AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• Automated Financial Technologies, LLC (AFT), an independent sales organization, operates ATMs in various locations within New Mexico, including casinos, restaurants, and hospitals. AFT's ATMs allow customers to withdraw cash from their bank accounts, charging a flat fee for the service. The company's income is derived entirely from these surcharge fees. The Taxation and Revenue Department of the State of New Mexico audited AFT for gross receipts taxes filed from April 2000 through December 2005, determining that AFT failed to report and pay gross receipts tax on the surcharge fees collected from ATM users. AFT protested the assessment, arguing that the fees were deductible under NMSA 1978, Section 7-9-61.1, as they were derived from funds loaned to finance withdrawals by ATM users.

Procedural History

• APPEAL FROM THE DECISION AND ORDER 10-16, Sally Galanter, Hearing Officer: The hearing officer concluded that AFT is not entitled to claim deductions for the surcharge fees collected from ATM users, as these fees do not qualify as receipts from charges made in connection with the origination, making, or assumption of a loan.

Parties' Submissions

• Protestant-Appellant (AFT): Argued that the surcharge fees collected from ATM users should be deductible under Section 7-9-61.1, as these fees are derived from funds loaned to finance withdrawals by ATM users, constituting loans to the banks which then repay these amounts to AFT.
• Respondent-Appellee (Taxation and Revenue Department): Contended that the surcharge fees are the result of a service provided to the customer to allow immediate cash withdrawal from their bank account and not a loan to the bank, thus subject to gross receipts tax and not deductible.

Legal Issues

• Whether surcharge fees collected by ATMs qualify as a deduction under Section 7-9-61.1.

Disposition

• The Court of Appeals of New Mexico affirmed the hearing officer's decision that AFT is not entitled to claim deductions for the surcharge fees collected from ATM users.

Reasons

• Per RODERICK T. KENNEDY, J. (JAMES J. WECHSLER, J., J. MILES HANISEE, J., concurring): The court held that the surcharge fees collected by AFT from ATM users do not qualify for deductions under Section 7-9-61.1 because they are not payments received from charges made in connection with the origination, making, or assumption of a loan. The court reasoned that the ATM transactions are not traditional loans between AFT and the customer's bank, as the transactions involve the customer withdrawing their own funds, with the bank's role limited to transferring funds owed by their customers to AFT. The court concluded that the surcharge fees constitute a service fee for providing convenient access to cash, which is not a borrowing transaction but merely dispensing cash to customers for which they bear no obligation of repayment. This interpretation aligns with the legislative intent behind the tax deduction for fees associated with typical loan transactions, thus AFT's ATM transactions do not qualify for the deduction, and AFT is liable to pay gross receipts tax on the surcharges.