AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• Process Equipment & Service Company, Inc. (PESCO) applied for a state tax credit for the 2014 and 2016 tax years under the Technology Jobs and Research and Development Tax Credit Act, seeking to recoup some of its research and development costs. The New Mexico Taxation and Revenue Department (TRD) denied these applications, leading PESCO to protest the denials. An independent administrative hearing was held, where it was determined that PESCO met the requirements for the tax credit for both years (paras 2-5).

Procedural History

• [Not applicable or not found]

Parties' Submissions

• Protestant-Appellee (PESCO): Argued that it met the statutory requirements for the tax credit, employing a cost accounting methodology to allocate wages for research and development activities and using the same methodology in its other business activities (paras 3-5).
• Respondent-Appellant (TRD): Contended that PESCO did not satisfy the statutory requirements for entitlement to the credit because it failed to use a cost accounting methodology for wage allocation and did not apply the same methodology in its other business activities (para 1).

Legal Issues

• Whether PESCO satisfied the statutory requirements for its claimed “qualified expenditures” under the Technology Jobs and Research and Development Tax Credit Act, specifically regarding the use of a cost accounting methodology and the application of the same methodology in its other business activities (paras 6-8).

Disposition

• The Court of Appeals affirmed the decision of the Chief Hearing Officer (CHO) that PESCO met the requirements for a tax credit under the Act for the 2014 and 2016 tax years (para 1).

Reasons

• The Court, led by Judge Baca, with Judges Duffy concurring and Judge Bustamante concurring in part and dissenting in part, held that PESCO used a cost accounting methodology as required by the Act and informally applied this same method in its other business activities. The Court determined that the term “cost accounting methodology” is a term of art within the Act and defined it accordingly, relying on definitions from Investopedia and other sources to interpret the term in a manner consistent with legislative intent. The Court rejected TRD’s argument that a cost accounting methodology must be used to measure a company’s financial performance, finding no support for this requirement in the Act or the Investopedia definition. The Court concluded that substantial evidence supported the CHO’s findings and that PESCO had met its burden of proof (paras 9-35). Judge Bustamante dissented in part, agreeing that the phrase “cost accounting methodology” was intended to be used as a term of art but finding insufficient evidence that PESCO used CLA’s methodology in its other business activities as required by the Act (paras 38-41).