A. There is levied and shall be collected by the department a privilege tax on the business of every person severing products in this state. The measure of the tax shall be:

(1) on oil and on oil and other liquid hydrocarbons removed from natural gas at or near the wellhead, except as provided in Paragraphs (4) and (5) of this subsection, three and fifteen hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;

(2) on carbon dioxide, helium and non-hydrocarbon gases, three and fifteen hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;

(3) on natural gas, except as provided in Paragraphs (6) and (7) of this subsection, four percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978;

(4) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, one and fifty-eight hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of oil was equal to or less than fifteen dollars ($15.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;

(5) on the oil and on other liquid hydrocarbons removed from natural gas at or near the wellhead from a stripper well property, two and thirty-six hundredths percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of oil was greater than fifteen dollars ($15.00) per barrel but not more than eighteen dollars ($18.00) per barrel in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed;

(6) on the natural gas removed from a stripper well property, two percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of natural gas was equal to or less than one dollar fifteen cents ($1.15) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed; and

(7) on the natural gas removed from a stripper well property, three percent of the taxable value determined pursuant to Section 7-31-5 NMSA 1978, provided that the average annual taxable value of natural gas was greater than one dollar fifteen cents ($1.15) per thousand cubic feet but not more than one dollar thirty-five cents ($1.35) per thousand cubic feet in the calendar year preceding July 1 of the fiscal year in which the tax rate is to be imposed.

B. Every interest owner, for the purpose of levying this tax, is deemed to be in the business of severing products and is liable for this tax to the extent of his interest in the value of the products or to the extent of his interest as may be measured by the value of the products.

C. Any Indian tribe, Indian pueblo or Indian is liable for this tax to the extent authorized or permitted by law.

History: 1953 Comp., § 72-21-4, enacted by Laws 1959, ch. 54, § 4; 1963, ch. 179, § 24; 1983, ch. 213, § 21; 1993, ch. 360, § 2; 1999, ch. 256, § 9; 2005, ch. 130, § 8.

Cross references. — For natural gas processors tax, see 7-33-1 to 7-33-8 NMSA 1978.

The 2005 amendment, effective July 1, 2005, in Subsection A(2), imposed the privilege tax on helium and non-hydrocarbon gases.

The 1999 amendment, effective June 18, 1999, inserted "except as provided in Paragraphs (4) and (5) of this subsection" in Subsection A(1), substituted "fifteen hundredths" for "fifteen one-hundredths" and "pursuant to" for "under" in Subsections A(1) and A(2), inserted "except as provided in Paragraphs (6) and (7) of this subsection" in Subsection A(3); added Subsections (A)(4) through A(7), and made minor stylistic changes.

The 1993 amendment, effective June 18, 1993, inserted the subsection designations; substituted "department" for "division" in the catchline and in the first sentence of Subsection A; deleted "three and fifteen one-hundredths percent of the taxable value of such products" at the end of the introductory paragraph of Subsection A; and added paragraphs (1) to (3) of Subsection A.

Indian right to tax oil production not preempted by congress. — Although it granted to the states the right to tax the production of oil and gas on Indian reservations, congress did not preempt similar tribal taxation. Merrion v. Jicarilla Apache Tribe, 617 F.2d 537 (10th Cir. 1980), aff'd, 455 U.S. 130, 102 S. Ct. 894, 71 L. Ed. 2d 21 (1982).

Non-Indian producers operating on reservations. — Oil and gas taxes imposed by the state against a non-Indian producer whose operations are located on an Indian reservation do not constitute an impermissible burden on interstate commerce, were not preempted by federal laws promoting tribal economic self-sufficiency, and may be imposed on the same on-reservation production of oil and gas by non-Indian lessees as is subject to the tribe's own severance tax. Cotton Petroleum v. State, 1987-NMCA-121, 106 N.M. 517, 745 P.2d 1170, cert. quashed, 106 N.M. 511, 745 P.2d 1159, aff'd, 490 U.S. 163, 109 S. Ct. 1698, 104 L. Ed. 2d 209 (1989).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 84 C.J.S. Taxation §§ 165 et seq.