{"id":4119,"date":"2016-10-17T11:51:23","date_gmt":"2016-10-17T17:51:23","guid":{"rendered":"https:\/\/www.tax.newmexico.gov\/all-nm-taxes\/?p=4119"},"modified":"2026-04-11T13:29:04","modified_gmt":"2026-04-11T19:29:04","slug":"a-w-restaurants-inc","status":"publish","type":"post","link":"https:\/\/www.tax.newmexico.gov\/all-nm-taxes\/2016\/10\/17\/a-w-restaurants-inc\/","title":{"rendered":"A &#038; W Restaurants, Inc."},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221;][et_pb_row _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221;][et_pb_column _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221; type=&#8221;4_4&#8243;][et_pb_text _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221; hover_enabled=&#8221;0&#8243; sticky_enabled=&#8221;0&#8243;]<\/p>\n<div class=\"blogDateTitleContainer\">\n<div class=\"blogDateTitle\">10\/17\/2016<\/div>\n<\/div>\n<div class=\"blogItem\">\n<p><a href=\"https:\/\/realfile.tax.newmexico.gov\/16-49_a_&amp;_w_restaurants_inc.pdf\">16-49<\/a><\/p>\n<p><span>On September 27, 2013, the Department assessed the Taxpayer for gross receipts tax and interest for the periods from June 30, 2007 to December 31, 2011.\u00a0 The Taxpayer filed a protest of the assessment on December 23, 2013.\u00a0 The Taxpayer entered into franchise agreements with New Mexico businesses.\u00a0 Section 1 of this agreement, entitled \u201cGrant of License\u201d grants a franchisee a limited license to use specific trademarks identified in the appendix to the agreement.\u00a0 The authority to use the trademarks is limited exclusively to use in connection with sales from a single restaurant established under the agreement.\u00a0 The agreement also sets the amounts that a franchisee is to pay the Taxpayer.\u00a0 Some of these are one-time fees, while others are paid on a monthly basis and are calculated based on the prior month\u2019s gross sales.\u00a0 The Department audited the Taxpayer for gross receipts tax for the periods from January 1, 2006 through December 31, 2011.\u00a0 The Department concluded that the continuing royalty fee was subject to gross receipts tax because the payments by franchisees to the Taxpayer represented receipts from granting a right to use a franchise employed in New Mexico.\u00a0 The Taxpayer argues that the continuing royalty fee is consideration for the Taxpayer\u2019s granting of a limited license to utilize its trademarks, which it claims is then exempt from gross receipts tax under the definition of \u201cproperty\u201d as provided in Section 7-9-3(J)\u00a0NMSA\u00a01978, which excludes trademarks.\u00a0 The Department asserts that the royalty fees paid are taxable as gross receipts because they are receipts from granting a right to use a franchise employed in New Mexico, which is subject to gross receipts tax under Section 7-9-3.5(A)(1)\u00a0NMSA\u00a01978.\u00a0 While the Taxpayer held that the trademarks must be unbundled from the other receipts, the hearing officer found that, based on prior case law, a franchise is to be treated as a compound or bundled form of property, which includes a license to use trademarks.\u00a0 The Taxpayer is obligated to pay gross receipts tax on the total receipts received from granting a right to use a franchise employed in New Mexico.\u00a0 The Taxpayer\u2019s protest was denied.<\/span><\/p>\n<\/div>\n<p>[\/et_pb_text][et_pb_text _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221;]<\/p>\n<p><a href=\"\/all-nm-taxes\/tax-decisions-orders\/\">Back to Tax Decisions &amp; Orders<\/a><\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>10\/17\/2016 16-49 On September 27, 2013, the Department assessed the Taxpayer for gross receipts tax and interest for the periods from June 30, 2007 to December 31, 2011.\u00a0 The Taxpayer filed a protest of the assessment on December 23, 2013.\u00a0 The Taxpayer entered into franchise agreements with New Mexico businesses.\u00a0 Section 1 of this agreement, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"960","footnotes":""},"categories":[43],"tags":[],"class_list":["post-4119","post","type-post","status-publish","format-standard","hentry","category-tax-decisions-orders"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>A &amp; W Restaurants, Inc. : All NM Taxes<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.tax.newmexico.gov\/all-nm-taxes\/2016\/10\/17\/a-w-restaurants-inc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A &amp; W Restaurants, Inc. : All NM Taxes\" \/>\n<meta property=\"og:description\" content=\"10\/17\/2016 16-49 On September 27, 2013, the Department assessed the Taxpayer for gross receipts tax and interest for the periods from June 30, 2007 to December 31, 2011.\u00a0 The Taxpayer filed a protest of the assessment on December 23, 2013.\u00a0 The Taxpayer entered into franchise agreements with New Mexico businesses.\u00a0 Section 1 of this agreement, [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.tax.newmexico.gov\/all-nm-taxes\/2016\/10\/17\/a-w-restaurants-inc\/\" \/>\n<meta property=\"og:site_name\" content=\"All NM Taxes\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/nmtaxationandrevenue\" \/>\n<meta property=\"article:published_time\" content=\"2016-10-17T17:51:23+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-04-11T19:29:04+00:00\" \/>\n<meta name=\"author\" content=\"admin@sks.com\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin@sks.com\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.tax.newmexico.gov\\\/all-nm-taxes\\\/2016\\\/10\\\/17\\\/a-w-restaurants-inc\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.tax.newmexico.gov\\\/all-nm-taxes\\\/2016\\\/10\\\/17\\\/a-w-restaurants-inc\\\/\"},\"author\":{\"name\":\"admin@sks.com\",\"@id\":\"https:\\\/\\\/www.tax.newmexico.gov\\\/all-nm-taxes\\\/#\\\/schema\\\/person\\\/35a194272e02a09e62fc495bfe6c0532\"},\"headline\":\"A &#038; 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