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 of Airport Compliance 

And Management Analysis 

Federal Aviation Administration 

800 Independence Avenue, SW, 

~ ashington, DC 20591 

December 8, 2015 

. . \ .. 

·Re: Federal Aviati'on Administration Pblicy Re&arding Use of Aviation 

Fuel tax Revenue '· · · ·' · · 

Dear Mr. Fiertz: 

. . The New Mexico Taxation and Revenue Department ("Department") has 

received multiple letters from local governments within New' Mexico regarding 

federal compliance restrictions on the use of Sta:te and local tax revenues derived 

from the sale of aviation fuel. This letter is to advise you and the Office of Airport 

Compliance and Management Analysis of the State's compliance with the Federal 

Aviation Administration's ("FAA") Revenue Use Policy requiring State and local 

tax revenues on the sale of aviation 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 of aviation gasoline. 

The State imposes·a gross receipts tax on the sale of aviation gasoline, pursuant to 

NMSA 1978, § 7-9-4·. The State's gross receipts tax scheme was established by 

statute in 196Q and has been in place since thar time. On December 30, 1987, the 

gross receipts tax rate was at 4.75% on the gross receipts of any person engaging in 

business in New Mexico, including aviation fuel. Today, the gross receipts tax rate is 

at 5.125% on the gross receipts of any person engaging in business in New Mexico, 

including aviation gasoline. 

The State also imposes an excise tax on gallons of gasoline received in New 

Mexico that is used in aircrafts propelled by engines other than turbo-prop or jettype engines, pursuant to NMSA 1978, § 7-13-3. The State's excise tax on gasoline 
TAXATION. 

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 of gasoline received in New Mexico. Today, the gasoline tax imposed is $.17 

cents per gallon of gasoline 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 of aviation gasoline at 

both the county and municipal level. While the Department collects on behalf of and 

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 of their 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 option 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 of gross 

receipts tax owed on the sale of aviation gasoline. Likewise, each month taxpayers 

report and pay to the Department the amount of gasoline received in the State and 

the amount of gasoline tax owed on the receipt of aviation 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 of aviation 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 $1,291,855.50 from gross receipts tax 

revenues on the sale of aviation gasoline. For fiscal year 2015, the Department 

distributed to the State Aviation Fund $391,581.42 from gasoline tax revenues on the 

receipt of aviation gasoline. 

In addition to the distribution of gross receipts tax and gasoline tax on the 

sale of aviation 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% of general gross receipts tax revenues to the State Aviation Fund 

on a monthly basis. See NMSA 1978, § 7-1-6.7(C). For fiscal year 2015, the 
TAXATJON 

REVENUE N EW M [ X IC O 

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 

Department distributed a total of$1 ,004,988.70 to the State Aviation Fund based on 

the fixed percentage of 0.046%. 

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 of aviation 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 of airport 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 

Chief Legal Counsel 

Cc: Cabinet Secretary Demesia Padilla (via e-mail); 

Deputy Cabinet Secretary Jolm Monforte (via e-mail); 

Deputy Cabinet Secretary of the New Mexico Department ofTransportation, 

Loren Hatch (via e-mail); 

General Counsel for the Office of the Governor, Steve Blankinship (viaemail); 
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 of Aviation 

City of Albuquerque 

P.O. Box 9948 

Albuquerque, NM 87119-1 048 

The Honorable Sally Burbridge 

Mayor of the City of Aztec 

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 of the City of Lordsburg 

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 A venue, Suite 160 

Los Alamos, NM 87544