2023 New Mexico Statutes › Chapter 7 - Taxation › Article 36 - Valuation of Property › Section 7-36-30 - Special methods of valuation; property that is part of a communications system.

A. All property that is part of a communications system and is subject to valuation for property taxation purposes shall be valued in accordance with the provisions of this section.
B. As used in this section:
(1) "communications system" means a system for the transmission and reception of information by the use of electronic, magnetic or optical means or any combination thereof and which system or any portion thereof is available for use by another person for consideration;
(2) "depreciation" means straight line depreciation over the useful life of the item of property;
(3) "other justifiable factors" includes but is not limited to wear and tear of the property not covered by depreciation, inadequacy, changes in demand and requirements of public authorities attributable to the applicable decrease in value and functional or economic obsolescence;
(4) "plant" means all tangible property located in this state and used or useful for the provision of communication service as reflected by the uniform system of accounting in use by the taxpayer, but does not include construction work in progress or materials and supplies;
(5) "construction work in progress" means the total of the balance of work orders for plant in process of construction on the last day of the preceding calendar year, exclusive of land and land rights;
(6) "tangible property cost" means the actual cost of acquisition or construction of property, including additions, retirements, adjustments and transfers, but without deduction of related accumulated provision for depreciation, amortization or other purposes; and
(7) "materials and supplies" means the cost, including sales, use and excise taxes, and transportation costs to point of delivery in this state, less purchases and trade discounts, of all unapplied materials and supplies on hand in this state as of December 31 of the preceding calendar year.
C. Each taxpayer having property subject to valuation under this section shall elect to have that property valued by the department in accordance with either Subsection D or Subsection F of this section. The election shall be effective for subsequent property tax years unless prior permission of the secretary is obtained to change the election for good cause shown. A taxpayer may not seek permission to change an election unless the prior election has been effective for at least three consecutive property tax years. The secretary shall find that good cause exists to change the election upon a showing satisfactory to the secretary by the taxpayer that:
(1) the net result of all amendments to the property tax statutes and regulations with effective dates commencing within the property tax year has a substantial adverse effect on the valuation for property tax purposes under the alternative elected for the property for that year relative to what the valuation for property tax purposes would have been under the other alternative in the absence of the amendments;
(2) the net result of all changes in law or circumstances but excluding acquisition or sale of property subject to valuation under this section, including changes which do not affect property tax liability, occurring within the property tax year has a substantial adverse effect on the valuation for property tax purposes under the alternative elected for the property for that year relative to what the valuation for property tax purposes for the property would have been under the other alternative in the absence of the changes; or
(3) changes in property tax statutes or regulations which are effective prior to the property tax year have a substantial adverse effect on the valuation for property tax purposes under the alternative elected for the property relative to what the valuation for property tax purposes would have been under the other alternative.
D. Communications system property valued under this subsection shall be valued in accordance with Paragraphs (1), (2) and (3) of this subsection:
(1) plant shall be valued in the following manner:
(a) the department shall first establish the tangible property cost of the plant;
(b) from such tangible property cost shall be deducted the related accumulated provision for depreciation and other justifiable factors; and
(c) notwithstanding the foregoing determination of value for property taxation purposes, the value for property taxation purposes of the plant shall not be less than twenty percent of the tangible property cost of the plant;
(2) construction work in progress shall have a value for property taxation purposes equal to fifty percent of the actual amounts expended and entered upon the accounting records of the taxpayer as of December 31 of the preceding calendar year for construction work in progress; and
(3) the value of materials and supplies shall be the tangible property cost for such property as of December 31 of the preceding calendar year.
E. Each item of property having a taxable situs in the state and valued under this section shall have its net taxable value allocated to the governmental units in which the property is located.
F. Communications system property valued under this subsection shall be valued using one or more or a combination of the following methods of valuation and applying the unit rule of appraisal to the property:
(1) capitalization of earnings;
(2) market value of stock and debt; or
(3) cost less depreciation and obsolescence.
G. The department shall adopt regulations under Section 7-38-88 NMSA 1978 [repealed] to implement the provisions of this section.
History:
1978 Comp., § 7-36-30, enacted by Laws 1975, ch. 165, § 11; 1985, ch. 109, § 6; 1987, ch. 206, § 1; 1989, ch. 112, § 1.
ANNOTATIONS
Bracketed material.
— The bracketed material was inserted by the compiler and is not part of the law. Laws 1991, ch. 166, § 14 repealed 7-38-88 NMSA 1978, referred to in Subsection G. For present comparable provisions,
see
9-11-6.2 NMSA 1978.
The 1989 amendment,
effective January 1, 1990, added Subsection C; added the introductory paragraph of Subsection D; designated the introductory paragraph of former Subsection C as Subsection D(1); redesignated former Subsections C(1) through C(3) as Subparagraphs (a) through (c) of Subsection D(1); redesignated former Subsections D through F as Subsections D(2), D(3) and E; deleted former Subsection G, relating to election of alternate valuation; redesignated former Subsection H as Subsection F, while substituting all of the language of the introductory paragraph preceding "using" for "The department shall, at the election of a taxpayer value communications system property"; deleted former Subsection I, relating to adoption of regulations providing for allocation of net taxable values of communications system property to the state and governmental units; and redesignated former Subsection J as Subsection G.
Interpretation of "communications system".
— Where plaintiff cable company repurposed parts of its cable television system and expanded its services to include broadband internet and interconnected voice over internet protocol (VoIP) services, which both transmit and receive information, and where the New Mexico taxation and revenue department began assessing taxes on all cable companies operating in the state which provided two-way communications services, reclassified plaintiff's property as a "communications system", and assessed taxes on plaintiff's property accordingly, the district court erred in granting plaintiff's motion for summary judgment and in concluding that plaintiff's property is not a "communications system" under the Tax Code, because in light of the clear, unambiguous definition of "communications system" in 7-36-30(B)(1) NMSA 1978, the legislature intended to grant the department the authority to classify plaintiff's property as a "communications system" and assess it under this section when plaintiff elected to repurpose portions of its system in order to provide two-way communications services to its customers.
Cable One, Inc. v. N.M. Taxation & Revenue Dep't
, 2018-NMCA-017, cert. granted.
Am. Jur. 2d, A.L.R. and C.J.S. references. —
71 Am. Jur. 2d State and Local Taxation §§ 416 to 420.
84 C.J.S. Taxation § 183.