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Tax Law

New Mexico Administrative Hearings Office Rejects Department’s Attempt to Eliminate Payroll Factor from Apportionment Factor Calculation

The State of New Mexico Administrative Hearings Office held that the New Mexico Taxation and Revenue Department could not remove the payroll factor from the apportionment factor calculation of a taxpayer in the credit card and personal lending business. The Hearings Office determined that “the party seeking to depart from the proscribed apportionment method,” which, in this case, was the Department, “bears the burden of proving by clear and convincing evidence that such departure is appropriate.” In this circumstance, the Department failed to prove that the taxpayer’s employees were not contributing significantly enough to the generation of the taxpayer’s income to warrant a full weighting of the payroll factor with the property and sales factors.


In the Matter of the Protest of Discover Bank, N.M. Admin. Hearings Office, Decision and Order No. 18-44 (Dec. 21, 2018).