A. In an administrative proceeding or court proceeding brought by or against a taxpayer and conducted in connection with the determination, collection or refund of a tax or the interest or penalty for a tax governed by the Tax Administration Act, the taxpayer shall be awarded a judgment or a settlement for reasonable administrative costs and reasonable litigation costs and attorney fees incurred in connection with the proceeding if the taxpayer is the prevailing party. B. As used in this section:
(1)"administrative proceeding" means any procedure or other action before the department or the administrative hearings office;
(2)"court proceeding" means any civil action brought in state district court;
(3)"reasonable administrative costs" means:
(a)any administrative fees or similar charge
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A. In an administrative proceeding or court proceeding brought by or against a taxpayer and conducted in connection with the determination, collection or refund of a tax or the interest or penalty for a tax governed by the Tax Administration Act, the taxpayer shall be awarded a judgment or a settlement for reasonable administrative costs and reasonable litigation costs and attorney fees incurred in connection with the proceeding if the taxpayer is the prevailing party. B. As used in this section: (1) "administrative proceeding" means any procedure or other action before the department or the administrative hearings office; (2) "court proceeding" means any civil action brought in state district court; (3) "reasonable administrative costs" means: (a) any administrative fees or similar charges imposed by the department or the administrative hearings office; and (b) actual charges for: 1) filing fees, court reporter fees, service of process fees and similar expenses; 2) the services of expert witnesses; 3) any study, analysis, report, test or project reasonably necessary for the preparation of the party's case; and 4) fees and costs paid or incurred for the services in connection with the proceeding of attorneys, certified public accountants, employees of a New Mexico licensed certified public accounting firm or enrolled agents who are authorized to practice in the context of an administrative proceeding; and (4) "reasonable litigation costs and attorney fees" means: (a) reasonable court costs; and (b) actual charges for: 1) filing fees, court reporter fees, service of process fees and similar expenses; 2) the services of expert witnesses; 3) any study, analysis, report, test or project reasonably necessary for the preparation of the party's case; and 4) fees and costs paid or incurred for the services of attorneys in connection with the proceeding. C. For purposes of this section: (1) the taxpayer is the prevailing party if the taxpayer has: (a) substantially prevailed with respect to the amount in controversy; or (b) substantially prevailed with respect to most of the issues involved in the case or the most significant issue or set of issues involved in the case; (2) the taxpayer is not the prevailing party if the administrative hearings office finds that the position of the department in the proceeding was based upon a reasonable application of the law to the facts of the case. For purposes of this paragraph, the position of the department shall be presumed not to be based upon a reasonable application of the law to the facts of the case if: (a) the department did not follow applicable published guidance in the proceeding; or (b) the assessment giving rise to the proceeding is not supported by substantial evidence determined at the time of the issuance of the assessment; (3) as used in Subparagraph (a) of Paragraph (2) of this subsection, "applicable published guidance" means: (a) department or administrative hearings office regulations, information releases, instructions, notices, technical advice memoranda and announcements; and (b) private letter rulings and letters issued by the department to the taxpayer; and (4) the determination of whether the taxpayer is the prevailing party and the amount of reasonable litigation costs or reasonable administrative costs shall be made by agreement of the parties or: (a) in the case of an administrative proceeding, by the hearing officer; or (b) in the case of a court proceeding, by the court. D. An order granting or denying in whole or in part an award for: (1) reasonable litigation costs and attorney fees pursuant to Subsection A of this section in a court proceeding may be incorporated as a part of the court's decision or judgment and are subject to appeal in the same manner as the decision or judgment; and (2) reasonable administrative costs pursuant to Subsection A of this section in an administrative proceeding are reviewable in the same manner as a decision of the administrative hearings office. E. An agreement for or award of reasonable administrative costs or reasonable litigation costs in any administrative proceeding or court proceeding pursuant to Subsection A of this section shall not exceed the lesser of twenty percent of the amount of the settlement or judgment or seventy-five thousand dollars ($75,000). F. The department shall annually report to the legislative finance committee and the revenue stabilization and tax policy committee on the costs it incurs pursuant to this section.