TAX NEWS - JUNE 2010

New Mexico Tax: New Mexico residents - Pay back taxes, avoid panic attacks and other ills

New Mexico tax department is promising relief from sleeplessness, panic attacks, high blood pressure and other ills: just pay your back taxes.

The Taxation and Revenue Department unveiled a tax amnesty program Monday that will allow New Mexico businesses and residents to avoid interest and penalties while catching up on unpaid taxes owed prior to 2010.

Tax amnesty program runs through Sept. 30.

"A big motivation for this program ... is the fact that many New Mexico taxpayers, both individuals and businesses, are having a tough time making ends meet," Taxation and Revenue Secretary Rick Homans said. "Many people have fallen behind in their obligations and sometimes people stop paying taxes or pay less than they owe."

Tax officials expect 3,000 to 5,000 taxpayers to come forward, said Phillip Salazar, head of the department's audit and compliance division.

Once the state determines how much taxpayers owe, they have 180 days to pay in full.

Homans said there's no limit to how long ago the taxes weren't paid.

"And that's where the benefit of forgiving penalties and interest really comes into play," he said. "If this is a tax liability from five years ago, 10 years ago, the penalty and interest is obviously going to be huge."

Officials estimate amnesty could bring in about $7 million in back taxes, based on what occurred in a 1999 amnesty program. Some $5.5 million would go to the state general fund and the rest to local governments.

"What's more difficult to estimate is the number of taxpayers who are not reporting who may come forward and then be regular taxpayers going forward," Homans said.

The state decided to take a humorous approach to publicize tax amnesty to catch people's interest, he said.

Radio and television ads will talk about relief from chest pains and unexplained hair loss. Posters at the news conference announcing the program showed a pill bottle, labeled "New Mexico Tax Relief," to cure ills such as anxiety, financial nightmares and paranoia in "116 easy to swallow days."

In small print, like a drug ad, the poster listed possible side effects: a clear conscience, lifted spirits, frequent bouts of giggling, loss of guilt.

The amnesty, authorized by the 2010 Legislature, does not apply to taxpayers being audited or under investigation.

"We're hoping that this amnesty program can help people and businesses straighten out their financial challenges, get on the right financial footing and move forward, and in that way help the economy of New Mexico," Homans said.