes
assertedly owed by the taxpayer to the state, demanding of the taxpayer the immediate
payment of the taxes and briefly informing the taxpayer of the remedies available to the
taxpayer; or

      (3)    when an effective jeopardy assessment is made as provided in the Tax
Administration Act.

   C. Any assessment of taxes or demand for payment made by the department is
presumed to be correct.

   D. When taxes have been assessed to any taxpayer and remain unpaid, the
secretary or the secretary's delegate may demand payment at any time except as
provided otherwise by Section 7-1-19 NMSA 1978.

History: 1953 Comp., § 72-13-32, enacted by Laws 1965, ch. 248, § 20; 1969, ch. 32, §
1; 1978 Comp., § 7-1-17; 1979, ch. 144, § 16; 1992, ch. 55, § 11; 2007, ch. 45, § 1;
2023, ch. 36, § 1.

                                    ANNOTATIONS

The 2023 amendment, effective July 1, 2023, raised the amount of tax liability requiring
assessment by the secretary of taxation and revenue; and in Subsection A, after "taxes
in excess of", deleted "twenty-five dollars ($25.00)" and added "fifty dollars ($50.00)".

The 2007 amendment, effective January 1, 2008, in Subsection A, changed the
minimum amount from $10.00 to $25.00.

The 1992 amendment, effective July 1, 1992, substituted "secretary" for "director" and
"department" for "division" several times throughout the section, added "except as
provided otherwise by Section 7-1-19 NMSA 1978" at the end of Subsection D, and
made minor stylistic changes throughout the section.

Assessment of taxes effective when effective jeopardy assessment is made as
provided in the Tax Administration Act. Regents of N.M. Coll. of Agric. & Mechanic Arts
v. Academy of Aviation, Inc., 1971-NMSC-087, 83 N.M. 86, 488 P.2d 343.

Assessment upheld when statutes followed and no dispute of factual
correctness. — Since the record showed the statutory provisions were followed and
taxpayer presented no evidence tending to dispute the factual correctness of the
assessments, assessment will be upheld. McConnell v. State ex rel. Bureau of
Revenue, 1971-NMCA-181, 83 N.M. 386, 492 P.2d 1003.

Presumption of correctness applies when assessment delivered. — Once the
notice of assessment of taxes is delivered to the taxpayer, the statutory presumption, of
the correctness of the assessment, applies, and absent a showing of incorrectness by
taxpayers, the audit and notice of assessment of taxes must stand. Torridge Corp. v.
Commissioner of Revenue, 1972-NMCA-171, 84 N.M. 610, 506 P.2d 354, cert. denied,
84 N.M. 592, 506 P.2d 336 (1973).

Exemption strictly construed in favor of taxing authority. — There is a presumption
that an assessment of gross receipts taxes is correct, and in order for the taxpayer to be
successful, he must clearly overcome this presumption. Moreover, where an exemption
is claimed, the exemption is strictly construed in favor of the taxing authority. Stohr v.
N.M. Bureau of Revenue, 1976-NMCA-118, 90 N.M. 43, 559 P.2d 420, cert. denied, 90
N.M. 254, 561 P.2d 1347 (1977).

Presumption applicable to penalty statute. — Presumption of correctness of this
section also applies to penalty section (7-1-69 NMSA 1978). Tiffany Constr. Co. v.
Bureau of Revenue, 1976-NMCA-127, 90 N.M. 16, 558 P.2d 1155, cert. denied, 90
N.M. 255, 561 P.2d 1348 (1977).

Burden on protesting taxpayers to overcome presumption. — The burden is on
taxpayers protesting assessment to overcome presumption that the bureau's (now
department's) assessment is correct. Archuleta v. O'Cheskey, 1972-NMCA-165, 84
N.M. 428, 504 P.2d 638; Tipperary Corp. v. N.M. Bureau of Revenue, 1979-NMCA-031,
93 N.M. 22, 595 P.2d 1212, cert. denied, 92 N.M. 675, 593 P.2d 1078; Anaconda Co. v.
Prop. Tax Dep't, 1979-NMCA-158, 94 N.M. 202, 608 P.2d 514, cert. denied, 94 N.M.
628, 614 P.2d 545 (1980); Hawthorne v. Director of Revenue Div. Taxation & Revenue
Dep't, 1980-NMCA-071, 94 N.M. 480, 612 P.2d 710, Carlsberg Mgmt. Co. v. State
Taxation & Revenue Dep't, 1993-NMCA-121, 116 N.M. 247, 861 P.2d 288; MPC Ltd. v.
N.M. Taxation & Revenue Dep't, 2003-NMCA-021, 133 N.M. 217, 62 P.3d 308.

Presumption overcome when not supported by substantial evidence. — The
assessment is presumed to be correct; the taxpayer may overcome the presumption of
correctness of the assessment by presenting evidence and showing that the decision of
the bureau (now department) is not supported by substantial evidence. Floyd & Berry
Davis Co. v. Bureau of Revenue, 1975-NMCA-143, 88 N.M. 576, 544 P.2d 291.

Protesting taxpayer must dispute factual correctness to overcome presumption.
— Since any assessment of taxes is presumed to be correct, the duty rested on the
taxpayer to present evidence tending to dispute the factual correctness of the
assessments and to overcome this presumption. Champion Int'l Corp. v. Bureau of
Revenue, 1975-NMCA-106, 88 N.M. 411, 540 P.2d 1300, cert. denied, 89 N.M. 5, 548
P.2d 70.

Presumption may be overcome by disputing factual correctness. — The
presumption of Subsection C need be overcome only by a taxpayer's disputing the
factual correctness of an assessment. When the taxpayer challenged the interpretation
of a county ordinance in its submitted memorandum of positions, the burden was
properly shifted by the memorandum to the bureau (now department) to at least
acknowledge the existence of the ordinance. Co-Con, Inc. v. Bureau of Revenue, 1974-
NMCA-134, 87 N.M. 118, 529 P.2d 1239, cert. denied, 87 N.M. 111, 529 P.2d 1232.
Necessity of presenting evidence to rebut the presumption of correctness. —
When the corporation contracted with an out-of-state buyer for the corporation to
destroy munitions, it was entitled to the gross receipts deduction, and the hearing officer
could not properly determine that use or delivery took place within the state without
some affirmative evidence in the record to support that conclusion. TPL, Inc. v. N.M.
Taxation & Revenue Dep't, 2003-NMSC-007, 133 N.M. 447, 64 P.3d 474.

No basis for overturning decision where taxpayer unprepared. — Since the record
showed that hearing officer carefully advised taxpayer as to the statutory procedures
and his rights in connection with hearing and it also showed the taxpayer did not come
prepared for the hearing, taxpayer's claims that bureau (now department) should have
given him opportunity to present his evidence at a later time and, although it was his
burden to proceed, that he was denied the right to cross-examine a witness who was
never called were based on taxpayer's lack of preparation and do not provide a basis for
overturning the commissioner's (now secretary's) decision. McConnell v. State ex rel.
Bureau of Revenue, 1971-NMCA-181, 83 N.M. 386, 492 P.2d 1003.

Presumption not overcome by contradictory evidence. — Evidence that the
construction contract between the taxpayer, a contracting business and a corporation
created a ceiling price was not compelling in view of the contradictory evidence as to
the actual cost of the construction, and the presumption of correctness of the
assessment of gross receipts tax was not overcome. Floyd & Berry Davis Co. v. Bureau
of Revenue, 1975-NMCA-143, 88 N.M. 576, 544 P.2d 291.

Presumption not overcome since acceptable audit method used. — Since the "test
months" method was used for audit of taxpayers whose records were destroyed by fire
in order to determine gross receipts subject to tax, and since there was evidence that
the "test months" method was acceptable practice, the presumption of correctness of
the assessments was not overcome. Torridge Corp. v. Comm'r of Revenue, 1972-
NMCA-171, 84 N.M. 610, 506 P.2d 354, cert. denied, 84 N.M. 592, 506 P.2d 336
(1973).

Evidence of entitlement to a manufacturing deduction. — A biotechnology company
whose expertise was in the diagnosis of genetic disorders that could be detected
through the appearance of chromosomes, and who produced tangible objects that were
provided to its customers, such as a written report of its experts' diagnosis and a
laminated karyotype, which consisted of photographs of chromosomes that were
numbered and pasted onto a piece of laminated cardboard, did not establish its
entitlement to a manufacturing deduction, since the company could not identify any out-
of-state purchases that would be subject to the compensating tax of products
incorporated into its reports or laminated karyotypes. The department, whose
assessment is assumed correct, had identified as subject to the compensating tax such
items as microscopes, sinks, and furniture, which undoubtedly were not incorporated
into the documents or laminated karyotypes. Vivigen, Inc. v. Minzner, 1994-NMCA-027,
117 N.M. 224, 870 P.2d 1382.
Presumption overcome when no basis for assessments existed. — Since the
undisputed evidence of no audit for a two-year period of no test for gross receipts for
those years and of different under-reporting percentages for the audited period
established an absence of any basis for the assessments for that period, such showing
overcame the presumption that the assessments were correct. Torridge Corp. v.
Commissioner of Revenue, 1972-NMCA-171, 84 N.M. 610, 506 P.2d 354, cert. denied,
84 N.M. 592, 506 P.2d 336 (1973).

Standard of review on appeal. — Department's gross receipts tax assessment can
only be reversed by the court of appeals if arbitrary, capricious, or there is an abuse of
discretion, such that the assessment's not supported by substantial evidence or it is
otherwise not in accordance with law. ITT Educ. Serv. v. Taxation & Revenue Dep't,
1998-NMCA-078, 125 N.M. 244, 959 P.2d 969.

Standard of review on appeal. — Any assessment of taxes by the taxation and
revenue department is presumed to be correct and in protesting the assessment of
taxes the taxpayer has the burden of proving the deductions were proper. In reviewing,
courts will reverse the department's decision only if it is arbitrary, capricious, an abuse
of discretion, otherwise not in accordance with law, or not supported by substantial
evidence. Arco Materials, Inc. v. State Taxation & Revenue Dep't, 1994-NMCA-062, 118
N.M. 12, 878 P.2d 330, rev'd on other grounds sub nom. Blaze Constr. Co. v. Taxation
& Revenue Dep't, 1994-NMSC-110, 118 N.M. 647, 884 P.2d 803, cert. denied, 514 U.S.
1016, 115 S. Ct. 1359, 131 L. Ed. 2d 216 (1995).

Presumption overcome by showing that division (now department) failed to
follow statutory provisions. — An assessment made by the bureau (now department)
is presumptively correct. This presumption may be overcome by showing that the
bureau (now department) failed to follow the statutory provisions contained in the Tax
Administration Act. Regents of N.M. Coll. of Agric. & Mechanic Arts v. Academy of
Aviation, Inc., 1971-NMSC-087, 83 N.M. 86, 488 P.2d 343.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local
Taxation §§ 596 to 602; 72 Am. Jur. 2d State and Local Taxation §§ 704 to 738.

Who may complain of underassessment or nonassessment of property for taxation, 5
A.L.R.2d 576, 9 A.L.R.4th 428.

Judicial notice as to assessed valuations, 42 A.L.R.3d 1439.

Separate assessment and taxation of air rights, 56 A.L.R.3d 1300.

84 C.J.S. Taxation §§ 423 to 454, 478 to 531.