The secretary or secretary’s delegate may decline to bring an action or proceeding to collect community debt against a spouse or former spouse when bringing an action or proceeding would be inequitable.

1. A. In the case of community tax debt arising from a jointly-filed income tax return, the secretary or the secretary’s delegate may decline to bring an action or proceeding to collect such taxes against the spouse or former spouse of a taxpayer who is granted relief by the internal revenue service (IRS) pursuant to 26 U.S.C. Section 6015. Where relief is granted in writing by the IRS, the spouse who received such relief may provide a copy of the IRS’s determination and request that the secretary cease any collection activity against that spouse or former spouse to the extent such relief was allowed by the IRS. The secretary or the secretary’s delegate may decline to pursue collection activity against a spouse or former spouse for community debt while an application for such relief is pending before the IRS, but the failure to seek or obtain such relief shall not preclude the secretary or secretary’s delegate from declining to bring an action or proceeding against a spouse or former spouse for collection of a community debt when bringing an action or proceeding would be inequitable. The secretary or the secretary’s delegate shall consider the following facts and circumstances when determining whether to bring an action or proceeding to collect community debt:

   (1) Did the spouse or former spouse have knowledge of the tax liability at the time that liability arose?

   (2) Did the spouse or former spouse have a meaningful opportunity to contest the assessment of tax at the time the assessment was made?

   (3) Has the spouse or former spouse cooperated with the department in collection and compliance efforts?

   (4) Can the state protect its interests without pursuing active collection efforts against the spouse or former spouse, including collection efforts against the other spouse or former spouse?

   (5) Has the spouse or former spouse benefited from the transfer of significant amounts of property from the other spouse or former spouse?

   (6) Was the spouse or former spouse given an opportunity to participate in the business decisions of the household during the periods when the debt arose?

2. B. In addition to the facts and circumstances listed in Subsection A above, in the case of a community debt arising from the conduct of a business within the state, including taxes collected under the combined reporting system, the secretary or the secretary’s delegate shall also consider the following facts and circumstances when determining whether to bring an action or proceeding to collect community debt:

   (1) Did the spouse or former spouse participate in the conduct of the business, including responsibility for payment of taxes and other debts?

   (2) Has the spouse or former spouse benefited from the conduct of the business?

   (3) Did the spouse or former spouse know that the other spouse or former spouse had a business?

3. C. The secretary or the secretary’s delegate shall weigh all applicable factors when determining whether to decline to bring an action or proceeding. No one factor shall be considered determinative. Each of these factors may be given different relative weight, depending on the facts and circumstances of each case, therefore the presence of a majority of said factors tending to indicate “innocent spouse” in a particular case may not necessarily indicate that the taxpayer in question qualifies as an “innocent spouse” for New Mexico tax purposes.
4. D. Nothing in this regulation shall be construed to apply to offsets of refunds or credits to collect on community debts.

5. E. The secretary and the secretary’s delegate has discretion to allow relief under this section. A spouse or former spouse who believes he or she is entitled to relief under this section may petition for such relief to the secretary in writing. The spouse or former spouse has the burden of proof in establishing his or her entitlement to the relief requested. A spouse or former spouse who believes that the request for relief under this section has been improperly denied may protest that decision under Section 7-1-24 NMSA 1978.

   HISTORY OF 3.1.12 NMAC:

   Pre-NMAC History: The material in this part was derived from that previously filed with the State Records Center:

   BOR 67-1, Tax Administration Act, 7/19/67, filed 7/28/67.

   R.D./OGAD Rule No. 1985, Regulations Pertaining to the Tax Administration Act, filed 11/5/85.

   TRD Rule TA-90, Regulations Pertaining to the Tax Administration Act, Sections 7-1-1 to 7-1-82 NMSA 1978, filed 8/15/90.

   History of Repealed Material: [RESERVED]

   NMAC History:

   3 NMAC 1.12, Tax Administration - Miscellaneous Provisions, filed 10/17/96.

   3.1.12 NMAC, Tax Administration - Miscellaneous Provisions, filed 1/4/2001.

[3.1.12.13 NMAC - N, 10/31/07]