July 17, 2014 – New Mexico Taxation and Revenue Department v. Casias Trucking, No. 32,595

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: July 17, 2014
NO. 32,595

NEW MEXICO TAXATION
AND REVENUE DEPARTMENT,

Appellant,
V.
CASTIAS TRUCKING,

Appellee.

APPEAL FROM THE TAXATION & REVENUE DEPARTMENT
Monica Ontiveros, Hearing Officer

New Mexico Taxation & Revenue Department
Nelson J. Goodin, Chief Legal Counsel
Santa Fe, NM

for Appellant

Wayne G. Chew, P.C.
Wayne G. Chew

Albuquerque, NM

for Appellee

OPINION
VIGIL, Judge.
{1} 	Taxpayer Casias Trucking (Casias Trucking) protested a tax assessment issued
by the Taxation and Revenue Department (the Department). 	The hearing officer
concluded that the Department’s method for calculating the amount of taxes owed by
Casias Trucking was unreliable and abated the assessment. 	Concluding that the
hearing officer’s decision is supported by substantial evidence, we affirm.
BACKGROUND
{2} 	Casias Trucking is a business engaged in the intra-state hauling of construction
materials. Per NMSA 1978, Section 7-15A-3 (1988), Casias Trucking is required to
pay a “weight distance tax” on its several trucks that weigh more than 26,000 pounds
for miles driven on New Mexico highways. In 2010, although Casias Trucking had
been filing weight distance tax returns and paying weight distance taxes, the
Department suspected it was underreporting and selected Casias Trucking for a weight
distance field audit for tax years 2007 through 2009. The Department extended the
audit to cover tax years 2004 through 2006 after it identified alleged underreporting
in excess of twenty-five percent. See NMSA 1978, § 7-1-18(D) (2013) (allowing for
an extension on the statute of limitations for assessing taxes from three years to six

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years, when taxpayers understate their tax liability on their returns by more than
twenty-five percent).
{3} 	At the commencement of the audit, Mr. Louie Casias, owner of Casias
Trucking, met with the auditor and her supervisor and explained that his business did
not engage in long-distance hauling but that he mostly traveled on construction sites
and that he only used five trucks. 	Mr. Casias calculated the mileage his trucks
traveled based on the amount of fuel purchased as shown in his fuel receipts,
multiplied by the industry average of five miles per gallon. 	He then reported the
mileage to his accountant, who prepared his tax returns. During the audit, Mr. Casias
provided the auditor with all of his fuel receipts for 2007 through 2009, and he went
through the fuel receipts for 2007 with the auditor to show that they matched with
what he had reported. He also provided a quarterly summary that he had prepared to
show the total number of gallons of fuel purchased referenced by truck number, along
with the odometer reading by date. For reasons which we explain in greater detail
below, the auditor decided Mr. Casias’s summary was unreliable, and refused to
calculate mileage based on the fuel receipts that Mr. Casias had.
{4} 	As a result of its audit, the Department assessed Casias Trucking with
$103,097.36 in weight tax principal, interest, and penalties for 2004 through 2009.
Casias Trucking protested the assessment, and a formal hearing was held before a

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Department hearing officer. 	At the hearing, the Department presented its audit
methodology for calculating the amount Casias Trucking underpaid and Casias
Trucking 	presented 	evidence 	that 	the 	Department’s 	methodology 	produced
unreasonably high results. The hearing officer ruled that Casias Trucking provided
sufficient evidence that the Department’s audit was not reliable and abated the claimed
amount due. 	The Department appeals. 	NMSA 1978, § 7-1-25(A) (1989) (“If the
protestant or secretary is dissatisfied with the decision and order of the hearing officer,
the party may appeal to the court of appeals for further relief, but only to the same
extent and upon the same theory as was asserted in the hearing before the hearing
officer.”) Additional pertinent facts are discussed below.
DISCUSSION
{5} 	The Weight Distance Tax Act (the Act), NMSA 1978, §§ 7-15A-1 to -16 (1988,
as amended through 2009), imposes a tax on all registered vehicles with a declared
weight over 26,000 pounds that travel on state highways. Section 7-15A-3. “The tax
shall be paid by the registrant, owner or operator of a motor vehicle registered in this
state to which the tax applies.” Section 7-15A-4. The Act sets forth a schedule for
the tax rate, or mills per mile rate (mill rate), based upon the declared gross vehicle
weight, with the mill rate increasing as the weight increases. Section 7-15A-6(A).
Motor vehicles that customarily only carry a full load one way (a one-way haul) are

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eligible to pay at the reduced rate of two-thirds of the appropriate mill rate. Section
7-15A-6(B)(1)-(2). Taxpayers subject to the Act must report to the Department the
total number of miles traveled inside and outside of New Mexico during the tax
payment period. Section 7-15A-8(B). However, the tax rate is computed based upon
the total number of miles traveled on New Mexico highways during the tax period.
Section 7-15A-8(A). 	Unless certain conditions are met to qualify for annual
payments, taxpayers are required to pay weight distance taxes quarterly. Section 7-
15A-9.
{6} 	Taxpayers must maintain records that will permit the accurate computation of
taxes. NMSA 1978, § 7-1-10(A) (2007). If claiming the one-way haul rate, taxpayers
must keep records of loaded miles versus empty miles designated by truck number.
3.12.6.11 NMAC. The records used to make quarterly tax payments must be kept for
four years after the payments are made. Section 7-15A-9(D). Upon the Department’s
request, taxpayers must make their records available “for audit as to accuracy of
computations and payments.” 	Id.; see also 3.1.5.8(A) NMAC (“Taxpayers have a
duty to provide the secretary or secretary’s delegate, upon request, with books of
account and other records upon which to establish a basis for taxation.”).
{7} 	The Department’s regulations provide that “[t]he adequacy or inadequacy of
taxpayer records is a matter of fact to be determined by the secretary or secretary’s

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delegate.” 	3.1.5.8(A) NMAC. 	“Failure of a taxpayer to keep adequate books of
account or other records will cause the department to use alternative methods to
determine or estimate taxes due.” 3.1.5.8(B) NMAC. The Department is authorized
to use any method or combination of methods to reconstruct or verify taxpayers’
records, including but not limited to utilizing bank deposits, comparison to industry
standards, and assessment of taxes based on the best information available. 3.1.5.8
(C)-(D) NMAC.
Presumption of Correctness and Burden Shifting
{8} 	“Any assessment of taxes or demand for payment made by the department is
presumed to be correct.” NMSA 1978, § 7-1-17(C) (2007); see also Torridge Corp.
v. Comm’r of Revenue, 1972-NMCA-171, ¶ 15, 84 N.M. 610, 506 P.2d 354 (“The
notice of assessment of taxes based on the audit is presumed to be correct.”). “The
presumption exists even if the secretary has issued assessments using alternative
methods of reconstruction of a tax or has estimated the tax.” 	3.1.6.12(B) NMAC.
“‘The effect of the presumption of correctness is that the taxpayer has the burden of
coming forward with some countervailing evidence tending to dispute the factual
correctness of the assessment made by the secretary.’” MPC Ltd. v. N.M. Taxation &
Revenue Dep’t, 2003-NMCA-021, ¶ 13, 133 N.M. 217, 62 P.3d 308 (quoting
3.1.6.12(A) NMAC); see Floyd & Berry Davis Co. v. Bureau of Revenue, 1975-

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NMCA-143, ¶ 8, 88 N.M. 576, 544 P.2d 291 (“One way for the taxpayer to overcome
the presumption of correctness of the assessment is to present evidence and to show
that the decision of the [b]ureau is not supported by substantial evidence.”);
McConnell v. State ex rel. Bureau of Revenue, 1971-NMCA-181, ¶ 7, 83 N.M. 386,
492 P.2d 1003 (explaining that the protestor can rebut the presumption of correctness
by showing that the department failed to follow relevant statutory provisions or
presenting evidence tending to dispute the factual correctness of the assessments).
However, “‘[u]nsubstantiated statements that the assessment is incorrect cannot
overcome the presumption of correctness.’” 	MPC Ltd., 2003-NMCA-021, ¶ 13
(quoting 3.1.6.12(A) NMAC). “Absent a showing of incorrectness by taxpayers, the
audit and notice of assessment of taxes must stand.” 	Torridge, 1972-NMCA-171,
¶ 15. On the other hand, when a taxpayer rebuts the presumption, the burden shifts
to the Department to demonstrate the correctness of the tax assessment. MPC Ltd.,
2003-NMCA-021, ¶ 13; accord Cibola Energy Corp. v. Roselli, 1987-NMCA-055,
¶ 11, 105 N.M. 774, 737 P.2d 555.
The Department’s Method
{9} 	During the audit, Casias Trucking provided the auditor with the records used
to calculate its weight distance tax returns, which consisted of receipts from 2007
through 2009 for fuel purchased by cash, credit card, and check, as well quarterly

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summaries it prepared that showed the date, truck number, ending odometer reading,
and amount of fuel purchased. The auditor decided that Casias Trucking’s quarterly
summaries were unreliable because the odometer readings could not have been an
accurate reflection of the actual odometer readings since some of the readings went
backward or stayed the same as time progressed.
{10} 	The auditor also determined that she would not use the fuel receipts to calculate
the mileage because she concluded that Casias Trucking did not provide fuel receipts
for all of its trucks. The auditor determined that Casias Trucking, which had bought
and sold trucks throughout the audited period, had titled seven to ten trucks in this
period based on permits issued by the motor vehicle division. 	Yet, the quarterly
summaries only accounted for fuel purchases for four to five trucks. Believing that
Casias Trucking would not buy “expensive” trucks that it would not use and that it
would have more than one to two receipts per month for each truck, she concluded
that Casias Trucking did not provide the receipts for all the fuel he had purchased.
Thus, the auditor decided not to base her audit on Casias Trucking’s records.
{11} 	Since she had determined Casias Trucking’s records were inadequate, the
auditor selected an alternate method per 3.1.5.8(B) NMAC for calculating the mileage
Casias Trucking’s trucks had traveled. 	She used an averaging method based on
subtracting the beginning odometer readings from the ending readings for six trucks

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with available readings, dividing that figure by the number of months that had passed
between the readings to get the average miles of travel per month, and multiplying that
figure by three to get the average miles traveled per quarter. For the remaining trucks
that had unavailable odometer readings, either because they were sold, placed out of
service, or had an unreliable beginning reading, the auditor based the mileage on an
average of the quarterly average of the other six trucks.
{12} 	According to the auditor’s calculations, Casias Trucking’s trucks had traveled
a total of 2,416,571 miles from 2004 through 2009, whereas Casias Trucking had
reported 228,992 miles for this period. The auditor credited Casias Trucking for the
amount it had paid and calculated the difference due. In addition, even though Casias
Trucking was required per 3.12.6.11 NMAC to have its drivers keep records of miles
with a full load verses an empty load in order to qualify for the one-way haul rate, the
auditor utilized the one-way haul rate in her calculations after investigating and
determining that it was customary for Casias Trucking’s trucks to leave full and return
empty. However, the auditor did not exclude any miles for being exempt (“off road”
or off New Mexico highways) because Casias Trucking did not keep records of which
miles were traveled on and which were off New Mexico highways.

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Casias Trucking’s Evidence
{13} 	Mr. Casias testified at the hearing that his trucks could not have possibly
traveled the distances calculated by the Department, and he could not have possibly
underreported in the amount the Department contended. 	He said his business
consisted of mostly “off road” or “on-site hauling”; meaning the trucks hauled
construction materials short distances to construction projects within New Mexico,
only traveling on highways to get to the job sites and spending a lot of idle time
waiting to dump the materials at the sites. Each truck hauled full loads one-way only
and traveled anywhere from thirty to fifty miles per day.
{14} 	According to Mr. Casias, he only had five to six trucks working at any given
time, with the other trucks only rarely being used to replace a broken down truck or
for an odd job. To explain how he could afford to let equipment sit idly, he presented
titles showing that all of the trucks were purchased used and relatively inexpensively,
with a price ranging from $150 to $50,000. He also said that he only employed seven
drivers, with one to two drivers serving as backup drivers. However, Mr. Casias did
admit that he reported to his accountant who prepared his weight distance taxes only
half of the total mileage he calculated because he thought he was entitled to cut his
miles in half since he only performed one-way hauls, which he understood to be an
erroneous understanding of the law by the time he testified.

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{15} 	According to Mr. Casias, his method of using fuel receipts to calculate mileage
traveled produced a more accurate result than the Department’s method. He said that
the fuel receipts he provided the auditor were for all of the fuel he purchased. When
prompted on cross-examination why he only produced fuel receipts for five vehicles
when he owned more than that, Mr. Casias maintained that he only used five trucks
at any given time and on a rare occasion, once every six to eight months, he would
purchase fuel for one of his backup trucks. He only reported on five trucks because
those were the trucks being used in his daily business.
The Hearing Officer’s Findings and Conclusions
{16} 	The hearing officer found that Casias Trucking owned up to ten trucks during
the audit period and that Mr. Casias credibly testified that he did not use all of the
trucks at the same time and only employed seven drivers at any given time, both of
which the Department failed to rebut. She also found his description of the type of
off-road hauling he did was credible. Finally, she determined that Mr. Casias credibly
testified that he could not have traveled the amount of miles or underreported in the
amount the Department alleged.
{17} 	Although the hearing officer agreed that Casias Trucking’s quarterly summaries
were unreliable because of the odometer reading anomalies, she also found that Casias
Trucking’s fuel receipts were “reliable and were not in any way controverted by the

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Department’s evidence.” 	The hearing officer noted that the Department did not
present any evidence that additional fuel receipts existed by way of bank statements
or otherwise. The auditor’s notes indicated that Mr. Casias told her he sometimes paid
for fuel by check, yet the auditor failed to produce any checks that would show he had
purchased additional fuel not accounted for in the receipts. She concluded that
“without any contradictory evidence, the amount of money expended by [Mr. Casias]
on fuel is uncontroverted.” 	Additionally, she noted that although the Department
refused to use Casias Trucking’s fuel receipts, in a prior case it did use a taxpayer’s
fuel receipts and applied the industry average of miles per gallon to calculate miles
driven.
{18} 	Based on this evidence, the hearing officer concluded that Mr. Casias had
overcome the presumption of the correctness of the Department’s assessment and that
the Department had failed to meet its burden to prove the correctness of its
assessment.
Standard of Review
{19} 	Our review of the hearing officer’s decision is not de novo. NMSA 1978, § 7-
1-25(A) (1989). This Court can only set aside a hearing officer’s decision and order
on appeal if we conclude that it is “(1) arbitrary, capricious or an abuse of discretion;
(2) not supported by substantial evidence in the record; or (3) otherwise not in

12
accordance with the law.” Section 7-1-25(C); see also Wing Pawn Shop v. Taxation
& Revenue Dep’t, 1991-NMCA-024, ¶ 8, 111 N.M. 735, 809 P.2d 649 (“On appeal
from an agency determination, we determine whether, viewing the evidence in a light
most favorable to the agency’s decision, the findings have substantial support in the
record as a whole.”).
{20} 	We first determine whether there is substantial evidence in the record to support
the hearing officer’s decision. See Floyd & Berry Davis Co., 1975-NMCA-143, ¶ 8.
“The question is not whether substantial evidence exists to support the opposite result,
but rather whether such evidence supports the result reached.” Las Cruces Prof’l Fire
Fighters v. City of Las Cruces, 1997-NMCA-044, ¶ 12, 123 N.M. 329, 940 P.2d 177.
When more than one inference can be drawn from the evidence, the determination
made by the hearing officer is conclusive. Waldroop v. O’Cheskey, 1973-NMCA-146,
¶ 9, 85 N.M. 736, 516 P.2d 1119. “[W]e will not reweigh the evidence nor substitute
our judgment for that of the fact finder.” 	Las Cruces Prof’l Fire Fighters, 1997-
NMCA-044, ¶ 12.
Analysis
{21} 	The parties submitted conflicting evidence regarding the completeness of the
fuel receipts. Mr. Casias testified that: (1) his trucks only traveled on highways to get
to and from a job site and spent the majority of time “on site”; (2) he only used five

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trucks at any given time, the other trucks sat unused as “backups” in his yard and were
used on rare occasions; (3) his trucks including his spare trucks were relatively
inexpensive with a purchase price as low as $150; (4) he only employed seven drivers
with one to two drivers serving as backup drivers; (5) he kept all the receipts for fuel
he purchased; (6) he based the mileage he reported on the amount of fuel he
purchased; and (7) calculating the mileage based on his fuel receipts would yield the
most accurate results despite not all of the fuel consumed being used on highways.
{22} 	In turn, the Department presented evidence that (1) Casias owned more than
five trucks at any given time and up to ten trucks at one time, (2) Casias only
submitted receipts for the same five trucks, (3) it believed that Casias would not let
expensive equipment sit on his yard without being used, and (4) the auditor believed
Casias had purchased more fuel than represented by the receipts Mr. Casias had
provided.
{23} 	The hearing officer found Mr. Casias’s testimony credible. 	It is “the sole
responsibility of the trier of fact to weigh the testimony, determine the credibility of
the witnesses, reconcile inconsistencies, and determine where the truth lies[,]” and we,
as the reviewing court, do not weigh the credibility of live witnesses. Tallman v. ABF
(Arkansas Best Freight), 1988-NMCA-091, ¶¶ 3, 7, 108 N.M. 124, 767 P.2d 363,
holding modified by Delgado v. Phelps Dodge Chino, Inc., 2001-NMSC-034, 131

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N.M. 272, 34 P.3d 1148. Thus, the hearing officer’s credibility determinations stand
on appeal.
{24} 	The Department reasserts in its brief to this Court the same arguments it
asserted to the hearing officer regarding the inadequacy of Casias Trucking’s fuel
receipts, offering that the Department “testified in detail about the inadequacy of
[Casias Trucking’s] fuel receipts.” 	However, by finding Casias Trucking’s fuel
receipts reliable, the hearing officer rejected the Department’s underlying premise for
using an alternative method to calculate mileage. Moreover, “[t]he question is not
whether substantial evidence exists to support the opposite result, but rather whether
such evidence supports the result reached.” Las Cruces Prof’l Fire Fighters, 1997-
NMCA-044, ¶ 12. 	Here, the hearing officer rejected the Department’s testimony
regarding the unreliability of the receipts in favor of Casias Trucking’s substantial
evidence that its fuel receipts were complete and reliable. When more than one
inference can be drawn from the evidence, the determination made by the hearing
officer that Casias Trucking’s fuel receipts were reliable and the amount expended on
fuel was uncontroverted, is conclusive. 	See Waldroop, 1973-NMCA-146, ¶ 9
(concluding that since more than one inference could be drawn regarding the
adequacy of the taxpayer’s record’s, the hearing officer’s determination that they were
inadequate was conclusive). 	We do not place ourselves in the position of the fact

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finder and reweigh the evidence. See Las Cruces Prof’l Fire Fighters, 1997-NMCA-
044, ¶ 12. The hearing officer did not err in rejecting the Department’s evidence in
favor of Casias Trucking’s substantial evidence.
{25} 	The Department further attacks the hearing officer’s application of the law on
the presumption of correctness and the burden of proof. 	The Department first
contends that the hearing officer erred in concluding that Casias Trucking overcame
the presumption of the correctness of its assessment. Citing Floyd & Berry Davis Co.,
1975-NMCA-143, 	¶ 	8, 	the 	Department 	contends 	that 	“[t]he 	presumption 	of
correctness is not overcome when contradictory evidence is presented but taxpayer
may overcome the presumption by presenting evidence that the department’s decision
is not supported by substantial evidence.”
{26} 	While it is true that a taxpayer can rebut the presumption of correctness by
presenting evidence that the Department’s decision is not supported by substantial
evidence, Floyd & Berry Davis Co. does not stand for the proposition that such a
demonstration is the only way to overcome the presumption. The reviewing agency
in Floyd & Berry Davis Co. concluded that the taxpayer’s evidence was “not
compelling in view of the contradictory evidence” and this Court concluded that we
must assent to that determination under our standard of review. Id. ¶ 11. That is not
an indication that the reviewing agency could not have been legally persuaded by the

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taxpayer’s contrary evidence, but simply that it was not persuaded in that particular
case. We have the opposite result here. The hearing officer was persuaded by Casias
Trucking’s conflicting evidence that its fuel receipts were reliable to calculate mileage
for weight distance tax purposes. 	She therefore concluded that Casias Trucking
rebutted the Department’s presumption of correctness for using an alternative
methodology, and we affirm her conclusion since, as we have stated, it is supported
by substantial evidence. 	Thus, we disagree with the Department that the hearing
officer impermissibly shifted the burden of proof from Casias Trucking to the
Department. Once a taxpayer overcomes the presumption of correctness, the burden
shifts back to the Department to prove the correctness of its assessment. 	See MPC
Ltd., 2003-NMCA-021, ¶ 13.
CONCLUSION
{27} 	We affirm.
{28} 	IT IS SO ORDERED.
_____________________________
MICHAEL E. VIGIL, Judge

WE CONCUR:

TIMOTHY L. GARCIA, Judge

J. MILES HANISEE, Judge

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