It can make it more difficult to collect across state lines, but if you legitimately owe the tax to New Mexico for monies earned in their state as a non resident, the IRS
can now step in under their "offset" program and "offset" any federal refund you may be eligible for the amount owed to a state. I realize that under normal circumstances you will not be required to file a Federal tax return
since none of the income you mentioned is taxable by the government
, but remember the $300 stimulus program that we just had in 2008. The only way to get the stimulus money, if you qualified, was to file the Federal tax return. Please see below: Tax Topics - Topic 203 Failure to Pay Child Support, Federal Non–Tax Debts, State Income ...
Its important I think that you realize that while being in another state can make things more difficult for them to collect, New Mexico still has options, and it would be a mistake to become complacent and let this ride and hang over your head. When I first started as a tax preparer
24 years ago, not only were Social Security benefits protected, meaning they could not be garnished for ANY reason, they were not taxable. Over the years, this has changed dramatically, and up to 85% of your Social Security benefits can now be taxable, when paired with other taxable income
(VA disability doesn't count as taxable income you need to worry about pairing with Social Security) The message here is that while its difficult to collect, its not impossible, and Social Security and VA funds are issued by the government, and the government imposes taxes, whether at the Federal or State level.
I gave you the best information at this time,and I have no idea how much you owe, or if you ever plan on owning any property, such as a home or even a car that could be levied against. so again, I still believe your best bet is to reach some kind of settlement with New Mexico, but as it stands today, there must be a judgment entered and approved for New Mexico to try to garnish any of your income for back taxes, and while your Social Security and VA disability is at this moment fully protected against garnishment, the banks don't always know the nature of the income in your account or even whether or not the money in your account can be levied, however, they really have no choice but to act should a lien reach that far, and then its up to you to contact the debtor and fight to reclaim your money. You will have to be vigilant in watching and protecting your funds.
I hope this helps.