NMSA 1978, § 7-32-1 Title
7-32-1. Title
Chapter 7, Article 32 NMSA 1978 may be cited as the "Oil and Gas Ad Valorem Production Tax Act".
1953 Comp., § 72-22-1, enacted by Laws 1959, ch. 55, § 1; 1985, ch. 65, § 36.
Oil and Gas Ad Valorem Production Tax
NMSA 1978 ch. 7, art. 32
in effectNMSA 1978, § 7-32-2 Definitions
7-32-2. Definitions
As used in the Oil and Gas Ad Valorem Production Tax Act:
A. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;
B. "production unit" means a unit of property designated by the department from which products of common ownership are severed;
C. "severance" means the taking from the soil any product in any manner whatsoever;
D. "value" means the actual price received for products at the production unit, except as otherwise provided in the Oil and Gas Ad Valorem Production Tax Act;
E. "product" or "products" means oil, including crude oil, slop oil or skim oil and condensate; natural gas; liquid hydrocarbon, including ethane, propane, isobutene, normal butane and pentanes plus, individually or any combination thereof; and non-hydrocarbon gases, including carbon dioxide and helium;
F. "operator" means any person:
(1) engaged in the severance of products from a production unit; or
(2) owning an interest in any product at the time of severance who receives a portion or all of such product for the person's interest;
G. "purchaser" means a person who is the first purchaser of a product after severance from a production unit, except as otherwise provided in the Oil and Gas Ad Valorem Production Tax Act;
H. "person" means any individual, estate, trust, receiver, business trust, corporation, firm, copartnership, cooperative, joint venture, association or other group or combination acting as a unit, and the plural as well as the singular number;
I. "interest owner" means a person owning an entire or fractional interest of whatsoever kind or nature in the products at the time of severance from a production unit or who has a right to a monetary payment that is determined by the value of such products;
J. "assessed value" means the value against which tax rates are applied;
K. "tax" means the oil and gas ad valorem production tax; and
L. "volume" means the quantity of product severed reported using:
(1) oil, condensate and slop oil in barrels; and
(2) natural gas, liquid hydrocarbons, helium and carbon dioxide in thousand cubic feet at a pressure base of fifteen and twenty-five thousandths pounds per square inch.
1953 Comp., § 72-22-2, enacted by Laws 1959, ch. 55, § 2; 1977, ch. 249, § 56; 1980, ch. 97, § 7; 1986, ch. 20, § 101; 2005, ch. 130, § 9; 2021, ch. 65, § 33; 2025, ch. 130, § 131.
NMSA 1978, § 7-32-4 Ad valorem tax levied; collected by department; rate; interest owner's liability to state; Indian liability
7-32-4. Ad valorem tax levied; collected by department; rate; interest owner's liability to state; Indian liability
There is levied and shall be collected by the department an ad valorem tax on the assessed value of products which are severed and sold to a purchaser from each production unit at the rate certified to the department by the department of finance and administration under the provisions of Section 7-37-7 NMSA 1978. Such rate shall be levied for each month following its certification and shall be levied monthly thereafter until a new rate is certified. Every interest owner shall be liable for this tax to the extent of the interest owner's interest in the value of such products or to the extent of the interest owner's interest as may be measured by the value of such products. Provided, any Indian tribe, Indian pueblo or Indian shall be liable for this tax to the extent authorized or permitted by law.
1953 Comp., § 72-22-4, enacted by Laws 1959, ch. 55, § 4; 1981, ch. 37, § 58; 2025, ch. 130, § 132.
NMSA 1978, § 7-32-5 Assessed value; method of determining
7-32-5. Assessed value; method of determining
A. The taxable value of products is an amount equal to one hundred fifty percent of the value of products after deducting:
(1) royalties paid or due the United States or the state of New Mexico;
(2) royalties paid or due any Indian tribe, Indian pueblo or Indian that is a ward of the United States; and
(3) the reasonable expense of trucking any product from the production unit to the first place of market.
B. The assessed value of products shall be determined by applying the uniform assessment ratio to the taxable value of products. The method prescribed by this section shall be the exclusive method for determining the assessed value of products. The tax imposed by Section 7-32-4 NMSA 1978 of the Oil and Gas Ad Valorem Production Tax Act, together with the tax imposed by Section 7-34-4 NMSA 1978 of the Oil and Gas Production Equipment Ad Valorem Tax Act [Chapter 7, Article 34 NMSA 1978], shall be the full and exclusive measure of ad valorem tax liability on the interests of all persons, including the operator and interest owners, in the production unit. Any other ad valorem tax on the production unit or on products severed therefrom is void.
1953 Comp., § 72-22-5, enacted by Laws 1959, ch. 55, § 5; 1972, ch. 59, § 1.
NMSA 1978, § 7-32-6 Value may be determined by department; standard
7-32-6. Value may be determined by department; standard
The department may determine the value of products severed from a production unit when:
A. the operator and purchaser are affiliated persons;
B. the sale and purchase of products is not an arm's length transaction; or
C. products are severed and removed from a production unit and a value as defined in the Oil and Gas Ad Valorem Production Tax Act is not established for such products.
The value determined by the department shall be commensurate with the actual price received for products of like quality, character and use which are severed in the same field or area.
1953 Comp., § 72-22-6, enacted by Laws 1959, ch. 55, § 6; 1978 Comp., § 7-32-6, 2025, ch. 130, § 133.
NMSA 1978, § 7-32-7 Price increase subject to approval of agency of United States of America, state of New Mexico or court; refund
7-32-7. Price increase subject to approval of agency of United States of America, state of New Mexico or court; refund
When an increase in the value of any product is subject to the approval of any agency of the United States of America or the state of New Mexico or any court, the increased value shall be subject to this tax. In the event the increase in value is disapproved, either in whole or in part, then the amount of tax which has been paid on the disapproved part of the value shall be considered excess tax. Any person who has paid any such excess tax may apply for a refund of that excess tax in accordance with the provisions of Section 7-1-26 NMSA 1978.
1953 Comp., § 72-22-7, enacted by Laws 1959, ch. 55, § 7; 1985, ch. 65, § 37.
NMSA 1978, § 7-32-8 Products on which tax has been levied; department rule
7-32-8. Products on which tax has been levied; department rule
The tax shall not be levied more than once on the same product. Reporting of products on which the tax has been paid shall be subject to department rule.
1953 Comp., § 72-22-8, enacted by Laws 1959, ch. 55, § 8; 1978 Comp., § 7-32-8, 2025, ch. 130, § 134.
NMSA 1978, § 7-32-9 Operator or purchaser to withhold interest owner's tax; department may require withholding of tax; tax withheld to be remitted to the state; operator or purchaser to be reimbursed
7-32-9. Operator or purchaser to withhold interest owner's tax; department may require withholding of tax; tax withheld to be remitted to the state; operator or purchaser to be reimbursed
A. Any operator making a monetary payment to an interest owner for the interest owner's portion of the value of products from a production unit shall withhold from such payment the amount of tax due from any interest owner.
B. Any purchaser, who by express or implied agreement with the operator, makes a monetary payment to an interest owner for the interest owner's portion of the value of products from a production unit shall withhold from such payment the amount of tax due from the interest owner.
C. The department may require any purchaser making a monetary payment to an interest owner for the interest owner's portion of the value of products from a production unit to withhold from such payment the amount of tax due from the interest owner.
D. Any operator or purchaser who pays any tax due from an interest owner shall be entitled to reimbursement from the interest owner for the tax so paid and may take credit for such amount from any monetary payment to the interest owner for the value of products.
1953 Comp., § 72-22-9, enacted by Laws 1959, ch. 55, § 9; 1978 Comp., § 7-32-9, 2025, ch. 130, § 135.
NMSA 1978, § 7-32-10 Operator's report; tax remittance; additional information
7-32-10. Operator's report; tax remittance; additional information
Each operator shall, in the form and manner required by the department, file a return with the department showing the total value, volume and kind of products sold from each production unit for each calendar month. All taxes due or to be remitted by the operator shall accompany this return. The return shall be filed on or before the twenty-fifth day of the second month after the calendar month for which the return is required. Any additional report or information the department may deem necessary for the proper administration of the Oil and Gas Ad Valorem Production Tax Act may be required.
1953 Comp., § 72-22-10, enacted by Laws 1959, ch. 55, § 10; 1986, ch. 5, § 8; 2025, ch. 130, § 136.
NMSA 1978, § 7-32-11 Purchaser's report; tax remittance; additional information
7-32-11. Purchaser's report; tax remittance; additional information
Each purchaser shall, in the form and manner required by the department, file a return to the department showing the total value, volume and kind of products purchased by the purchaser from each production unit for each calendar month. All taxes due or to be remitted by the purchaser shall accompany this return. The return shall be filed on or before the twenty-fifth day of the second month after the calendar month for which the return is required. Any additional reports or information the department may deem necessary for the proper administration of the Oil and Gas Ad Valorem Production Tax Act may be required.
1953 Comp., § 72-22-11, enacted by Laws 1959, ch. 55, § 11; 1986, ch. 5, § 9; 2025, ch. 130, § 137.
NMSA 1978, § 7-32-13 Department shall prepare schedules and forward to assessors and treasurers
7-32-13. Department shall prepare schedules and forward to assessors and treasurers
By the last day of each month, the department shall prepare and certify a schedule to the respective counties in which production units are located. The schedules shall reflect the accounting of the preceding month and shall list each production unit and by production unit show the assessed value, taxing district, extension of tax levies, tax payments and other information as the department deems appropriate. The schedules shall be forwarded to the assessors and treasurers of the respective counties. Upon receipt, an assessor shall accept them as the assessment of property as required in the Oil and Gas Ad Valorem Production Tax Act and a county treasurer shall accept them as the oil and gas ad valorem schedule for the county.
1953 Comp., § 72-22-13, enacted by Laws 1959, ch. 55, § 13; 1985, ch. 65, § 38; 2025, ch. 130, § 138.
NMSA 1978, § 7-32-14 Monthly report to department of finance and administration; remittance to state and county treasurers; state and county treasurers may distribute funds
7-32-14. Monthly report to department of finance and administration; remittance to state and county treasurers; state and county treasurers may distribute funds
A. By the last day of each month, the department shall prepare and certify a report to the secretary of finance and administration. The report shall be for the preceding month and shall show the amount of taxes collected and distributed to the oil and gas production tax fund, the amount due the state and each taxing district imposing a tax as reflected by the schedules prepared pursuant to Section 7-32-13 NMSA 1978 and any other information required by the secretary of finance and administration. The secretary of finance and administration shall forthwith remit the appropriate amounts from the oil and gas production tax fund to the state treasurer and the respective county treasurers. The state treasurer and the county treasurers shall, upon receipt of such remittance, make appropriate distribution of the proceeds thereof, except as provided in Subsection B of this section.
B. If the board of county commissioners notifies the secretary of finance and administration that the county elects not to distribute the proceeds of the oil and gas ad valorem production tax due the municipalities, community college districts and school districts within the county, the secretary of finance and administration shall pay amounts due directly to municipalities, community college districts and school districts within the county.
1953 Comp., § 72-22-14, enacted by Laws 1959, ch. 55, § 14; 1963, ch. 88, § 1; 1977, ch. 247, § 186; 1983, ch. 221, § 1; 1985, ch. 65, § 39; 1993, ch. 131, § 1.
NMSA 1978, § 7-32-15 Determination of assessed values for taxing districts
7-32-15. Determination of assessed values for taxing districts
To determine for any purpose the total assessed value of property required to be assessed under the Oil and Gas Ad Valorem Production Tax Act for any taxing district, the assessed value of the taxing district as is reflected by the oil and gas ad valorem production tax schedules of the twelve months of the calendar year preceding the determination shall be used.
1953 Comp., § 72-22-15, enacted by Laws 1959, ch. 55, § 15; 1985, ch. 65, § 40.
NMSA 1978, § 7-32-28 Advance payment required
7-32-28. Advance payment required
A. Any person required to make payment of tax pursuant to Section 7-32-10 or 7-32-11 NMSA 1978 shall make the advance payment required by this section.
B. For the purposes of this section:
(1) "advance payment" means the payment required to be made by this section in addition to any oil and gas ad valorem production tax, penalty or interest due; and
(2) "average tax" means the aggregate amount of tax, less any refunds or credits, paid by a person during the twelve-month period ending March 31 pursuant to the Oil and Gas Ad Valorem Production Tax Act divided by the number of months during that period for which the person made payment.
C. Each year, prior to July 1, the department shall compute the advance payment required to be made pursuant to this section, compute the average tax for the filing periods February through January of the subsequent year for each person required to pay tax pursuant to the Oil and Gas Ad Valorem Production Tax Act and provide a tax statement to each person required to pay tax pursuant to the Oil and Gas Ad Valorem Production Tax Act. The average tax calculated for a year shall be used during the twelve-month period beginning with July of that year and ending with June of the following year as the basis for making the advance payments required by Subsection D of this section.
D. Annually, by the twenty-fifth of the month in which a person files or amends that person's first return pursuant to the Oil and Gas Ad Valorem Production Tax Act and after receiving the tax statement provided by the department, a person required to pay tax in a month pursuant to the Oil and Gas Ad Valorem Production Tax Act shall pay, in addition to any amount of tax, interest or penalty due, an advance payment in an amount equal to the applicable average tax, except:
(1) if the person is making a final return under the Oil and Gas Ad Valorem Production Tax Act, no advance payment pursuant to this subsection is due for that return; and
(2) as provided in Subsection F of this section.
E. Annually, by the twenty-fifth of the month in which a person files or amends that person's first return pursuant to the Oil and Gas Ad Valorem Production Tax Act and after receiving the tax statement provided by the department, a person required to pay tax pursuant to the Oil and Gas Ad Valorem Production Tax Act may claim a credit equal to the amount of advance payment made in the previous year, except as provided in Subsection F of this section.
F. If, in any year, a person is not required to pay tax pursuant to the Oil and Gas Ad Valorem Production Tax Act, that person is not required to pay the advance payment and may not claim a credit pursuant to Subsection E of this section; provided that, in any succeeding month when the person has liability under the Oil and Gas Ad Valorem Production Tax Act, the person may claim a credit for any advance payment made and not credited.
G. In the event that the date by which a person is required to pay the tax pursuant to the Oil and Gas Ad Valorem Production Tax Act is accelerated to a date earlier than the twenty-fifth day of the second month following the month of production, the advance payment provision contained in this section is void and any money held as advance payments shall be credited to the taxpayers' accounts.
Laws 1991, ch. 9, § 39; 2025, ch. 130, § 139.
Source: New Mexico Compilation Commission (nmonesource.com)URL: https://nmonesource.com/nmos/nmsa-unanno/en/item/18507/index.doFetched: 10/20/2026