United Nuclear Corp. v. Revenue Div., Taxation and Revenue Dept.
| Decision Date | 06 April 1982 |
| Docket Number | No. 5255,5255 |
| Citation | 98 N.M. 296,648 P.2d 335,1982 NMCA 67 |
| Parties | UNITED NUCLEAR CORPORATION, a corporation, Plaintiff-Appellant, v. REVENUE DIVISION, TAXATION AND REVENUE DEPARTMENT, State of New Mexico, Defendant-Appellee. |
| Court | Court of Appeals of New Mexico |
United Nuclear Corporation (taxpayer) appeals a decision of the New Mexico Taxation and Revenue Department (department) denying its request for refund of severance taxes in the approximate sum of $896,896.00 under § 7-1-25, N.M.S.A.1978. 1 We affirm.
The taxpayer filed two requests for refunds of severance taxes paid to the State of New Mexico on uranium concentrate which was mined in New Mexico, shipped outside the state by the taxpayer, and sold and delivered to buyers at a point outside of New Mexico. A formal hearing on both requests was held by a hearing officer designated by the Commissioner, as provided by § 7-1-24, N.M.S.A.1978. The hearing officer entered a final decision as provided by § 7-1-24(H), denying the requests for refund.
The taxpayer engages in the business of severing and processing uranium-bearing ore in New Mexico to obtain and sell uranium concentrate. The chemical compound of the uranium concentrate is U 3O 8, and it is commonly known as "yellowcake". The taxpayer had sales contracts with several customers which stated the unit price per pound for the concentrate. The contracts also provided that the buyers were to pay the taxpayer the amount of applicable severance tax, which is sometimes referred to as "reimbursed" tax. When billing the customers, the taxpayer separately stated the total amount of yellowcake, the price per pound, the total price times pounds, and the New Mexico severance tax. Typically, the severance tax shown on the billing was based on a unit price of $42.75, and was computed as follows:
Statutory (($40 - $50 base)) 1.99
k 12.5% of excess over $40 .34
----
2.33
k 12.5% of 2.33 .29
----
Severance tax per pound 2.62
The department originally ruled that severance tax billed to and reimbursed by the purchaser would be added to the sales price one time only, as in the above example. See Ruling No. 77-700-5. The department later decided that Ruling No. 77-700-5 was incorrect, but conceded that in this particular case it was estopped by its decision in the ruling from imposing additional taxes on the taxpayer. In the future, however, the tax will be imposed on the total amount received by the taxpayer. In the above example, if the taxpayer charges the customer $2.62, it will have to add 12.5% of $ .29 to the taxes due, and so on.
The issue on appeal is whether the taxpayer, when it computes the severance tax due the State of New Mexico, can deduct the amounts it labeled taxes from the taxable value of the yellowcake. The taxpayer challenges the department's decision on the grounds that: 1. Section 7-26-4(F), N.M.S.A.1978, is ambiguous and should be interpreted in favor of the taxpayer; and 2. That in calculating the severance tax, the taxable value should not include the amount of the severance tax itself.
The following statutes from N.M.S.A.1978 2 are pertinent to a resolution of these issues:
7-26-3. Imposition of tax; denomination as "severance tax."
For the privilege of severing natural resources, there is imposed on any severer of natural resources in New Mexico an excise tax on the taxable value or the quantity of natural resources severed and saved by or for him as determined under, and at the rates provided in the Severance Tax Act (7-26-1 to 7-26-8 NMSA 1978). The tax imposed by this section shall be known as the "severance tax."
7-26-4. Determination of taxable value of natural resources.
....
F. The taxable value to be reported for severed and saved uranium-bearing material is the sales price per pound of the content of U 3O 8 contained in the severed and saved or processed uranium, regardless of the form in which the product is actually disposed of. It is presumed, in the absence of preponderant evidence of another value, that the taxable value means the total amount of money and the reasonable value of other consideration received, or either of them, for the severed and saved uranium ore or processed uranium "yellowcake" concentrate. However, if the severed and saved uranium ore or "yellowcake" concentrate is not sold as ore or concentrate, the gross value shall be the value of U 3O 8 in ore or "yellowcake" concentrate represented in the final product. Taxable value shall be gross value without deduction of any kind.
7-26-7. Severance tax on uranium.
A. The severance tax on uranium is measured by the quantity of U 3O 8 contained in and recoverable from severed and saved uranium-bearing material whether that material is ore or solution, measured in a standard manner established by regulation of the commissioner of revenue. The taxable event is the sale, transportation out of New Mexico or consumption of the uranium-bearing material, whichever first occurs. Upon each pound of severed and saved U 3O 8 contained in severed uranium-bearing material, there shall be collected from the severer a severance tax as specified in the following table:
If Taxable Value Per Pound of U 3O 8 is:
But Not
Over Over The Tax Per Pound Shall Be
$ 0 $ 5.00 1.0%
5.00 7.50 $ .05 plus 1.6% of excess taxable value
over $5.00
7.50 10.00 .09 plus 2.0% of excess taxable value
over $7.50
10.00 15.00 .14 plus 3.0% of excess taxable value
over 10.00
15.00 20.00 .29 plus 4.0% of excess taxable value
over 15.00
20.00 25.00 .49 plus 5.0% of excess taxable value
over 20.00
25.00 30.00 .74 plus 7.0% of excess taxable value
over 25.00
30.00 40.00 1.09 plus 9.0% of excess taxable value
over 30.00
40.00 50.00 1.99 plus 12.5% of excess taxable value
over 40.00
50.00 and over 3.24
B. Notwithstanding the provisions of Subsection A of this section, a taxpayer may elect, prior to August 1, 1977, to register with the bureau (division) of revenue any bona fide arms length contract for sale of uranium-bearing material entered into prior to January 1, 1977, which does not allow the taxpayer to obtain reimbursement for all of the additional taxes imposed by Subsection A of this section. The commissioner of revenue (director of the revenue division of the taxation and revenue department) shall provide a system for the registration of such contracts. There shall be collected from the severer of uranium-bearing material sold pursuant to a registered contract a severance tax of 1.25% of the taxable value of each pound of U 3O 8 contained in and recoverable from the severed and saved uranium-bearing material. The taxable event is the sale or transportation out of New Mexico, whichever first occurs. The taxpayer's right to have his liability determined under this subsection shall terminate if the registered contract is or has been amended in any manner after January 1, 1977 and the effect of the amendment is to increase the total amount of money and the reasonable value of other consideration, or either of them, received for the uranium-bearing material or to increase the total quantity of uranium-bearing material to be sold under the registered contract or to otherwise increase the value of the registered contract to the seller. In any event, the taxpayer's right to have his liability determined under this subsection shall terminate on December 31, 1984.
7-26-10. Purpose of act.
The purpose of this act is to impose a unified system of severance taxes upon the severance of energy resources in the form of oil, gas, coal and uranium, taking into account the quantity of energy producible, in addition to the value of the product or natural resource, in a manner consistent with a unified system.
The legislature finds that certain interferences with the market and certain existing contracts have from time to time imposed restrictions which require variances from the stated purpose of the act. Until such time as these restrictions are removed, the achievement of its goal is not possible, but this act achieves as much of that goal as is currently possible.
The taxpayer contends that there is an ambiguity in § 7-26-4(F). We disagree. In Reed v. Jones, 81 N.M. 481, 468 P.2d 882 (Ct.App.1970), this court stated:
The burden is on the taxpayer to establish clearly his right to the deduction and the intention to authorize the deduction claimed by the taxpayer must be clearly and unambiguously expressed in the statute. (citations omitted).
In speaking on exemptions from taxation the United States Supreme Court stated in Hoge v. Railroad Co., 99 U.S. 348, 25 L.Ed. 303 (1879), the following:
Any exception or rights to deductions must be contained...
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