A Review of New Mexico State Tax Payment Plans

new mexico state tax payment planNew Mexican Taxpayers who owe the state taxes and can’t pay in full may want to consider a tax payment plan with the Taxation and Revenue Department (TRD). Taxpayers who set up a payment plan with the TRD can avoid enforced collection activities such as levies or seizure in most cases. However, if a business taxpayer defaults, TRD can seize business assets and close the business. If an individual taxpayer defaults on a payment agreement, TRD can also seize assets including motor vehicles.

Coronavirus Relief

For personal income taxes, the TRD is giving taxpayers until April 15th, 2021 to pay any 2019 tax liabilities in full without penalties or interest. They do not need to set up a payment plan online.  Taxpayers only need to satisfy their balance by April 15th, 2021. They can achieve this by making payments online using their social security number or by mailing payments. For tax balances for years older than 2019, they can set up a payment plan online.

Two Types of Payment Plans Offered by the NM’s TRD

New Mexico’s TRD offers two types of payment plans for taxpayers that cannot pay off their tax balance in full.

Short-Term Payment Plan

A short-term payment plan is for taxpayers who need only 12 months or less to pay off the tax liability. The benefit of setting up this type of payment plan, besides paying less over time in interest, is that the TRD will not file a lien if the taxpayer chooses this type of payment plan.

Installment Agreement

An Installment Agreement is a formal written agreement that is entered into between the taxpayer and the TRD. Installment Agreements are for longer periods of time and can be entered into a plan up to 72 months. All installment agreements must be secured by a lien or other acceptable security under state law in order to be granted by the TRD. Additionally, taxpayers should be aware that pursuant to state law, by entering into a payment plan with the TRD, they waive all rights to appeal the validity of the liability in the future.

NM State Tax Payment Plan Terms

The TRD offers flexible monthly payment terms for both types of payment plans. Taxpayers can set up equal or fluctuating monthly payments, or payment amounts that increase over the term of the agreement. In most cases, the TRD will request financial information from the taxpayer when requesting an Installment Agreement.

How to Setup a New Mexico State Tax Payment Plan

The TRD offers many options for taxpayers to set up a payment plan for past due taxes.

Self-Service Option

The TRD recently allowed taxpayers to create a payment plan for tax balance, including penalties and interest. Taxpayers can select their down payment and duration of their plan up to 72 months. Some taxpayers will have their payment plan approved automatically, while others will be contacted by the TRD to complete the process. Taxpayers can log into their online account at tap.state.nm.us/TAP/  and will see options to set up a payment plan once logged in.

Setup Appointment at District Office

Taxpayers can also set up a payment plan by also visiting a District Office. Taxpayers can call the Santa Fe District (505-827-0920) or the Albuquerque District (505-841-6262) to set up an appointment.

Call the Taxation and Revenue Department

Taxpayers can also set up a payment plan by calling the TRD directly. However, it is best to set up a payment plan online. The toll-free number is 1-866-285-2996 or taxpayers can call the general line at 505-827-0700.

Defaulting on a Tax Payment Plan

If a taxpayer misses a payment, makes payments late, does not file tax returns on time, or creates new liabilities, the TRD will send the taxpayer a Delinquent Agreement Letter. If the taxpayer fails to respond or contact the TRD after receiving this letter, the TRD will send a Defaulted Agreement Letter. Next, the TRD could pursue enforced collection actions.

In Closing

Taxpayers who cannot pay off their tax bill in full can set up one of two payment plans. The payment plan will help the taxpayer stay in compliance with the TRD. As a result, taxpayers can avoid seizures, levies, and other enforcement actions. The TRD has suspended certain enforcement collection actions until the end of August 2020. Moreover, for taxpayers with 2019 tax balances who filed on time or who filed an extension, they can submit payments online or mail payments. The benefit here is there is no consequence of interest and penalties until after April 15th, 2021. For those taxpayers with tax balances from before the 2019 tax year, they can set up a payment plan online, by phone, or by visiting a district office (by appointment only).

If a taxpayer cannot afford to make monthly payments, they should work with a licensed tax professional and consider other options. Alternatively, they can contact the Taxpayer Advocate as well.

Disclaimer

Reading this article does not create an attorney-client relationship. This article should not be used as a substitute for the advice of a competent attorney or tax professional admitted or authorized to practice in your jurisdiction.