Section 7-1-29.1 - Awarding of costs and fees. - New Mexico Statutes

7-1-29.1. Awarding of costs and fees.

A.     In any administrative or court proceeding that is brought by or against the taxpayer on or after July 1, 2003 in connection with the determination, collection or refund of any tax, interest or penalty for a tax governed by the provisions of the Tax Administration Act [7-1-1 NMSA 1978], the taxpayer shall be awarded a judgment or a settlement for reasonable administrative costs incurred in connection with an administrative proceeding with the department or reasonable litigation costs incurred in connection with a court proceeding, if the taxpayer is the prevailing party.   

B.     As used in this section:   

(1)     "administrative proceeding" means any procedure or other action before the department;   

(2)     "court proceeding" means any civil action brought in state district court;   

(3)     "reasonable administrative costs" means:   

(a)     any administrative fees or similar charges imposed by the department; and   

(b)     actual charges for: 1) filing fees, court reporter fees, service of process fees and similar expenses; 2) the services of expert witnesses; 3) any study, analysis, report, test or project reasonably necessary for the preparation of the party's case; and 4) fees and costs paid or incurred for the services in connection with the proceeding of attorneys or of certified public accountants who are authorized to practice before the department; and   

(4)     "reasonable litigation costs" means:   

(a)     reasonable court costs; and   

(b)     actual charges for: 1) filing fees, court reporter fees, service of process fees and similar expenses; 2) the services of expert witnesses; 3) any study, analysis, report, test or project reasonably necessary for the preparation of the party's case; and 4) fees and costs paid or incurred for the services of attorneys in connection with the proceeding.   

C.     For purposes of this section:   

(1)     the taxpayer is the prevailing party if the taxpayer has:   

(a)     substantially prevailed with respect to the amount controversy; or   

(b)     substantially prevailed with respect to most of the issues involved in the case or the most significant issue or set of issues involved in the case;   

(2)     the taxpayer shall not be treated as the prevailing party if the department establishes that the position of the department in the proceeding was based upon a reasonable application of the law to the facts of the case. For purposes of this paragraph, the position of the department shall be presumed not to be based upon a reasonable application of the law to the facts of the case if:   

(a)     the department did not follow its applicable published guidance in the proceeding; or   

(b)     the assessment giving rise to the proceeding is not supported by substantial evidence determined at the time of the issuance of the assessment;   

(3)     as used in Subparagraph (a) of Paragraph (2) of this subsection, "applicable published guidance" means:   

(a)     department regulations, information releases, instructions, notices, technical advice memoranda and announcements; and   

(b)     private letter rulings and letters issued by the department to the taxpayer; and   

(4)     the determination of whether the taxpayer is the prevailing party and the amount of reasonable litigation costs or reasonable administrative costs shall be made by agreement of the parties or:   

(a)     in the case where the final determination with respect to the tax, interest or penalty is made in an administrative proceeding, by the department hearing officer; or   

(b)     in the case where the final determination is made by the court, the court.   

D.     An order granting or denying in whole or in part an award for reasonable litigation costs pursuant to Subsection A of this section in a court proceeding may be incorporated as a part of the decision or judgment in the court proceeding and shall be subject to appeal in the same manner as the decision or judgment. A decision or order granting or denying in whole or in part an award for reasonable administrative costs pursuant to Subsection A of this section by the department hearing officer shall be reviewable in the same manner as a decision of the department hearing officer.   

E.     No agreement for or award of reasonable administrative costs or reasonable litigation costs in any administrative or court proceeding pursuant to Subsection A of this section shall exceed the lesser of twenty percent of the amount of the settlement or judgment or fifty thousand dollars ($50,000). A taxpayer awarded administrative litigation costs pursuant to this section may not receive an award of attorney fees pursuant to Subsection D of Section 7-1-25 NMSA 1978.