New Mexico residents facing state audits: Key points to know

LAS CRUCES, N.M. (KVIA) -- The deadline for filing 2023 taxes passed on April 15, but for some New Mexico residents, the stress may just be beginning as state audits loom.

ABC-7 interviewed a local tax accountant serving both New Mexico and Texas residents, who noted a surge in state audits.

According to tax accountant Miguel Favela, New Mexico residents working or operating businesses in Texas and receiving a 1099 or reporting self-employment income may receive state letters.

Favela emphasized that even those who don't consider themselves business owners but receive a 1099 or self-employment income are subject to state scrutiny.

Many people mistakenly believe they need to register a business to be considered self-employed, but New Mexico law defines earning income without a W2 as being in business.

Despite working solely in El Paso, one New Mexico resident found herself audited by New Mexico tax authorities.

The stress of receiving an audit notice was palpable for Karina Portillo, who expressed her initial terror upon receiving the letter.

Favela observed that fear often leads people to pay the state without challenging the audit, although many issues can be resolved through proper communication.

To prevent such audits, Favela advises residents to register with the Las Cruces Taxation and Revenue Department for a gross receipt tax account or consult a tax accountant.

For those receiving state letters, Favela recommends comparing the amounts owed with receipts and providing documentation to resolve discrepancies.

While audits are stressful, seeking help from a qualified accountant can alleviate the burden and ensure compliance.

An IRS official reached in regards to this story and wanted to clarify the following, "From what was published, it seems that the audits are a result of a state tax law and therefore the IRS would not be sending these types of notices as these would come from the state taxation and revenue department."