“By regulation, the secretary may require any person maintaining one or more places of business to report the person’s taxable gross receipts and deductions for each municipality or county … in which the person maintains a place of business.” NMSA 1978, § 7-1-14(A) (1995, amended 2023). Here, Select Water Solutions receipts are from providing water management and fluid chemistry solutions, including selling and delivering water to oil and gas companies engaged in hydraulic fracking.
The hearing officer determined that Select qualifies as a “utility” under 3.1.4.13(B)(3) NMAC because it delivers water to the well sites via a pipeline. As such, Select’s revenues are source to the relevant county where the wellhead is located and not to the City of Carlsbad where Select maintains a place of business. The hearing officer rejected that Select’s services were oil and gas construction services under 3.2.1.11 NMAC, which would have resulted in the revenues being sourced to Carlsbad.
Alternatively, the hearing officer found that the Department’s assessments— which followed after the Department first approved the refund claims and then reconsidered— were not timely because “no assessment of tax may be made by the department after three years from the end of the calendar year in which payment of the tax was due …” NMSA 1978, Section 7-1-18(A) (2013, amended 2021)