2023 New Mexico Statutes › Chapter 7 - Taxation › Article 9 - Gross Receipts and Compensating Tax › Section 7-9-3.4 - Definitions; construction, construction materials and construction-related services.

As used in the Gross Receipts and Compensating Tax Act:
A. "construction" means:
(1) the building, altering, repairing or demolishing in the ordinary course of business any:
(a) road, highway, bridge, parking area or related project;
(b) building, stadium or other structure;
(c) airport, subway or similar facility;
(d) park, trail, athletic field, golf course or similar facility;
(e) dam, reservoir, canal, ditch or similar facility;
(f) sewerage or water treatment facility, power generating plant, pump station, natural gas compressing station, gas processing plant, coal gasification plant, refinery, distillery or similar facility;
(g) sewerage, water, gas or other pipeline;
(h) transmission line;
(i) radio, television or other tower;
(j) water, oil or other storage tank;
(k) shaft, tunnel or other mining appurtenance;
(l) microwave station or similar facility;
(m) retaining wall, wall, fence, gate or similar structure; or
(n) similar work;
(2) the leveling or clearing of land;
(3) the excavating of earth;
(4) the drilling of wells of any type, including seismograph shot holes or core drilling; or
(5) similar work;
B. "construction material" means tangible personal property that becomes or is intended to become an ingredient or component part of a construction project, but "construction material" does not include a replacement fixture when the replacement is not construction or a replacement part for a fixture; and
C. "construction-related service" means a service directly contracted for or billed to a specific construction project, including design, architecture, drafting, surveying, engineering, environmental and structural testing, security, sanitation and services required to comply with governmental construction-related rules. "Construction-related service" does not include general business services, such as legal or accounting services, equipment maintenance or real estate sales commissions.
History:
1978 Comp., § 7-9-3.4, enacted by Laws 2003, ch. 272, § 5; 2020, ch. 80, § 4.
ANNOTATIONS
The 2020 amendment,
effective July 1, 2021, defined "construction-related service" as used in the Gross Receipts and Compensating Tax Act; in the section heading, added "and construction-related services"; and added Subsection C.
Construction work incidental to "severing" exempt from gross receipts tax.
— The exemption provided by Section 7-9-35 NMSA 1978 applied, since "severing" was taking place as the development work was performed and none of taxpayer's work was preliminary to or preparatory for "severing"; therefore, receipts from development work, which includes construction, were exempted from the gross receipts tax and taxable under the service tax (resources excise tax) when such construction work was incidental to the "severing."
Patten v. Bureau of Revenue
, 1974-NMCA-051, 86 N.M. 355, 524 P.2d 527.
"Fence" not a "structure".
— The word "structure", which follows "building" and "stadium," is limited in its meaning to things or classes of the same general character as buildings and stadia and this does not include fences.
Cardinal Fence Co. v. Commissioner of Bureau of Revenue
, 1972-NMCA-136, 84 N.M. 314, 502 P.2d 1004 (decided under prior law).
Fence not within definition of "construction".
— Construction of fences does not come within the definition of "construction"in that the fencing material sold is not a component part of a construction project.
Cardinal Fence Co. v. Commissioner of Bureau of Revenue
, 1972-NMCA-136, 84 N.M. 314, 502 P.2d 1004 (decided under prior law).
Erection of fences not construction.
— Since the construction of fences does not come within the definition of "construction", fencing material sold with or without setting of the posts did not become a component part of a construction project and receipts from such sales were deductible.
Cardinal Fence Co. v. Commissioner of Bureau of Revenue
, 1972-NMCA-136, 84 N.M. 314, 502 P.2d 1004 (decided under prior law).
Non-Indians performing construction services for tribe subject to tax.
— Under the gross receipts tax act, non-Indian contractors involved in the construction of an Indian resort complex are subject to a tax on the gross receipts they received for performing construction services. The legal incidence of the tax falls upon them and not upon the tribe or tribal property. The state is imposing the tax solely on non-Indians who have performed services for the tribe.
Mescalero Apache Tribe v. O'Cheskey
, 439 F. Supp. 1063 (D.N.M. 1977),
aff'd
, 625 F.2d 967 (10th Cir. 1980), cert. denied, 450 U.S. 959, 101 S. Ct. 1417, 67 L. Ed. 2d 383 (1981),
reh'g denied
, 455 U.S. 929, 102 S. Ct. 1296, 71 L. Ed. 2d 474 (1982).
Imposition of tax on tribal organization impermissible.
— If the economic burden of the gross receipts tax ultimately falls on a tribal organization, even though the legal incidence of the tax falls on the non-Indian contractor with whom the organization contracted to build an Indian school, the imposition of the tax impermissibly impedes the clearly expressed federal interest in promoting the quality and quantity of educational opportunities for Indians by depleting the funds available for the construction of Indian schools.
Ramah Navajo Sch. Bd., Inc. v. Bureau of Revenue
, 458 U.S. 832, 102 S. Ct. 3394, 73 L. Ed. 2d 1174 (1982).
Federal regulatory scheme and policy.
— The comprehensive federal regulatory scheme and the express federal policy of encouraging tribal self-sufficiency in the area of education preclude the imposition of the state gross receipts tax on the construction of school facilities on tribal lands pursuant to a contract between a tribal organization and a non-Indian contracting firm.
Ramah Navajo Sch. Bd., Inc. v. Bureau of Revenue
, 458 U.S. 832, 102 S. Ct. 3394, 73 L. Ed. 2d 1174 (1982).
Construction project includes wide variety of activities.
— This section was intended to make sales of construction materials to governmental entities taxable when the materials were to be incorporated into construction projects. Contrary to taxpayer's argument that Regulation GR 51:16 (now 3.2.1.11) establishes a definite test for determining whether an endeavor is a "construction project," this regulation merely states nonexclusive guidelines for determining whether materials constitute a component part of a construction project. Thus, construction projects include the wide variety of activities listed in Subsection C.
Arco Materials, Inc. v. State Taxation & Revenue Dep't
, 1994-NMCA-062, 118 N.M. 12, 878 P.2d 330,
rev'd on other grounds sub nom.
Blaze Constr. Co. v. Taxation & Revenue Dep't
, 1994-NMSC-110, 118 N.M. 647, 884 P.2d 803, cert. denied, 514 U.S. 1016, 115 S. Ct. 1359, 131 L. Ed. 2d 216 (1995).
"Construction" deemed question of fact.
— Whether activities of a party constitute "construction" is a question of fact for a jury.
United States v. New Mexico
, 642 F.2d 397 (10th Cir. 1981).