SANTA FE – The New Mexico tax department has agreed to stop automatically withholding income tax refunds from many foreign nationals without Social Security numbers who file under alternative identification numbers provided by the IRS, a New Mexico state senator said Friday.
Sen. Gerald Ortiz y Pino, D-Albuquerque, said he co-signed the settlement as a plaintiff that says state tax authorities will no longer withhold refunds based solely on discrepancies between a taxpayer’s individual taxpayer identification number, or ITIN, and any Social Security number submitted on corresponding W-2 income forms.
The Taxation and Revenue Department and other parties to the settlement declined to comment or acknowledge the agreement.
The agreement resolves a lawsuit against the department alleging a practice of withholding tax refunds owed to foreign nationals starting in 2012 based on mismatched tax identification numbers.
The lawsuit was filed last year by the immigrant rights groups Somos Un Pueblo Unido and the Mexican American Legal Defense and Educational Fund. Plaintiffs have estimated that thousands of tax filers were affected.
At court hearings, the department and agency Secretary Demesia Padilla denied targeting immigrants. She acknowledged that the agency used an automated software system to flag inconsistencies on tax returns and withheld returns to seek more information as a precaution against fraud.
Ortiz y Pino said the department has agreed to withhold only refunds from tax filers using the alternative ID numbers when told to do so by the federal government, or if identification discrepancies are linked to documented instances of fraud.
He said foreign nationals would be less likely to see their refunds delayed or denied.
“All the immigrant families that don’t have a Social Security number, who have been told to use this number, they would be fine,” he said.
Somos Un Pueblo Unido has posted a message on its website warning tax filers using ITINs of a mid-November deadline to appeal any additional assessments linked to delayed returns.
A representative for Somos Un Pueblo Unido declined to speak about new arrangements with taxation officials.
The group’s website said 2015 tax filings by foreign nationals using individual taxation identification numbers will be automatically re-run and refunds sent to those who qualify, and that those taxpayers also have the right to pursue refunds withheld from 2012-2014.
New Mexico settles lawsuit over immigrant tax refunds