Copyright © 2021 Roswell Daily Record
Copyright © 2021 Roswell Daily Record
Reporter’s note: This article has been edited for clarity.
Mayor Dennis Kintigh shared his recent letter to the New Mexico Taxation and Revenue Department during a city retreat on Saturday morning.
Mayor Kintigh handed out copies of his letter, dated March 14, to John Monforte, secretary of the Taxation and Revenue department, to city staff and city councilors as an informative action for the governing body. Prior to the retreat, Kintigh said the letter was proofread by City Attorney Aaron Holloman and City Manager Joe Neeb and copies were given to the legal and finance committees.
“There’s been some discussion in the media about internet sales tax — sales tax on internet transactions,” Kintigh said. “There’s actually a case that’s been argued before the Supreme Court in the last week upon this matter.
“Basically, the Supreme Court in 1992 decided that if a company did not have brick and mortar presence in a state, the state could not impose sales tax on internet transactions,” Kintigh said about the 1992 Quill Corporation v. North Dakota case.
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When Amazon purchased Whole Foods, Kintigh sent an email to the Legislative Finance Committee and the New Mexico Municipal League stating that he believed all Amazon transactions are subject to gross receipts tax and the consensus was one of agreement from them. He said both parties were also interested in the outcome of the GRT and internet sales tax discussion.
With three Whole Foods stores, two in Albuquerque and one in Santa Fe, Kintigh asked Monforte for the department’s plan to collect gross receipts tax due to the state because of the “brick and mortar presence” of Amazon.com Inc. Kintigh said Whole Foods has been integrated into Amazon’s system where points and other benefits apply to Amazon Prime members.
Kintigh said the city and all municipalities deserve clarity on the matter of how and whether gross receipts tax will apply, whether the origination or delivery of the internet transaction is to “be assessed, collected, rendered to the municipality.” He also said he has heard verbally that Tax and Revenue consider this issue to be “too complex.”
“The objective is this letter — and I have discussed this extensively with Mr. Holloman — is to precipitate a written response from tax and revenue,” Kintigh said. “I have heard verbally that Tax and Revenue maintains that Whole Foods, although owned by the Amazon parent corporation, is a separate company and therefore Quill does not apply.”
On Tuesday, Mayor Kintigh said there is no written statement from Tax and Revenue at this time.
“Tax and Rev collects the GRT,” Kintigh said. “The GRT goes to Tax and Revenue. So in other words, the transaction occurs this month, next month the merchant pays tax and rev, (and in) the following month, the check comes to the city of Roswell. They give us our portion of tax and revenue. They also charge us — I call it — a shipping and handling fee.”
Mayor Kintigh said the state portion of 5 percent of gross receipts tax and 1.225 percent is given to municipalities such a Roswell. Monica Garcia, the city’s finance director, said there is no way for Roswell to ensure that the city is receiving the GRT due to municipalities.
Garcia said the city received a high payment of over $3,000,000 from Tax and Revenue erroneously last year, which the city sought to correct and Tax and Revenue took back later. She said some cities could not make payroll and that Tax and Revenue bankrupted Eunice. Kintigh said that if Tax and Revenue discover their own errors they can extract the money from the cities.
The Daily Record reached out to Secretary Monforte and Ben Cloutier, director of communications for the New Mexico Taxation and Revenue Department and the New Mexico Economic Development Department responded with a statement.
“The Taxation and Revenue Department works diligently to collect all taxes due to the state and local governments pursuant to state laws and federal constitutional requirements,” Cloutier said. “Of the $6 billion collected and distributed by the department each year, local governments are the beneficiaries of over one-quarter of those collections. We look forward to continuing our strong partnership with our local governments.”
Councilor Steve Henderson said it was his understanding that Gov. Susana Martinez made a deal with Amazon where the GRT goes directly to the state, giving Roswell the short end of the stick. Kintigh said this agreement does not send this percentage back to the municipalities. Councilor Henderson said some communities in New Mexico have a lawsuit in Tax and Revenue because the department made errors on their GRT revenue. He also said Tax and Revenue arbitrarily increased the processing fee without approval from the legislation.
“At some point, with the technology the way it is — that surely the municipalities should be able to benefit on internet sales that are created or originate say — from Roswell,” Henderson said. “In other words, whatever Roswell gets over the internet, we should get our tax plus the state should get their tax. For the state to get their tax and for the municipality to not get theirs, I think was the wrong approach. So I think that at some point, we have been fighting this battle a long time and we are losing hundreds of millions of dollars in tax money. Surely at some point, people will come to their senses and realize that it is only fair to our local brick and mortar people that everybody is taxed on a level playing field.”
Councilor Judy Stubbs said there has been a discussion on lack of sales tax on internet purchases about this since her first time attending the National League of Cities in 1995. Councilor Savino Sanchez asked how the transactions are going to be tracked, to which Councilor Caleb Grant said Amazon is keeping track of sales in half the states already. Councilor Grant added that the state’s agreement is unfair to the local business.
Kintigh said the internet has shifted retail and that he thinks there will be a permanent shift away from brick and mortar, which the advantage allows Roswell to have access many types of goods and services. Sanchez asked what the city is going to do to increase brick and mortar businesses and Mayor Kintigh said he is unsure how the city could or should help, but said the discussion should continue.
Saying Tax and Revenue is facing two lawsuits already, Kintigh said on the internet sales that the city might need to litigate against Tax and Revenue. Councilor Angela Moore said she thought the city should pursue receiving the appropriate GRT.
“Where this goes, we don’t know,” Kintigh said to the councilors and city staff. “What everyone agrees that I have had a discussion with — we as a municipality and municipalities need a written position out of Tax and Rev on this whole issue.”
City/RISD reporter Alison Penn can be reached at 575-622-7710, ext. 205, or at email@example.com.