This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
Apache Corporation, a multinational oil and gas company, and its foreign subsidiaries were assessed corporate income tax by the New Mexico Taxation and Revenue Department for the 2015 tax year. The assessment included income from foreign subsidiaries, which Apache Corporation argued should not be considered unitary income apportionable to New Mexico under the Corporate Income and Franchise Tax Act (paras 1-3).
Procedural History
- Administrative Hearings Office: The Administrative Hearing Officer concluded that Apache Corporation and its foreign subsidiaries constituted a unitary corporation, making the foreign dividends subject to New Mexico's corporate income tax (para 4).
Parties' Submissions
- Appellant (Apache Corporation): Argued that the foreign subsidiaries should not be included in the unitary corporation definition as they were not engaged in trade or business in the United States, and thus their income should not be subject to New Mexico's corporate income tax (paras 3, 7).
- Appellee (New Mexico Taxation & Revenue Department): Initially argued that the foreign subsidiaries were part of a unitary corporation with Apache Corporation, making their income taxable in New Mexico. However, they later conceded that the foreign subsidiaries did not engage in trade or business in the United States during the taxable period (paras 4, 12).
Legal Issues
- Whether Apache Corporation and its foreign subsidiaries can be deemed a "unitary corporation" under New Mexico's Corporate Income and Franchise Tax Act (para 1).
- Whether the foreign dividend income of Apache Corporation is taxable by New Mexico (para 9).
Disposition
- The decision and order of the Administrative Hearing Officer were reversed, and the case was remanded for proceedings consistent with the appellate court's opinion (para 23).
Reasons
Per Bustamante J. (Yohalem and Wray JJ. concurring):
The court found that the statutory definition of "unitary corporation" in Section 7-2A-2(Q) excludes foreign subsidiaries not engaged in trade or business in the United States. The Administrative Hearing Officer's interpretation was incorrect as it negated the carve-out provision meant to exclude such foreign entities. The court emphasized the importance of adhering to the plain language of the statute and the legislative intent behind its amendments, which aimed to address constitutional concerns regarding the taxation of foreign income. The court concluded that Apache Corporation's foreign subsidiaries should not have been included in the unitary corporation for tax purposes (paras 10-22).