The New Mexico Department of Revenue recently issued a notice regarding the New Mexico 8th Circuit Court’s invalidation of Taos, New Mexico’s annexation of the Taos Airport. See New Mexico Department of Revenue Release, “Taos Annexation Invalid” (October 9, 2014). This invalidation applies retroactively back to July 1, 2013, and business which had remitted taxes assuming the annexation was valid must now file amended returns and a claim for a refund of overpaid tax. Id.
Prior to July 1, 2013, businesses with a location at the Taos Airport filed their returns reflecting the tax rate applicable to the unincorporated portion of Taos County, 7.125%. That rate was a combination of the 5.125% state rate and the 2.00% rate for the County. When the city purportedly annexed the airport, the combined rate increased to 8.1875%; the combination of the 5.125% state rate, a 1.5% reduced county rate applicable in the incorporated areas of the Town of Taos, and a 1.5625% rate for the Town of Taos.
In December 2012, the Town of Taos passed Resolution 12-76, authorizing the town manger to seek annexation of the airport. In March of the following year, the city passed Ordinance 13-01, attempting the annexation. The County sued the Town in the New Mexico 8th Circuit Court, asking the Court to invalidate the annexation. The County alleged that the City had failed to follow various statutory requirements in performing the annexation. Complaint, Board of County Commissioners et. Al v. The Town of Taos, D-820-CV-2013-00133. The Court agreed with the County, and the airport is now back within the unincorporated portion of the County.