T!'"XATION 

### REVENUE

Susana Martinez Governor Demesia Padilla, CPA Cabinet Secretary Divisions Office of the Secretary (505) 827-0341 Administrative Services (505) 827-0369 Audit and Compliance (505) 827-0900 Motor Vehicle (505) 827-2296 Property Tax (505) 827-0870 Revenue Processing (505) 827-0800 Tax Fraud Investigations (505) 841-6544 

## State of New Mexico Taxation 

## & Revenue Department An Equal Opportunity Employer

Legal Services Bureau Post Office Box 630 1100 South St. Francis Drives, Suite 1100 Santa Fe, New Mexico 87504-0630 Office (505) 827-2594 Fax (505) 827-0684



### Via Regular U.S. Mail
Mr. Randall S. Fiertz, Director Office ofAirport Compliance And Management Analysis Federal Aviation Administration 800 Independence Avenue, SW,

**~**ashington, DC 20591 December 8, 2015

. . \ .. Federal Aviati'on Administration Pblicy Re&arding Use ofAviation

· Re: 

### Fuel tax Revenue '· · ··' · · Dear Mr. Fiertz:

. . The New Mexico Taxa tion and Revenue Department ("Department") has received multiple letters from local governments within New 'Mexico regarding federal compliance restrictions on the use ofSta:te and local tax revenues derived from the sale of aviation fuel. This letter is to advise you and the Office ofAirport Complia nce and Management Analysis ofthe State's compliance with the Federal Aviation Administration's ("FAA") Revenue Use Policy requiring State and local tax revenues on the sale ofaviation fuel to be used for aviation purposes. 

### I. 

### New Mexico taxes imposed on the sale of aviation fuel.
New Mexico imposes two different taxes upon the sale ofaviation gasoline. The State imposes ·a gross receipts tax on the sale ofaviation gasoline, pursuant to NMSA 1978, 

### § 7

-9

-4· . The State's gross receipts tax scheme was esta blished by statute in 196Q and has been in place since thartime. On December 30, 1987, the gross receipts tax rate was at 4.75% on the gross receipts ofany person engaging in business in New Mexico, including aviation fuel. Today, the gross receipts tax rate is at 5.125% on the gross receipts ofany person engaging in business in New Mexico, including aviation gasoline. The State also imposes an excise tax on gallons ofgasoline received 

### in New Mexico that is used in aircrafts propelled by engines other than turbo-prop orjettype engines, pursuant to NMSA 1978, § 7-13-3. The State's excise tax on gasolineTAXATION

. REVENUE ' E \\ \1 £ X I C 0

Susana Martinez Governor Demesia Padilla, CPA Cabinet Secretary Divisions Office of the Secretary (505) 827
- 0341 Administrative Services (505) 827-0369 Audit and Compliance (505) 827-0900 Motor Vehicle (505) 827-2296 Property Tax (505) 827-0870 Revenue Processing (505) 827-0800 Tax Fraud Investigations (505) 841
- 6544 

## State of New Mexico Taxation & Revenue Department An Equal Opportunity Employer

received in New Mexico was established by statute in 1971 and has been in place since that time. On December 30, 1987, the gasoline tax imposed was $.14 cents per gallon ofgasoline received in New Mexico. Today, the gasoline tax imposed is $.17 cents per gallon ofgasoline received in New Mexico. 

### II. Local Option Gross Receipts Taxes According to the State's tax code, local governments have the ability to impose their own local option gross receipts tax upon the sale ofaviation gasoline at both the county and municipal level. While the Department collects on behalfofand distributes local option gross receipts taxes to the local governments, the Department does not maintain their budgets or get involved with the local governments appropriation oftheir tax revenue. The Department does not know whether any of the State's local governments appropriate funds from their local option gross receipts tax revenues to a local aviation fund. At this time, no local government imposes a local opt ion gross receipts tax at a rate higher than 4%. 

### III. Distribution of tax revenues collected by 

### the Department The Department is charged with the responsibility to collect all taxes imposed by state law, including the gross receipts tax and the gasoline tax described above. Each month taxpayers report and pay to the Department the amount ofgross receipts tax owed on the sa le ofaviation gasoline. Likewise, each month taxpayers report and pay to the Department the amount ofgasoline received in the State and the amount ofgasoline tax owed on the receipt ofaviation gasoline. The following month the Department distributes to the New Mexico Department of Transportation's State Aviation Fund all tax revenues received by the State from the sale ofavia tion gasoline under both the gross receipts tax regime and the gasoline tax regime.
For the State's fiscal year 2015 (July 2014 to June 2015), the Department distributed to the State Aviation Fund $ 1 ,29 1 ,855.50 from gross receipts tax revenues on the sale ofaviation gasoline. For fiscal year 2015, the Department distributed to the State Aviation Fund $391,581.42 from gasoline tax revenues on the receipt ofaviation gasoline.
In addition to the distribution ofgross receipts tax and gasoline tax on the sale ofaviation gasoline, the Department distributes two additional monthly amounts based on statute. First, the Department distributes each month from general gross receipts tax revenues $250,000.00 to the State Aviation Fund. See NMSA 1978, 

### § 7- 1-6.7(0). For fiscal year 2015, the Department distributed $3,000,000.00 to the State Aviation Fund based on the fixed monthly distribution. Second, the Department distributes 0.046% ofgeneral gross receipts 

### tax revenues to the State Aviation Fund on a monthlybasis. See NMSA 1978, 

### § 7

- 1-6.7(C). For fiscal year 2015, theTAXATJON REVENUE N EW M [ X IC O

Susana Martinez Governor Demesia Padilla, CPA Cabinet Secretary Divisions Office ofthe Secretary (505) 827
-0341 Adm inistrative Services (505) 827-0369 Audit and Comp liance (505) 827-0900 Motor Vehicle (505) 827
-2296 Property Tax (505) 827-0870 Revenue Processing (505) 827-0800 Tax Fraud I nvestigations (505) 841-6544 

## State of New Mexico Taxation & Revenue Department An Equal Opportunity Employer

Department distributed a total of$1 ,004,988.70 to the State Aviation Fund based on the fixed percentage of0.046%.
In total, for fiscal year 2015, the Department distributed to the State Aviation Fund a total of$5 ,688,425.62. 

### IV. Compliance with Federal Aviation Administration's Revenue Use Policy Based on the foregoing, the Department's position is that the State is in compliance with the FAA's Revenue Use Policy. The Department distributes all tax revenues from the sale ofaviation gasoline to the State's Aviation Fund. This includes tax revenues that most likely are not required to be dedicated under the FAA's Revenue Use Policy because the rates in place on December 30, 1987 would be grandfathered in and exempt from the policy. Additionally, the Department distributes according to statute general tax revenue to the State Aviation Fund in an amount greater than $3,000,000.00 per year. The Department further believes that the State and local governments comply with the FAA's Revenue Use Policy based on the amount the State transfers to the State's Aviation Fund even iflocal governments are not appropriating any funds to a local aviation fund

. Further, during this past legislative session the Legislature appropriated $600,300.00 to the New Mexico General Services Department's State Aircraft Pool. The Department understands that the funds appropriated to the State's Aircraft Pool are used for the maintenance and completion ofairport projects located throughout the State

. Should you care to discuss this matter further, please feel free to give me a call at (505) 827-2594.

BRAD W. ODELL ChiefLegal Counsel Cc: Cabinet Secretary Demesia Padilla (via e-mail); Deputy Cabinet Secretary Jolm Monforte (via e-mail); Deputy Cabinet Secretary ofthe New Mexico Department ofTransportation, Loren Hatch (via e-mail); General Counsel for the Office ofthe Governor, Steve Blank inship (viae

mail);TAXATION 

### REVENUE

Susana Martinez Governor Demesia Padilla, CPA Cabinet Secretary Divisions Office of the Secretary (505) 827
-0341 Administrative Services (505) 827-0369 Audit and Compliance (505) 827-0900 Motor Vehicle (505) 827-2296 Property Tax (505) 827-0870 Revenue Processing (505) 827-0800 Tax Fraud Investigations (505) 841-6544 

## State of New Mexico Taxation 

## & Revenue Department An Equal Opportunity Employer

Via Regular U.S. Mail
James D

. Hinde, C.M. Director ofAviation City ofAlbuquerque P.O. Box 9948 Albuquerque, NM 87119-1 048 The Honorable Sally Burbridge Mayor ofthe City ofAztec 201 West Chaco Aztec, NM 87410 Jennifer Brady, Director Roswell International Air Center 1 Jerry Smith Circle Roswell, NM 88203

The Honorable Arthur Clark Smith Mayor ofthe City ofLordsburg 409 W. Wabash Street Lordsburg, NM 88045 Patricia Gonzales Colfax County Manager Colfax County P .O. Box 1498 Raton, NM 87740 Raymond C. Jenkins, Manager Grants- Milan Municipal Airport P.O. Box 879 Grants, NM 87020 Steven Lynne Deputy County Manager Los Alamos County 1000 Central Avenue, Suite 160 Los Alamos, NM 87544