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City of Roswell changes lodgers’ tax code


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Many property owners in Roswell renting a few rooms for short periods of time will have to collect and pay gross receipts taxes and lodgers’ taxes starting in September.

Property owners with short-term rentals and lodging businesses will receive information about changes from the city, says Public Affairs Director Juanita Jennings. (Submitted Photo)

And all lodging enterprises — whether hotels, recreational vehicle parks, beds-and-breakfasts or rentals such as AirBnBs — also will have to start charging taxes for stays longer than 30 days if people renting the space are staying temporarily to be near work. The vendors also will have to comply with new reporting requirements in those cases.

The Roswell City Council voted 10-0 Thursday to approve an ordinance that makes several changes to the city’s lodgers’ tax, which is explained in Article 1 of Chapter 23 of the Roswell City Code.

The changes are prompted by two laws passed by the New Mexico State Legislature: Senate Bill 106, passed in 2019 and effective Jan. 1, and House Bill 117, signed into law in March and effective July 1.

SB 106 was intended to “close a loophole” between more traditional lodging such as hotels and the individuals, partnerships or corporations that own properties with only a bedroom or two. So the law eliminated an exemption for properties with fewer than three rooms.

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“Currently in Roswell, we had 64 of these short-term rentals that are operating without a business license and had not been in compliance when these laws went into effect,” said Public Affairs Director Juanita Jennings. “By updating the ordinance, we would now be able to speak with these properties and get them into compliance with city code.”

She explained to city councilors that a reporting agency has identified such properties within the city limits.

HB 117 is intended to help municipalities and counties that were losing out on lodgers’ taxes when companies or individuals would rent large numbers of rooms or RV spots for months at a time to be near booming industries such as oilfields.

For that reason, the law allows local governments to charge taxes for stays of 31 days or longer if the renter is staying to be near work. There are some exceptions allowed for charitable, government, educational of health care institutions.

The law also requires vendors to indicate which taxes are on rentals of 30 days or less and which are collected on stays of 31 days or longer, because the local government is able to spend the money differently depending on which category the taxes are in.

Jennings said after the council vote, the new ordinance takes effect Aug. 21, but that the city is giving a grace period until Aug. 31.

Businesses and property owners will need to start charging and collecting the taxes in September, with the first tax payment and report due to the city on Oct. 25.

Jennings said the city will send letters to relevant business and property owners that will include information on how to obtain the necessary business licenses, permits and inspections and will describe the actions needed to set up the lodgers’ tax reporting and payment processes with the city.

Gross receipts taxes on room rentals are handled by the state of New Mexico Taxation and Revenue Department.

The city’s website also will have information and applications under a “Business Development and Lodgers’ Tax” section, with that scheduled to be posted by Aug. 21.

Once the licenses, inspections, permits and reporting processes have been established, Tourism Manager Stephanie Mervine will manage the lodgers’ taxes and will meet online or by appointment with property owners.

Jennings said the coronavirus crisis and other economic factors could affect city projections, but she has estimated that the city could receive an additional $30,000 in lodgers’ taxes a year from the change that affects AirBnB and similar rentals. It also expects as much as a 20% increase in tax collections due to the change that allows taxes on stays of 31 days or more for people here due to work.

At the City Council meeting, a few people said they could see issues concerning certain definitions in the law.

“I think that language for temporary lodging needs to be tightened up to reflect what I think the council’s true purpose is here,” said Michael Pitts, who said he lives in Artesia but owns property in Roswell.

Councilors Jacob Roebuck, Barry Foster and Jason Perry also raised questions about the definitions. They asked whether the 31-day rule would apply for someone who moved here for their work but were staying temporarily in a short-term rental while looking for a permanent home or residence. Roebuck also said the “primary residence” definition used to determine if someone is engaged in short-term rentals of their property could be contentious.

“There are no cases on this,” Interim City Attorney Parker Patterson said. “All this is new. How this will work in the real world has not been determined yet.”

He also pointed out the definitions came from state laws written by legislators.

Another provision of the tax change allowed by HB 117 is that taxes paid for stays of 31 days or longer can be used for purposes defined by the local government.

The city of Roswell has decided to use those portions of lodgers’ taxes in three ways: the construction, maintenance or renovation of city-owned tourist facilities or attractions; for public safety and community development initiatives; and for economic development projects.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 351, or at reporter02@rdrnews.com.

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Lisa Dunlap is a general assignment reporter for the Roswell Daily Record.