N.M. Stat. Ann. § 7-29-6 – Operator or purchaser to withhold interest owner's tax; department may require withholding of tax; tax withheld to be remitted to the state; operator or purchaser to be reimbursed

A. Any operator making a monetary payment to an interest owner for the interest owner's portion of the value of products from a production unit shall withhold from such payment the amount of tax due from the interest owner.
B. Any purchaser who, by express or implied agreement with the operator, makes a monetary payment to an interest owner for the interest owner's portion of the value of products from a production unit, shall withhold from such payment the amount of tax due from the interest owner.
C. The department may require any purchaser making a monetary payment to an interest owner for the interest owner's portion of the value of products from a production unit to withhold from such payment the amount of tax due from the interest owner.
D. Any operator or purchaser who pays any tax due from an interest owner shall be entitled to reimbursement from the interest owner for the tax so paid and may take credit for such amount from any monetary payment to the interest owner for the value of products.

History: 1953 Comp., § 72-19-9, enacted by Laws 1959, ch. 52, § 9; 1978 Comp., § 7-29-6, 2025, ch. 130, § 117.

ANNOTATIONS

The 2025 amendment, effective July 1, 2025, replaced each occurrence of "commission" with "department" throughout the section.

Tax liability of interest owners. — Although, pursuant to Section 7-29-4(C) NMSA 1978, each interest owner is liable for its proportionate share of the calculated tax, the law does not mandate or even contemplate the determination of different taxable values for each of the various interest owners based on proceeds received downstream from the wellhead. The law is satisfied so long as (1) carbon dioxide production is accurately measured and valued as a whole at the wellhead, (2) the appropriate tax rate is applied to that production to calculate the total tax owed, and (3) the total tax is allocated to the various interest owners in proportion to their fractional interest in that production. Any readjustment in the allocation of the tax burden among working interest owners and royalty interest owners is left to private contract. Feerer v. Amoco Prod. Co., 242 F.3d 1259 (10th Cir. 2001).