2019 New Mexico Statutes
Chapter 7 - Taxation
Article 9 - Gross Receipts and Compensating Tax
Section 7-9-35 - Exemption; gross receipts tax; natural resources subject to Resources Excise Tax Act.

Exempted from the gross receipts tax are receipts from the sale or processing of natural resources the severance or processing of which are subject to the taxes imposed by the Resources Excise Tax Act [Chapter 7, Article 25 NMSA 1978] except as otherwise provided in Section 7-25-8 NMSA 1978.

History: 1953 Comp., § 72-16A-12.23, enacted by Laws 1969, ch. 144, § 28; 1984, ch. 2, § 5; 1989, ch. 115, § 3.

The 1989 amendment, effective July 1, 1989, substituted "natural resources" for "persons" in the catchline, and substituted the present provisions for "When a privilege tax is imposed for the privilege of severing or processing natural resources by the Resources Excise Tax Act, the provisions of the Resources Excise Tax Act shall apply for the privilege of engaging in business stated and in that act, and no gross receipts pursuant to the Gross Receipts and Compensating Tax Act shall apply to or create a tax liability for such privilege, except as is provided in Section 7-25-8 NMSA 1978. A taxpayer subject to the Resources Excise Tax Act is also subject to the compensating tax pursuant to the Gross Receipts and Compensating Tax Act and any other taxes imposed by any tax act which is applicable to the taxpayer pursuant to the NMSA 1978."

Amendment to be prospectively applied. — The amendment of this section by Laws 1984, ch. 2, § 5 is to be only prospectively applied from and after the date the legislation was signed into law, February 11, 1984. Phelps Dodge Corp. v. Revenue Div., Dep't of Taxation & Revenue, 1985-NMCA-055, 103 N.M. 20, 702 P.2d 10.

Construction and severing work. — Where both severing and construction work occur at the same time on the same job, the classification of "construction" is not justified and receipts from severing are exempt from gross receipts tax. J.W. Jones Const. Co., v. Revenue Div., Dep't of Taxation & Revenue, 1979-NMCA-144, 94 N.M. 39, 607 P.2d 126 (Ct. App. 1979).

Construction work incidental to "severing" exempt. — The exemption provided by this section applies 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, are 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.

Taxation of lumber business activities. — "Road maintenance" and "hauling" are an integral and indispensable part of a taxpayer's activity of severing timber and delivering it to a lumber mill and as such are exempt from the Gross Receipts Tax Act, Chapter 7, Article 9 NMSA 1978, by the provisions of this section, while being taxable under the Resources Excise Tax Act, Chapter 7, Article 25 NMSA 1978. Carter & Sons, Inc. v. New Mexico Bureau of Revenue, 1979-NMCA-025, 92 N.M. 591, 592 P.2d 191.

No compensation tax on property purchased outside state, used in state mine operations. — Compensating tax may not be assessed based on property purchased outside of New Mexico but used in New Mexico in the mine operations of a taxpayer in severing uranium ore. In re Ranchers-Tufco Limestone Project Joint Venture, 1983-NMCA-126, 100 N.M. 632, 674 P.2d 522, cert. denied, 100 N.M. 505, 672 P.2d 1136 (decided prior to 1984 amendment).

Am. Jur. 2d, A.L.R. and C.J.S. references. — Mining exemption from sales or use tax, 47 A.L.R.4th 1229.