SENATE BILL 207
56th legislature - STATE OF NEW MEXICO - second session, 2024
RELATING TO PROPERTY; AMENDING PROVISIONS OF THE LODGERS' TAX ACT; AUTHORIZING AN OCCUPANCY SURTAX ON CERTAIN SHORT-TERM RENTALS PURSUANT TO THE LODGERS' TAX ACT; REQUIRING LOCAL GOVERNMENTS THAT IMPOSE THE OCCUPANCY SURTAX TO USE THE PROCEEDS TO DEFRAY THE COST OF AFFORDABLE HOUSING; EXCLUDING CERTAIN SHORT-TERM RENTAL PROPERTY FROM THE DEFINITION OF "RESIDENTIAL PROPERTY" IN THE PROPERTY TAX CODE; AMENDING FORM REQUIREMENTS FOR NOTICES OF VALUATION SENT TO PROPERTY OWNERS; REPEALING A SECTION OF THE PROPERTY TAX CODE THAT REQUIRES PROPERTY TO BE PRESUMED CLASSIFIED AS NONRESIDENTIAL PROPERTY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 3-38-14 NMSA 1978 (being Laws 1969, Chapter 199, Section 2, as amended) is amended to read:
"3-38-14. DEFINITIONS.--As used in the Lodgers' Tax Act:
A. "gross taxable rent" means the total amount of rent paid for lodging, not including the state gross receipts tax or local sales taxes;
B. "lodging" means the transaction of furnishing rooms or other accommodations by a vendor to a vendee who for rent uses, possesses or has the right to use or possess the rooms or other units of accommodations in or at a taxable premises;
C. "lodgings" means the rooms or other accommodations furnished by a vendor to a vendee by a taxable service of lodging;
D. "occupancy surtax" means the surtax imposed by Section 3-38-15.1 NMSA 1978;
[D] E. "occupancy tax" means the tax on lodging authorized by [the Lodgers' Tax Act] Section 3-38-15 NMSA 1978;
[E.] F. "person" means a corporation, firm, other body corporate, partnership, association or individual. "Person" includes an executor, administrator, trustee, receiver or other representative appointed according to law and acting in a representative capacity. "Person" does not include the United States of America, the state of New Mexico, any corporation, department, instrumentality or agency of the federal government or the state government or any political subdivision of the state;
[F.] G. "rent" means the consideration received by a vendor in money, credits, property or other consideration valued in money for lodgings subject to [an occupancy] a tax authorized in the Lodgers' Tax Act;
[G.] H. "taxable premises" means a hotel, motel or other premises used for lodging that is not the vendee's household or primary residence;
[H.] I. "temporary lodging" means lodgings for the purpose of housing a vendee within proximity of the vendee's employment or job location;
[I.] J. "tourist" means a person who travels for the purpose of business, pleasure or culture to a municipality or county imposing an occupancy tax;
[J.] K. "tourist-related events" means events that are planned for, promoted to and attended by tourists;
[K.] L. "tourist-related facilities and attractions" means facilities and attractions that are intended to be used by or visited by tourists;
[L.] M. "tourist-related transportation systems" means transportation systems that provide transportation for tourists to and from tourist-related facilities and attractions and tourist-related events;
[M.] N. "vendee" means a natural person to whom lodgings are furnished in the exercise of the taxable service of lodging; and
[N.] O. "vendor" means a person or the person's agent furnishing lodgings in the exercise of the taxable service of lodging."
SECTION 2. A new Section 3-38-15.1 NMSA 1978 is enacted to read:
"3-38-15.1. [NEW MATERIAL] OCCUPANCY SURTAX.--
A. In addition to the occupancy tax, a municipality or county may impose by ordinance an occupancy surtax for revenues on single-family rentals. The surtax shall not exceed two and one-half percent gross taxable rent of single-family rentals.
B. A municipality or county imposing an occupancy surtax shall use the proceeds from the surtax to defray the cost of providing affordable housing or to leverage federal funding for affordable housing.
C. As used in this section:
(1) "affordable housing" means any housing that benefits those whose income is at or below eighty percent of the area median income;
(2) "single-family rental" means a single-family residence offered for rent for a term of less than thirty days; and
(3) "single-family residence" means an occupied residence, including an apartment, house, guest house, cottage or condominium, in which at least one room or unit is rented by a vendor through the use of advance reservations. "Single-family residence" does not include a hotel, motel, lodging house, bed and breakfast establishment or property offered as a time share, as that term is used in the New Mexico Time Share Act."
SECTION 3. Section 3-38-16 NMSA 1978 (being Laws 1969, Chapter 199, Section 4, as amended) is amended to read:
"3-38-16. EXEMPTIONS.--The occupancy tax and occupancy surtax shall not apply:
A. if a vendee:
(1) has been a permanent resident of the taxable premises for a period of at least thirty consecutive days, unless those premises are temporary lodging; or
(2) enters into or has entered into a written agreement for lodgings at the taxable premises for a period of at least thirty consecutive days, unless those premises are temporary lodging;
B. if the rent paid by a vendee is less than two dollars ($2.00) a day;
C. to lodging accommodations at institutions of the federal government, the state or any political subdivision thereof;
D. to lodging accommodations at religious, charitable, educational or philanthropic institutions, including accommodations at summer camps operated by such institutions;
E. to clinics, hospitals or other medical facilities; or
F. to privately owned and operated convalescent homes or homes for the aged, infirm, indigent or chronically ill."
SECTION 4. Section 3-38-17 NMSA 1978 (being Laws 1969, Chapter 199, Section 5, as amended) is amended to read:
"3-38-17. COLLECTION OF TAXES.--
A. Every vendor providing lodgings in a municipality or county imposing an occupancy tax or occupancy surtax shall collect the proceeds thereof on behalf of the municipality or county and shall act as a trustee therefor.
B. The tax and surtax shall be collected from vendees in accordance with the ordinance imposing the tax and shall be charged separately from the rent fixed by the vendor for the lodgings."
SECTION 5. Section 3-38-17.1 NMSA 1978 (being Laws 1992, Chapter 12, Section 2, as amended) is amended to read:
"3-38-17.1. AUDIT OF VENDORS.--The governing body of any municipality or county collecting over two hundred fifty thousand dollars ($250,000) in occupancy tax or occupancy surtax proceeds shall select for annual random audits one or more vendors to verify the amount of gross taxable rent subject to the [occupancy] tax and surtax and to ensure that the full amount of [occupancy] tax and surtax on that rent is collected. The governing body of any municipality or county collecting less than two hundred fifty thousand dollars ($250,000) in receipts, per annum, of [occupancy] tax and surtax proceeds shall conduct random audits to verify full payment of occupancy tax receipts. Copies of audits completed shall be filed annually with the local government division of the department of finance and administration."
SECTION 6. Section 3-38-17.2 NMSA 1978 (being Laws 1996, Chapter 58, Section 5) is amended to read:
"3-38-17.2. FINANCIAL REPORTING.--
A. The governing body of any municipality or county imposing and collecting an occupancy tax or occupancy surtax shall furnish to the advisory board created pursuant to Section 3-38-22 NMSA 1978 that portion of any proposed budget, report or audit filed or received by the governing body pursuant to either Chapter 6, Article 6 NMSA 1978 or the Audit Act that relates to the expenditure of [occupancy] tax and surtax funds within ten days of the filing or receipt of such proposed budget, report or audit by the local governing body.
B. The governing body of any municipality or county imposing and collecting an occupancy tax or occupancy surtax shall report to the local government division of the department of finance and administration on a quarterly basis any expenditure of [occupancy] tax and surtax funds pursuant to Sections 3-38-15, 3-38-15.1 and 3-38-21 NMSA 1978 and shall furnish a copy of this report to the advisory board when it is filed with the division."
SECTION 7. Section 3-38-17.3 NMSA 1978 (being Laws 1996, Chapter 58, Section 6) is amended to read:
A. An action to enforce the provisions of the Lodgers' Tax Act may be brought by:
(1) the attorney general or the district attorney in the county of jurisdiction; or
(2) a vendor who is collecting the proceeds of an occupancy tax or occupancy surtax in the county of jurisdiction.
B. A district court may issue a writ of mandamus or order an injunction or other appropriate remedy to enforce the provisions of the Lodgers' Tax Act.
C. The court shall award costs and reasonable [attorneys'] attorney fees to the prevailing party in a court action to enforce the provisions of the Lodgers' Tax Act."
SECTION 8. Section 3-38-18 NMSA 1978 (being Laws 1969, Chapter 199, Section 6, as amended) is amended to read:
"3-38-18. COLLECTION OF DELINQUENCIES.--
A. The governing body of [the] a municipality or county shall, by ordinance, provide that a vendor is liable for the payment of the proceeds of any occupancy tax or occupancy surtax that the vendor failed to remit to the municipality or county, due to [his] the vendor's failure to collect the tax or surtax or otherwise, and shall provide for a civil penalty for any such failure in an amount equal to the greater of ten percent of the amount that was not duly remitted to the municipality or county or one hundred dollars ($100).
B. [The] A municipality or county may bring an action in law or equity in the district court for the collection of any amounts due, including without limitation penalties thereon, interest on the unpaid principal at a rate [of] not exceeding one percent a month, the costs of collection and reasonable [attorneys'] attorney fees incurred in connection therewith."
SECTION 9. Section 3-38-18.1 NMSA 1978 (being Laws 1992, Chapter 12, Section 1) is amended to read:
"3-38-18.1. LIEN FOR OCCUPANCY TAX--PAYMENT--CERTIFICATE OF LIENS.--
A. The occupancy tax and occupancy surtax imposed by a municipality or county [constitutes] constitute a lien in favor of that municipality or county upon the personal and real property of the vendor providing lodgings in that municipality or county. The lien may be enforced as provided in Sections 3-36-1 through 3-36-7 NMSA 1978. Priority of the lien shall be determined from the date of filing.
B. Under process or order of court, no person shall sell the property of any vendor without first ascertaining from the clerk or treasurer of the municipality or county in which the vendor is located the amount of any occupancy tax or occupancy surtax due the municipality or county. Any occupancy tax or occupancy surtax due the municipality or county shall be paid from the proceeds of the sale before payment is made to the judgment creditor or any other person with a claim on the sale proceeds.
C. The clerk or treasurer of [the] a municipality or county shall furnish to any person applying for such a certificate a certificate showing the amount of all liens in the records of the municipality or county against any vendor pursuant to Chapter 3, Article 38 NMSA 1978."
SECTION 10. Section 3-38-19 NMSA 1978 (being Laws 1969, Chapter 199, Section 7, as amended) is amended to read:
"3-38-19. PENALTIES.--The governing body of [the] a municipality or county shall, by ordinance, provide for penalties by creating a misdemeanor and imposing a fine of not more than five hundred dollars ($500) or imprisonment for not more than ninety days or both for a violation by any person of the provisions of the [occupancy tax] ordinance imposing an occupancy tax or occupancy surtax for a failure to pay the tax or surtax, to remit the proceeds thereof to the municipality or county or to account properly for any lodging and the tax or surtax proceeds pertaining thereto."
SECTION 11. Section 3-38-20 NMSA 1978 (being Laws 1969, Chapter 199, Section 8, as amended) is amended to read:
"3-38-20. ORDINANCE REQUIREMENTS.--The ordinance imposing an occupancy tax or occupancy surtax or any ordinance amendatory thereof or supplemental thereto, except as limited by or otherwise provided in the Lodgers' Tax Act, shall:
A. provide a procedure for licensing each vendor and for refusing a vendor a license after an opportunity has been given to the vendor of a public hearing thereon by the governing body of the municipality or county, as the case may be;
B. state the rate or other amount of the occupancy tax or occupancy surtax; the times, place and method for the payment of the [occupancy] tax or surtax proceeds to the municipality or county; the accounts and other records to be maintained in connection with the [occupancy] tax or surtax; a procedure for making refunds and resolving disputes relating to the [occupancy] tax or surtax, including exemptions pertaining thereto; the procedure for preservation and destruction of records and their inspection and investigation; vendor audit requirements; applicable civil and criminal penalties; and a procedure of liens, distraint and sales to satisfy such liens; and
C. provide other rights, privileges, powers, immunities and other details relating to any such vendor licenses, the collection of the occupancy tax or occupancy surtax and the remittance of the proceeds thereof to the municipality or county."
SECTION 12. Section 3-38-21.1 NMSA 1978 (being Laws 1996, Chapter 58, Section 8) is amended to read:
"3-38-21.1. CONTRACTING FOR SERVICES.--
A. The governing body of a municipality or county may contract for the management of programs and activities funded with revenue from the occupancy tax [authorized in Section 3-38-15 NMSA 1978] or occupancy surtax. The governing body shall require periodic reports to the governing body, at least quarterly, listing the expenditures for those periods. Within ten days of receiving the reports, the governing body shall furnish copies of them to the advisory board. Funds provided to the contracting person or governmental agency shall be maintained in a separate account established for that purpose and shall not be commingled with any other money.
B. A person or governmental agency with whom a municipality or county contracts under this section to conduct an activity authorized by [Section] Sections 3-38-15.1 and 3-38-21 NMSA 1978 shall maintain complete and accurate financial records of each expenditure of the occupancy tax or occupancy surtax revenue made and upon request of the governing body of the municipality or county shall make such records available for inspection.
C. The occupancy tax and occupancy surtax revenue spent for a purpose authorized by the Lodgers' Tax Act may be spent for day-to-day operations, supplies, salaries, office rental, travel expenses and other administrative costs only if those administrative costs are incurred directly for that purpose.
D. A person or governmental agency with whom a local governmental body contracts under this section may subcontract with the approval of the governing body of the municipality or county. A subcontractor shall be subject to the same terms and conditions as the contractor regarding separate financial accounts, periodic reports and inspection of records."
SECTION 13. Section 7-35-2 NMSA 1978 (being Laws 1973, Chapter 258, Section 2, as amended) is amended to read:
"7-35-2. DEFINITIONS.--As used in the Property Tax Code:
A. "abandoned real property" means real property:
(1) that is part of a subdivision where the subdivision has a minimum of five thousand lots in delinquency on the department's delinquent property tax list as prepared by the appropriate county treasurer pursuant to Section 7-38-61 NMSA 1978 as of January 1, 2019;
(2) of which the subdivided lots are vacant;
(3) that is part of a subdivision plotted on or before 1980;
(4) the property taxes, penalties and interest of which are delinquent for at least ten years; and
(5) that does not include property with existing homes, businesses or other habitable structures;
B. "department" or "division" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;
C. "director" means the secretary;
D. "livestock" means cattle, buffalo, horses, mules, sheep, goats, swine, ratites and other domestic animals useful to humans;
E. "manufactured home" means a manufactured home as that term is defined in Section 66-1-4.11 NMSA 1978;
F. "net taxable value" means the value of property upon which the tax is imposed and is determined by deducting from taxable value the amount of any exemption authorized by the Property Tax Code;
G. "nonresidential property" means property that is not residential property;
H. "owner" means the person in whom is vested any title to property;
I. "person" means an individual or any other legal entity;
J. "property" means tangible property, real or personal;
K. "residential property" means property consisting of one or more dwellings together with appurtenant structures, the land underlying both the dwellings and the appurtenant structures and a quantity of land reasonably necessary for parking and other uses that facilitate the use of the dwellings and appurtenant structures. As used in this subsection, "dwellings" includes both manufactured homes and other structures when used primarily for permanent human habitation, but the term does not include structures when used primarily for temporary or transient human habitation such as hotels, motels and similar structures, or a single-family dwelling offered for rent for a term of less than thirty days for sixty percent or more of a tax year;
L. "secretary" means the secretary of taxation and revenue and, except for purposes of Section 7-35-6 NMSA 1978 and Paragraphs (1) and (2) of Subsection B of Section 9-11-6.2 NMSA 1978, also includes the deputy secretary or a division director or deputy division director delegated by the secretary;
M. "tax" means the property tax imposed under the Property Tax Code;
N. "taxable value" means the value of property determined by applying the tax ratio to the value of the property determined for property taxation purposes;
O. "tax rate" means the rate of the tax expressed in terms of dollars per thousand dollars of net taxable value of property;
P. "tax ratio" means the percentage established under the Property Tax Code that is applied to the value of property determined for property taxation purposes in order to derive taxable value; and
Q. "tax year" means the calendar year."
SECTION 14. Section 7-38-20 NMSA 1978 (being Laws 1973, Chapter 258, Section 60, as amended) is amended to read:
"7-38-20. COUNTY ASSESSOR AND DEPARTMENT TO MAIL NOTICES OF VALUATION.--
A. By April 1 of each year, the county assessor shall mail a notice in a form prescribed by the county assessor to each property owner informing the property owner of the net taxable value of the property owner's property that has been valued for property taxation purposes by the assessor and other related information as required by Subsection D of this section.
B. By May 1 of each year, the department shall mail a notice in a form prescribed by the department to each property owner informing the property owner of the net taxable value of the property owner's property that has been valued for property taxation purposes by the department and other related information as required by Subsection D of this section.
C. Failure to receive the notice required by this section does not invalidate the value set on the property, any property tax based on that value or any subsequent procedure or proceeding instituted for the collection of the tax.
D. The notice required by this section shall state, at a minimum:
(1) the property owner's name and address;
(2) the description or identification of the property valued;
(3) the classification of the property valued;
(4) the value set on the property for property taxation purposes;
(5) the tax ratio;
(6) the taxable value of the property for the previous and current tax years;
(7) the tax rate from the previous tax year;
(8) the amount of tax from the previous tax year;
(9) with respect to residential property, instructions for calculating an estimated tax for the current tax year, which shall be prominently displayed on the front of the notice, and a disclaimer for such instructions similar to the following:
"The calculation of property tax may be higher or lower than the property tax that will actually be imposed.";
(10) the amount of any exemptions allowed and a statement of the net taxable value of the property after deducting the exemptions;
(11) the allocations of net taxable values to the governmental units;
(12) briefly, the eligibility requirements and application procedures and deadline for claiming eligibility for a limitation on increases in the valuation for property taxation purposes of a single-family dwelling owned and occupied by a person sixty-five years of age or older; and
(13) briefly, the procedures for protesting the value determined for property taxation purposes, classification, allocation of values to governmental units or denial of a claim for an exemption or for the limitation on increases in valuation for property taxation purposes.
E. The county assessor may mail the valuation notice required pursuant to Subsection A of this section to taxpayers with:
(1) the preceding tax year's property tax bills if the net taxable value of the property has not changed since the preceding taxable year. In this early mailing, the county assessor shall provide clear notice to the taxpayer that the valuation notice is for the succeeding tax year and that the deadlines for protest of the value or classification of the property apply to this mailing date; and
(2) a form that may be completed by the taxpayer and returned to the county assessor to update the taxpayer's mailing address or the classification of the taxpayer's property, or to claim an exemption or a limitation on increases in valuation for property taxation purposes pursuant to the Property Tax Code."
SECTION 15. REPEAL.--Section 7-38-17.1 NMSA 1978 (being Laws 1981, Chapter 37, Section 68) is repealed.
SECTION 16. APPLICABILITY.-The provisions of Section 13 of this act apply to the 2025 and subsequent property tax years.
SECTION 17. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2024.
- 19 -