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Renzenberger, Inc. v. State Taxation and Revenue Department

Court of Appeals of New Mexico

July 26, 2017

RENZENBERGER, INC., Plaintiff-Appellant,
v.
STATE OF NEW MEXICO TAXATION AND REVENUE DEPARTMENT, Defendant-Appellee.

         APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY David K. Thomson, District Judge.

          Betzer, Roybal & Eisenberg, P.C. Benjamin C. Roybal Albuquerque, NM

          Sanchez, Mowrer & Desiderio, P.C. Robert J. Desiderio Albuquerque, NM for Appellant

          Hector H. Balderas, Attorney General New Mexico Taxation and Revenue Department Elena Romero Morgan, Special Assistant Attorney General Santa Fe, NM for Appellee

          Multistate Tax Commission Helen Hecht, General Counsel Bruce Fort, Counsel Washington, D.C. Amicus Curiae

          OPINION

          JAMES J. WECHSLER, Judge.

         {1} We determine in this appeal that a taxpayer's transport as a motor carrier of an interstate railroad's employees from point to point in New Mexico is not "transportation of a passenger traveling in interstate commerce by motor carrier" in order to preempt New Mexico gross receipts tax under a federal statute, 49 U.S.C. § 14505(2) (2012). We therefore affirm the district court's summary judgment denying a refund of taxes paid.

         BACKGROUND

         {2} Renzenberger, Inc. (Taxpayer) contracted with Union Pacific Railroad and Burlington Northern Santa Fe (the railroads) to transport railroad employees to and from railroad trains both within New Mexico and from New Mexico to another state.[1]The railroads carried freight across state lines in the United States. Taxpayer asserted that its service was necessary because interstate railroad carriers needed to comply with federal safety regulations and union rules concerning crew hours and that Taxpayer's service enables railroads to "provide relief services to allow the railroads to continue to operate without undue delay."

         {3} Defendant State of New Mexico Taxation and Revenue Department (the Department), after an audit, assessed Taxpayer for gross receipts tax, penalties, and interest for the period from March 31, 2005 through August 31, 2010. The Department assessed liability only for gross receipts tax on revenue derived from transportation between locations in New Mexico, not for transportation from a location in New Mexico to a location in another state. Taxpayer timely paid the assessed liability, penalties, and interest in full and filed an application for refund with the Department for the amounts paid. The Department denied the application, and Taxpayer filed a complaint for tax refund in the First Judicial District Court.

         {4} In the district court, the parties filed cross-motions for summary judgment. After a hearing, the district court denied Taxpayer's motion and granted the Department's motion.

         49 U.S.C. § 14505

         {5} In 1995, Congress passed the Interstate Commerce Commission Termination Act (the ICCTA) with the intent of deregulating certain industries. 49 U.S.C. §§ 101-80504 (2012). Within the ICCTA, Congress enacted 49 U.S.C. § 14505 to restrict states and local subdivisions from burdening interstate passenger travel by motor carrier. Title 49 U.S.C. § 14505 reads:

         A State or political subdivision thereof may not collect or levy a tax, fee, head charge, or other charge on-

(1) a passenger traveling in interstate commerce by motor carrier;
(2) the transportation of a passenger traveling in interstate commerce by motor carrier;
(3) the sale of passenger transportation in interstate commerce by ...

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