1. A. At any time after the assessment of any tax or the denial of a refund or credit, if the secretary in good faith is in doubt of the correctness of the denial or liability for the payment of an assessment, the secretary may compromise the asserted liability for taxes or the denial by entering with the taxpayer into a written agreement that adequately protects the interests of the state.
2. B. The agreement provided for in this section is to be known as a "closing agreement". If entered into after any court acquires jurisdiction of the matter, the agreement shall be part of a stipulated order or judgment disposing of the case.
3. C. As a condition for entering into a closing agreement, the secretary may require the taxpayer to furnish security for payment of any taxes due according to the terms of the agreement.

4. D. A closing agreement is conclusive as to liability or nonliability for payment of assessed taxes or the denial of a refund or credit relating to the periods referred to in the agreement, and except upon a showing of fraud or malfeasance, or misrepresentation or concealment of a material fact:

   1. (1) the agreement shall not be modified by any officer, employee or agent of the state; and
   2. (2) in any suit, action or proceeding, the agreement or any determination, assessment, collection, payment, abatement, refund or credit made in accordance therewith shall not be annulled, modified, set aside or disregarded.

History: 1953 Comp., § 72-13-34, enacted by Laws 1965, ch. 248, § 22; 1979, ch. 144, § 19; 1995, ch. 70, § 1; 2025, ch. 130, § 28.

ANNOTATIONS

Cross references. — For compromise, satisfaction or release by attorney general or district attorney, see 36-1-22 NMSA 1978.

The 2025 amendment, effective July 1, 2025, removed the requirement of the attorney general approval of closing agreements between the taxation and revenue department and taxpayers settling tax disputes, and added the denial of a refund or credit as the subject of a closing agreement; in Subsection A, after "any tax" added "or the denial of a refund or credit", after "doubt of the" added "correctness of the denial or", after "the secretary may" deleted "with the written approval of the attorney general", and after "liability for taxes" added "or the denial"; and in Subsection D, after "assessed taxes" added "or the denial of a refund or credit".

The 1995 amendment, effective July 1, 1995, substituted references to "the secretary" for references to "the director" in Subsections A and C.

Attorney general's approval necessary. — A settlement agreement compromising tax liability was not valid or enforceable since it lacked the attorney general's written approval as required by this section. Johnson & Johnson v. Taxation & Revenue Dep't, 1997-NMCA-030, 123 N.M. 190, 936 P.2d 872, cert. denied, 123 N.M. 168, 936 P.2d 337.

No authority for settlement. — Employees of the taxation and revenue department did not have apparent authority to enter into a compromise tax settlement agreement without the attorney general's written approval. Johnson & Johnson v. Taxation & Revenue Dep't, 1997-NMCA-030, 123 N.M. 190, 936 P.2d 872, cert. denied, 123 N.M. 168, 936 P.2d 337.

No estoppel to permit enforcement of invalid settlement. — The doctrine of equitable estoppel did not apply to preclude disavowal of a compromise tax settlement agreement entered into without the attorney general's written approval. Johnson & Johnson v. Taxation & Revenue Dep't, 1997-NMCA-030, 123 N.M. 190, 936 P.2d 872, cert. denied, 123 N.M. 168, 936 P.2d 337.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation § 310; 72 Am. Jur. 2d State and Local Taxation §§ 853 to 855, 1074.

Power of legislature to remit, release or compromise tax claim, 28 A.L.R.2d 1425.

84 C.J.S. Taxation §§ 907 to 909, 1052.