Tax dept. head wanted to aid former client during audit

When the State Taxation and Revenue Department was in the process of auditing Bernalillo-based Harold’s Grading & Trucking, Secretary Demesia Padilla wanted to write an affidavit supporting tax deductions the company made in the past. This is according to an email recently released to New Mexico Political Report by the department as part of a […]

Tax dept. head wanted to aid former client during audit

When the State Taxation and Revenue Department was in the process of auditing Bernalillo-based Harold’s Grading & Trucking, Secretary Demesia Padilla wanted to write an affidavit supporting tax deductions the company made in the past.

Untitled design (3)This is according to an email recently released to New Mexico Political Report by the department as part of a public records request.

Padilla is under investigation by the New Mexico Attorney General’s office for allegedly using her position to attempt to provide special treatment to a taxpayer for whom she previously did accounting work.

State Auditor Tim Keller, whose office conducted a preliminary investigation into the matter, wouldn’t publicly identity the name of the taxpayer in question. However, a botched redaction from the tax department this summer revealed that it was Harold’s Trucking.

Padilla served as an accountant for Harold’s Trucking before becoming Secretary of the Taxation and Revenue Department.

Newly-released documents from the tax department provide more insight into the controversy.

On Oct. 17, 2014, Kevin Sourisseau, who at the time worked as the tax department’s Audit and Compliance Division deputy director, sent an email to a colleague titled “Harold’s Trucking discussion with Secretary Padilla.”

In the email to then-Audit and Compliance Division Director Lizzy Vedamanikam, Sourisseau wrote that Padilla “believed the discussion and issue has been blown out of proportion.”

“She is only trying to address the issue of penalty,” he wrote. “This is a change from her initial desire to provide an affidavit as ‘other evidence’ to support the deductions attesting to [the] fact that she was in possession of the NTTCs in question and that they were destroyed.”

NTTCs refer to Nontaxable Transaction Certificates, which businesses use as proof of tax deductions they make from items they sell. In most cases, businesses need the NTTCs to prove their tax deductions were legally allowed.

It’s unclear why Padilla originally wanted to support Harold’s Trucking’s previous tax deductions, or whether writing an affidavit would have allowed the company to keep its deductions. In an email between Sourisseau and Vedamanikam sent earlier that month, Sourisseau cited state statute as to why Padilla’s proposed affidavit would not be sufficient enough to support the deductions.

Also unclear is why she would have possession of Harold’s Trucking’s previous NTTCs, or why and how they were destroyed.

New Mexico Political Report sent questions about the documents to Tax Department spokesman Ben Cloutier on Wednesday, as he had requested. Cloutier did not provide any response by press time.

Later that month, Sourisseau wrote to Vedamanikam that the audit of Harold’s Trucking was going forward with “no changes.”

Harold’s Trucking ultimately was assessed by the tax department earlier this year. The company lost a later appeal to the department.

Harold Dominguez, who owns Harold Trucking, said he was unaware of Padilla’s attempt to write an affidavit for his company, or that some of his company’s NTTCs were destroyed.

“As far as I know, no,” he said in an interview Thursday. “We’re paying our taxes.”

He said he first found out that his company was involved in the controversy when a reporter told him in July.

In a statement, State Auditor spokeswoman Justine Freeman said that the newly released emails “appear to confirm a pattern of officials allegedly attempting to pressure employees to give preferential treatment.”

Previously, Keller stated that Padilla’s actions in the matter may have cost the state money and led to retaliation against two senior tax department employees.

Neither Sourisseau or Vedamanikam work at the tax department anymore, though both are working for the state. Sourisseau now works for the State Auditor’s office and Vedamanikam for the state Department of Finance and Administration.

Freeman said Sourisseau “was not involved in any way in the investigation” of the tax department that Keller’s office contracted with an Albuquerque accounting firm to conduct. She also said that investigation “includes hours of audio recordings and corroborated interviews with multiple people.”

Though the tax department botched a redaction of the name Harold’s Trucking in an email released to media in July, this time they didn’t redact the name in multiple emails provided to New Mexico Political Report in the public records request. The request sought internal emails with the words “Harold’s Grading and Trucking,” “Harold’s Grading & Trucking” and “Harold’s Trucking Audit” from several tax department officials.

The response to the records request also included the original email which the department initially botched the redaction—this time with no attempt at a redaction.

Releasing confidential taxpayer information is against the law, and Freeman said “it would be deeply troubling” if the tax department did so.

Read the newly released emails below:

TRD email 1 by New Mexico Political Report

TRD email 2 by New Mexico Political Report

TRD email 3 by New Mexico Political Report

Correction: A previous version of this story said Attorney General Hector Balderas won’t identify the name of the taxpayer in question. In fact, no media until today had asked Balderas’ office to identify the name of the taxpayer. AG spokesman James Hallinan is looking into the matter and we’ll update this post once he responds.

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