New Mexico Tax Policies Challenged

SANTA FE, N.M. (CN) - New Mexico refuses to pay state income tax refunds to legally employed foreigners due to prejudicial policies of its Department of Taxation and Revenue, two residents claim in court.

Gladys Cobos and L. Roberto Sanchez sued the Department of Taxation and Revenue and its director on Feb. 12 in Santa Fe County Court.

The two residents of Santa Fe County claim the defendants instituted unfair and discriminatory rules in 2012, in violation of the Legislature's intent.

The policies punish people who work in the state with federal Individual Tax Identification Numbers (ITINs), by requiring additional documentation that is either redundant or not applicable, Cobos and Sanchez say. They claim the state is indefinitely holding state refunds, applying baseless penalties, and/or arbitrarily increasing the tax liability of legal workers who do not qualify for a Social Security number under federal law.

They say the defendants have no legal authority under the state's Tax Administration Act to deny them their tax refunds, and that doing so violates the Equal Protection Clause of the New Mexico Constitution.

This could have far-reaching consequences, as the department has reported that there are more than 14,500 unresolved cases involving ITIN holders. The combined estimated value of the money wrongfully withheld comes to more than $4 million, the plaintiffs say.

They want their past-due tax returns, with interest, declaratory judgment that the state's policies on tax refunds for ITIN-holders violate of the Tax Administration Act, and an injunction.

Their lead counsel is David G. Hinojosa with the Mexican American Legal Defense and Educational Fund, of San Antonio, Texas.

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