2023 New Mexico Statutes › Chapter 7 - Taxation › Article 9 - Gross Receipts and Compensating Tax › Section 7-9-14 - Exemption; compensating tax; governmental agencies; Indians.

A. Except as otherwise provided in this subsection, there is exempted from the compensating tax the use of property and services by the United States or the state of New Mexico or any governmental unit or subdivision, agency, department or instrumentality thereof. The exemption provided by this subsection does not apply to:
(1) the use of property that is or will be incorporated into a metropolitan redevelopment project under the Metropolitan Redevelopment Code [Chapter 3, Article 60A NMSA 1978]; or
(2) the use of construction material.
B. Exempted from the compensating tax is the use of property by any Indian nation, tribe or pueblo or any governmental unit, subdivision, agency, department or instrumentality thereof on Indian reservations or pueblo grants.
History:
1953 Comp., § 72-16A-12.2, enacted by Laws 1969, ch. 144, § 7; 1985, ch. 225, § 3; 1990, ch. 41, § 3; 1993, ch. 31, § 5; 2001, ch. 343, § 2; 2023, ch. 85, § 11.
ANNOTATIONS
Cross references.
— For Community Development Incentive Act,
see
3-64-1 NMSA 1978 et seq.
The 2023 amendment,
effective July 1, 2023, exempted from the compensating tax the use of services by governmental agencies; and in Subsection A, in the introductory paragraph, after "use of property", added "and services".
The 2001 amendment,
effective July 1, 2001, substituted former Paragraph A(2), listing tangible personal property that becomes an ingredient or component part of a construction project, for the current Paragraph A(2).
The 1993 amendment,
effective July 1, 1993, deleted "or any agency or instrumentality thereof" following "United States" and substituted "any governmental unit or subdivision, agency, department or instrumentality" for "any political subdivision" in the first sentence of Subsection A and, in Subsection B, deleted "the governing body of" preceding "any Indian nation" and inserted "or any governmental unit, subdivision, agency, department or instrumentality thereof".
The 1990 amendment,
effective July 1, 1990, designated the former first and second sentences of the section as present Subsections A and B, substituted "Except as otherwise provided in this subsection" for "Except for the use of property that is or will be incorporated into a metropolitan redevelopment project created under the Metropolitan Redevelopment Code" in the first sentence in Subsection A, added the second sentence of Subsection A, and in Subsection B, substituted "Indian nation, tribe or pueblo" for "Indian tribe or Indian pueblo".
Taxing contractor furnishing materials to federal government not taxing government.
— When general contractor was required by contracts with federal government to furnish materials to be used on federal reservation in New Mexico, the contractor purchased the materials, became the owner thereof, and was liable for the use or compensating tax under § 72-17-1, 1953 Comp., et seq. (now repealed); and this was not taxation of government land or other government property.
Robert E. McKee, Gen. Contractor, Inc. v. Bureau of Revenue
, 1957-NMSC-082, 63 N.M. 185, 315 P.2d 832.
Tax ultimately falling 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 tribal 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).