7-1-6.15. Adjustments of distributions or transfers.
2,092 words·~10 min read·
/nm/chapter-7-taxation/article-1-administration/7-1-6-15·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A. The provisions of this section apply to:
(1)any distribution to a municipality pursuant to Section 7-1-6.2, 7-1-6.4, 7-1- 6.36 or 7-1-6.46 NMSA 1978;
(2)any transfer to a municipality with respect to any local option gross receipts tax or municipal compensating tax imposed by that municipality;
(3)any transfer to a county with respect to any local option gross receipts tax or county compensating tax imposed by that county;
(4)any distribution to a county pursuant to Section 7-1-6.5, 7-1-6.16 or 7-1- 6.47 NMSA 1978;
(5)any distribution to a municipality or a county of gasoline taxes pursuant to Section 7-1-6.9 NMSA 1978;
(6)any transfer to a county with respect to any tax imposed in accordance with the Local Liquor Excise Tax Act [7-24-8 through 7-24-16 NMSA 1978];
(7)any distribution to a county from the county government road fund pursuant to Section 7-1-6.26 NMSA 1978;
(8)any distribution to a municipality of gasoline taxes pursuant to Section 7-1- 6.27 NMSA 1978;
(9)any distribution to the state treasurer on behalf of a political subdivision of oil and gas ad valorem production taxes pursuant to Sections 7-32-1 through 7-32-38 NMSA 1978;
(10)any distribution to a political subdivision of oil and gas production ad valorem equipment tax pursuant to Sections 7-34-1 through 7-34-9 NMSA 1978; and
(11)any distribution to a municipality or a county of cannabis excise taxes pursuant to Section 7-1-6.68 NMSA 1978.
B. Before making a distribution or transfer specified in Subsection A of this section for the month, amounts comprising the net receipts shall be segregated into two mutually exclusive categories. One category shall be for amounts relating to the current month, and the other category shall be for amounts relating to prior periods. The total of each category for a distribution recipient shall be reported each month to the recipient; provided that all negative amounts relating to a period prior to the three calendar years preceding the year of the current month, net of any positive amounts in that same time period for the same taxpayers to which the negative amounts pertain, shall be excluded from the total relating to prior periods; provided further, if the total of the amounts relating to prior periods is less than zero and its absolute value exceeds the greater of one hundred dollars ($100) or an amount:
(1)equal to twenty percent of the average distribution or transfer amount for that recipient, the revised total for prior periods shall be excluded from the distribution or transfers and the net receipts to be distributed or transferred to the recipient shall be equal to the amount for the current month; and provided further that the department shall recover the excluded amount from the recipient; or
(2)less than twenty percent of the average distribution or transfer amount for that recipient, the net receipts to be distributed or transferred to the recipient shall be adjusted to equal the amount for the current month plus the revised total for prior periods.
C. The department shall recover from a distribution recipient the amount excluded by Paragraph
(2)of Subsection B of this section. This amount may be referred to as the "recoverable amount".
D. Prior to or concurrently with the distribution or transfer to the distribution recipient of the adjusted net receipts, the department shall notify the recipient whose distribution or transfer has been adjusted pursuant to Paragraph
(2)of Subsection B of this section:
(1)that the department has made such an adjustment, that the department has determined that a specified amount is recoverable from the recipient and that the department intends to recover that amount from future distributions or transfers to the recipient;
(2)that the recipient has ninety days from the date notice is made to enter into a mutually agreeable repayment agreement with the department;
(3)that if the recipient takes no action within the ninety-day period, the department will recover the amount from the next six distributions or transfers following the expiration of the ninety days; and
(4)that the recipient may inspect, pursuant to Section 7-1-8.9 NMSA 1978, an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application.
E. No earlier than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall begin recovering the recoverable amount from a distribution recipient as follows:
(1)the department may collect the recoverable amount by:
(a)decreasing distributions or transfers to the recipient in accordance with a repayment agreement entered into with the recipient; or
(b)except as provided in Paragraphs
(2)and
(3)of this subsection, if the recipient fails to act within the ninety days, decreasing the amount of the next six distributions or transfers to the recipient following expiration of the ninety-day period in increments as nearly equal as practicable and sufficient to recover the amount;
(2)if, pursuant to Subsection B of this section, the secretary determines that the recoverable amount is more than fifty percent of the average distribution or transfer of net receipts for that recipient, the secretary:
(a)shall recover only up to fifty percent of the average distribution or transfer of net receipts for that recipient; and
(b)may, in the secretary's discretion, waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance; and
(3)if, after application of a refund claim, audit adjustment, correction of a mistake by the department or other adjustment of a prior period, but prior to any recovery of the department pursuant to this section, the total net receipts of a recipient for the twelve-month period beginning with the current month are reduced or are projected to be reduced to less than fifty percent of the average distribution or transfer of net receipts, the secretary may waive recovery of any portion of the recoverable amount, subject to approval by the state board of finance.
F. No later than ninety days from the date notice pursuant to Subsection D of this section is given, the department shall provide the distribution recipient adequate opportunity to review an application for a claim for refund that gave rise to the recoverable amount, exclusive of any amended returns that may be attached to the application, pursuant to Section 7-1-8.9 NMSA 1978.
G. On or before September 1 of each year beginning in 2016, the secretary shall report to the state board of finance and the legislative finance committee the total recoverable amount waived pursuant to Subparagraph
(b)of Paragraph
(2)and Paragraph
(3)of Subsection E of this section for each distribution recipient in the prior fiscal year.
H. The secretary is authorized to decrease a distribution or transfer to a distribution recipient upon being directed to do so by the secretary of finance and administration pursuant to the State Aid Intercept Act [6-22-1 to 6-22-3 NMSA 1978] or to redirect a distribution or transfer to the New Mexico finance authority pursuant to an ordinance or a resolution passed by the recipient and a written agreement of the recipient and the New Mexico finance authority. Upon direction to decrease a distribution or transfer or notice to redirect a distribution or transfer to a recipient, the secretary shall decrease or redirect the next designated distribution or transfer, and succeeding distributions or transfers as necessary, by the amount of the state distributions intercept authorized by the secretary of finance and administration pursuant to the State Aid Intercept Act or by the amount of the state distribution intercept authorized pursuant to an ordinance or a resolution passed by the recipient and a written agreement with the New Mexico finance authority.
The secretary shall transfer the state distributions intercept amount to the recipient treasurer or other person designated by the secretary of finance and administration or to the New Mexico finance authority pursuant to written agreement to pay the debt service to avoid default on qualified local revenue bonds or meet other local revenue bond, loan or other debt obligations of the recipient to the New Mexico finance authority. A decrease to or redirection of a distribution or transfer pursuant to this subsection that arose:
(1)prior to an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department takes precedence over any collection of any recoverable amount pursuant to Paragraph
(2)of Subsection B of this section, which may be made only from the net amount of the distribution or transfer remaining after application of the decrease or redirection pursuant to this subsection; and
(2)after an adjustment of a distribution or transfer of net receipts creating a recoverable amount owed to the department shall be subordinate to any collection of any recoverable amount pursuant to Paragraph
(2)of Subsection B of this section.
I. Upon the direction of the secretary of finance and administration pursuant to Section 9-6-5.2 NMSA 1978, the secretary shall temporarily withhold the balance of a distribution to a distribution recipient, net of any decrease or redirected amount pursuant to Subsection H of this section and any recoverable amount pursuant to Paragraph
(2)of Subsection B of this section, that has failed to submit an audit report required by the Audit Act [12-6-1 to 12-6-15 NMSA 1978] or a financial report required by Subsection F of Section 6-6-2 NMSA 1978. The amount to be withheld, the source of the withheld distribution and the number of months that the distribution is to be withheld shall be as directed by the secretary of finance and administration. A distribution withheld pursuant to this subsection shall remain in the tax administration suspense fund until distributed to the distribution recipient and shall not be distributed to the general fund. An amount withheld pursuant to this subsection shall be distributed to the recipient upon direction of the secretary of finance and administration.
J. As used in this section:
(1)"amounts relating to the current month" means any amounts included in the net receipts of the current month that represent payment of tax due for the current month, correction of amounts processed in the current month that relate to the current month or that otherwise relate to obligations due for the current month;
(2)"amounts relating to prior periods" means any amounts processed during the current month that adjust amounts processed in a period or periods prior to the current month regardless of whether the adjustment is a correction of a department error or due to the filing of amended returns, payment of department-issued assessments, filing or approval of claims for refund, audit adjustments or other cause;
(3)"average distribution or transfer amount" means the following amounts; provided that a distribution or transfer that is negative shall not be used in calculating the amounts:
(a)the annual average of the total amount distributed or transferred to a distribution recipient in each of the three twelve-month periods preceding the current month;
(b)if a distribution or transfer to a recipient has been made for less than three years, the total amount distributed or transferred in the year preceding the current month; or
(c)if a recipient has not received distributions or transfers of net receipts for twelve or more months, the monthly average of net receipts distributed or transferred to the recipient preceding the current month multiplied by twelve;
(4)"current month" means the month for which the distribution or transfer is being prepared; and
(5)"repayment agreement" means an agreement between the department and a distribution recipient under which the recipient agrees to allow the department to recover an amount determined pursuant to Paragraph
(2)of Subsection B of this section by decreasing distributions or transfers to the recipient for up to seventy-two months beginning with the distribution or transfer to be made with respect to a designated month. No interest shall be charged.
History: 1978 Comp., § 7-1-6.15, enacted by Laws 1983, ch. 211, § 20; 1986, ch. 20, § 10; 1987, ch. 169, § 2; 1988, ch. 72, § 5; 1989, ch. 326, § 12; 1990, ch. 99, § 48; 1991, ch. 9, § 13; 1991, ch. 176, § 17; 1992, ch. 105, § 4; 1993, ch. 30, § 3; 1994, ch. 54, § 1; 1996, ch. 28, § 3; 1999, ch. 189, § 1; 2007, ch. 331, § 1; 2011, ch. 106, § 3; 2015, ch. 89, § 1; 2015, ch. 100, § 1; 2021 (1st S.S.), ch. 4, § 49; 2025, ch. 130, § 15.