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Helmerich Payne International Drilling Co. v. New Mexico Taxation and Revenue Department

Court of Appeals of New Mexico

June 27, 2019

HELMERICH PAYNE INTERNATIONAL DRILLING CO., Protestant-Appellee,
v.
NEW MEXICO TAXATION AND REVENUE DEPARTMENT, Respondent-Appellant.

          APPEAL FROM THE ADMINISTRATIVE HEARINGS OFFICE Dee Dee Hoxie, Hearing Officer

          Askew & Mazel, LLC Timothy R. Van Valen Albuquerque, NM for Appellee

          Hector H. Balderas, Attorney General Tonya Noonan Herring, Special Assistant Attorney General Santa Fe, NM for Appellant

          OPINION

          KRISHNA BOGXRDUS, JUDGE

         {¶1} The New Mexico Taxation and Revenue Department (the Department) appeals from a decision and order of the Administrative Hearings Office (AHO) awarding Helmerich & Payne International Drilling Co. (Helmerich) $50, 000 in administrative costs and fees associated with its tax protest. The Department challenges the AHO's subject matter jurisdiction to make the award. The Department further alleges that, assuming the AHO had jurisdiction, the AHO abused its discretion in exercising it. We conclude that the AHO's exercise of jurisdiction was proper and that the AHO did not abuse its discretion in awarding Helmerich the costs and fees. Further, we decline to consider the issue of award amount because the Department failed to preserve it. Accordingly, we affirm the AHO's decision and order (the Decision).

         BACKGROUND

         {¶2} The following facts, which the parties do not dispute, are taken from the Decision. The matter at issue in this case was prompted by a 2015 Department corporate income tax audit of Helmerich. Following the Department's assessment against Helmerich for $391, 178 in tax, a $78, 235.60 penalty, and $21, 220.07 in interest, Helmerich filed a formal protest and included in it a request for an award of fees and costs. The Department then requested, and the AHO made preparations for, a hearing on the protest. Before the hearing, Helmerich filed a motion for summary judgment. The Department did not respond, instead, it abated the entire assessment. The Department never explained to Helmerich or the AHO the reason for the abatement.

         {¶3} After the abatement, Helmerich renewed its request for an award of costs and fees. The Department objected, arguing that, because the assessment was abated in its entirety before any ruling by the AHO, the AHO lacked jurisdiction to make the award. The AHO vacated the originally scheduled merits hearing but issued an order on the jurisdictional question in which it concluded that it had jurisdiction to determine the prevailing party in the protest. After a hearing on the prevailing-party issue, the AHO issued the Decision, the subject of this appeal.

         DISCUSSION

         {¶4} The Department raises several issues on appeal. Essentially, it argues that (1) the AHO lacked subject matter jurisdiction to hold a hearing on Helmerich's request for costs and fees when the AHO did not decide the underlying issue of tax, interest, and penalty owed; (2) even if the AHO had jurisdiction, it abused its discretion by concluding that Helmerich was the prevailing party, thus entitled to an award of costs and fees; and (3) the AHO abused its discretion in awarding the amount of costs and fees it did.

         {¶5} Helmerich filed a succinct answer brief stating that it materially agrees with the Decision and requesting that we affirm it. Helmerich made no arguments in response to the Department and stated that, to avoid incurring even more costs and fees, it would participate no further in the appeal.

         I. The AHO Had Jurisdiction to Decide Whether Helmerich Was the Prevailing Party

         {¶6} Whether the AHO, an administrative agency, had subject matter jurisdiction to hold a hearing on the prevailing-party issue and to make the resulting award is a question we review de novo. See Citizen Action v. Sandia Corp., 2008-NMCA-031, ¶ 12, 143 N.M. 620, 179 P.3d 1228. "The subject matter jurisdiction of an administrative agency is defined by statute, and an agency is limited to exercising only the authority granted by statute." Id. In construing a statute, we observe the general principles that "the plain language of a statute is the primary indicator of legislative intent" and that when "several sections of a statute are involved, they must be read together so that all parts are given effect." High Ridge Hinkle Joint Venture v. City of Albuquerque, 1998-NMSC-050, ¶ 5, 126 N.M. 413, 970 P.2d 599 (internal quotation marks and citation omitted).

         {¶7}The resolution of this question of jurisdiction lies in NMSA 1978, Section 7- 1-29.1 (2015, amended 2019), [1] which addresses the awarding of costs and fees in tax disputes. Section 7-1-29.1(A) reads:

In any administrative . . . proceeding that is brought by or against the taxpayer ... in connection with the determination, collection or refund of any tax, interest or penalty for a tax governed by . . . the Tax Administration Act, [NMSA 1978, ยงยง 7-1-1 to -83 (1965, as amended through 2019)] the taxpayer shall be awarded a judgment or a settlement for reasonable administrative costs incurred in connection with an ...

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