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Taos, New Mexico: Invalid Airport Annexation

  • Oct 15, 2014 | Gail Cole

 The point of contention.

In spite of vocal opposition, the Taos, New Mexico, Town Council voted in March 2013 to annex the Taos Regional Airport and six miles of Highway 64. Immediately after the vote, Taos County manager Stephen Archuleta vowed to challenge the annexation in court. That challenge was affirmed when a Taos judge invalidated and voided the annexation in December 2013.

At issue is gross receipts tax revenue.

Tensions arose over a proposed airport expansion. The Town of Taos said it needed to annex the airport “so that it could collect gross receipts tax revenue from the expansion project.” The town claimed it needed the tax revenue in order to fund its portion of the expansion costs.

Not surprisingly, Taos County wanted to keep the tax revenue generated in the annexed area. County officials argued that the annexation “would give the town a toehold to annex more territory and take a bite out of the county’s tax revenue.”

The battle has been acrimonious. When the county offered to pass to the town gross receipts tax revenue generated by the expansion, the town refused on the grounds that “it could not rely on the county to stick to its word.”

Airport expansion moving forward

The litigation proved unpopular and sparked political change. In March of this year, Taos Mayor Darren Córdova and Councilor Rudy Abeyta were voted out of office. Taos County voters elected a new Commissioner, Dan Barrone. In April, officials from the county and town reached an accord.

With the battle over gross receipts tax behind them, the town and county have agreed to the following settlement terms:

  • The town of Taos is dismissing the appeal.
  • Taos County will provide up to $375,000 for the town to use as its match for the federal grant (which totals more than $1 million).
  • The annexation will be voided.

Revenue collected, revenue returned

The annexation of the Taos Airport took effect on July 1, 2013, and remained in place while being contested. From that point on, businesses in the annexed area reported gross receipts under business location code 20-126, with a rate of 8.1875%. Prior to the annexation, businesses reported under location code 10-163, with a rate of 7.125%.

On October 9, 2014, the New Mexico Taxation and Revenue Department issued a press release announcing that the Taos annexation is invalid. Business location code 10-163 (with a rate of 7.125%) is reinstated retroactively to July 1, 2013. Any businesses that filed returns for the period July 1, 2013 to the present should file amended returns. “These amended returns would show any receipts from a Taos Airport business location using the business location code, 20-163, and the associated rate of 7.125%.” Businesses may claim a refund of overpaid tax.

Additional details are available on the press release and through the Department of Taxation and Revenue.

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photo credit: MichaelB in Houston via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.