This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
Intel Corporation sought a refund of New Mexico corporate income tax payments for the tax years 1988 through 1991, claiming eligibility for a tax credit under a state statute for child care expenses incurred for employees' dependent children. The dispute centered on whether Intel's payments under its Dependent Care Assistance Program (DCAP), which included a salary reduction component, qualified for the tax credit (paras 1-3).
Procedural History
- New Mexico Taxation and Revenue Department, Hearing Officer: Denied Intel's claim for a refund of corporate income tax payments but allowed Intel's claim for a tax credit for child care expenses in the 1991 tax year (headnotes, para 1).
Parties' Submissions
- Plaintiff-Appellant/Cross-Appellee (Intel Corporation): Argued that the payments made under its DCAP Plan, including the salary reduction component, qualified for the child care tax credit under NMSA 1978, Section 7-2A-14(A). Intel contended that the funds were paid by the corporation and met the statutory requirements (paras 2-3, 7-8).
- Defendant-Appellee/Cross-Appellant (Taxation and Revenue Department): Asserted that the salary reduction component of the DCAP Plan did not qualify for the tax credit because the funds were derived from employees' salaries, not Intel's own expenses. The Department also argued that the statute did not intend to allow such generous tax treatment (paras 2, 4, 7).
Legal Issues
- Whether Intel's payments under the salary reduction component of its DCAP Plan qualified as "incurred and paid" expenses under NMSA 1978, Section 7-2A-14(A) (paras 5-7).
- Whether the Taxation and Revenue Department's denial of Intel's refund claims for the tax years 1988 through 1991 was valid (para 1).
Disposition
- The Court of Appeals affirmed the decision of the hearing officer, allowing Intel's claim for the child care tax credit for the 1991 tax year but denying its refund claims for the tax years 1988 through 1991 (para 12).
Reasons
Majority Opinion (Hartz J., Bustamante J. concurring):
Hartz J.:
The Court interpreted the statutory language "incurred and paid" in NMSA 1978, Section 7-2A-14(A), to mean that expenses must be paid to cover liabilities for services already rendered. The Court rejected a technical interpretation that would exclude all corporations from qualifying for the credit. It found that Intel's payments under the DCAP Plan, including the salary reduction component, met the statutory requirements because the funds were treated as Intel's payments under federal tax law, which New Mexico's tax laws incorporate. The Court also noted that the Department's approach would not necessarily result in greater tax revenue and emphasized that any policy concerns should be addressed by the legislature, not the courts (paras 5-10).
The Court awarded Intel $2,000 in attorney's fees under NMSA 1978, Section 7-1-25(D), as the Department's appeal of the hearing officer's decision was unsuccessful (para 11).
Partial Dissent (Donnelly J.):
Donnelly J.:
While concurring with the majority's decision to affirm the child care tax credit for 1991, Donnelly dissented from the denial of Intel's refund claims for the tax years 1988 through 1991. He argued that the Department's treatment of Intel's foreign dividend income violated the Foreign Commerce Clause of the U.S. Constitution, as established in Kraft General Foods, Inc. v. Iowa Department of Revenue & Finance. Donnelly would have granted Intel's refund claims based on this constitutional principle (paras 14-15).