- Associated Press - Thursday, February 12, 2015

SANTA FE, N.M. (AP) - Civil rights groups have filed lawsuits against New Mexico and the state’s tax department alleging that refunds are being withheld illegally from people filing taxes using federal tax ID numbers.

The two lawsuits were filed in state court Thursday on behalf of a couple and two other workers. They seek refunds and an injunction to block what the organizations call an “unlawful and discriminatory practice” that kept hundreds of dollars from the workers and millions more from other New Mexico taxpayers.

Lawyers for the Mexican American Legal Defense and Educational Fund and the statewide immigrant rights group Somos Un Pueblo Unido accused the state Taxation and Revenue Department of quietly instituting an illegal policy, overstepping its authority and violating the state constitutional rights of the workers.

The attorneys said the department in 2012 began a policy of denying tax refunds to New Mexico residents who are foreign nationals and who file returns using their federally issued tax ID.

Taxation and Revenue Secretary Demesia Padilla called the allegations “a bogus political charade.”

“They’re asking us to turn a blind eye when illegal immigrants seek tax refunds using tax returns that have fraudulent Social Security numbers. That’s ridiculous,” Padilla said in a statement.

Gabriela Ibanez Guzman, staff attorney for Somos Un Pueblo Unido, suggested that the tax policy is part of a “disturbing pattern” by Gov. Susana Martinez’s administration to single out and punish immigrant families.

“Discriminating against immigrants and withholding their hard-earned money negatively impacts their U.S. born children and local economies,” she said.

According to the lawsuits, the department reported it had sent more than 14,500 discrepancy letters since 2012 seeking supporting documents from taxpayers who filed their state income taxes using a federally issued ID. That resulted in more than $4 million in withheld refunds.

Meanwhile, the same people have been receiving federal refunds from the IRS, lawyers for the workers said.

Tax department spokesman S.U. Mahesh says every return goes through a screening process to identify discrepancies, inconsistencies, security concerns and other red flags. When an issue is identified, a review is triggered.

“This screening process appropriately flags when an illegal immigrant uses an ITIN (the federally-issued individual tax identification number) to file a tax return, along with a W2 form containing a fraudulent Social Security number belonging to someone else,” Mahesh said. That’s when the department seeks additional information from filers.

The change in processing of taxes in 2012 occurred because the department discovered the “widespread nature of this problem, that an incredibly large number of Social Security numbers were being used in employment paperwork attached to taxpayers who didn’t have” them, Mahesh said.

From 2013 through now, the department has sent about 23,800 letters, he said.

“The department has processes in place to safeguard the integrity of New Mexican’s tax returns,” he said. “The goal is simply to ensure the rightful taxpayers receive their refunds and not those who have stolen someone’s identity.”

When filers provide documentation with basic information confirming their identity, such as paystubs or letters from their employers, the department releases their refunds, Mahesh said.

Lawyers said the workers have submitted the required documentation.

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