More cities, counties join lawsuit over New Mexico taxes

January 1, 2020 GMT

ALBUQUERQUE, N.M. (AP) — More New Mexico cities and counties are now claiming that the state tax agency has failed to accurately collect and distribute tax revenue.

The Albuquerque Journal reports that 44 municipalities, counties and other local agencies have signed on to a lawsuit that began with just a few local governments in late 2018. They are asking that a judge order the state Taxation and Revenue Department to compensate them for improper reductions to their revenue.

The suit claims the state automatically granted refunds to businesses that claimed they overpaid and gave little explanation to the cities and counties that rely on that revenue.

The amount owed to local governments could reach $100 million, depending on how many years back they seek reimbursement, said William Fulginiti, executive director of the New Mexico Municipal League.

The Taxation and Revenue Department in court documents has denied the allegations. The agency has appointed a liaison to answer questions and concerns about the tax distribution, and spokesman Charlie Moore said officials are committed to ensuring that local governments receive the amounts they are due in a timely way.

“We agree with local governments on the importance of determining the accuracy of distribution from past years,” Moore said in a statement.

Albuquerque, Santa Fe, Las Cruces, Roswell and Farmington are among the plaintiffs. They contend the state has shorted them some of the revenue they rely on to pay for law enforcement, fire protection and other services.

The dispute centers on revenue generated by gross receipts taxes, which are shared by the state and local governments. It’s similar to a sales tax, usually paid by consumers buying goods or services. The state collects the money and distributes some of it back to cities and counties each month.

Fulginiti said the cities and counties are open to a settlement that would outline how to calculate what each local government is owed. The Municipal League also supports legislative action to further clarify how to handle the distribution of revenue.