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Contracted Work on Corrales Homes Must Pay Gross Receipts Tax Here |
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Written by Jeff Radford
Corrales Comment
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Monday, 13 July 2009 |
Over the objections of several realtors, Corrales has imposed a gross
receipts tax reporting requirement meant to assure sales tax revenues
on homes and home improvements come to Village government.
At their June 23 meeting, councillors unanimously approved the measure
recommended two years ago by a committee appointed to find was to
increase revenues for Village operations.
Led by Coldwell Banker Legacy’s Peter Parnegg of Corrales, realtors
turned out in force to oppose the ordinance. But after addressing some
of their concerns with minor amendments, the council passed the measure
6-0. It goes into effect September 1, 2009.
Parnegg and others doubted that the ordinance would do much to improve
gross receipts tax reporting to benefit Corrales, because they think
most realtors and title companies are already complying with state
reporting directives.
Village Attorney John Appel had modeled the Corrales law on that
enacted by the Village of Los Ranchos to accomplish the same objective:
prevent taxes collected by realtors, home remodelers and suppliers from
being misdirected to the City of Albuquerque or Rio Rancho where the
business are based.
Parnegg said he knew for a fact that the Los Ranchos measure was
imposed punitively by the mayor there, Larry Abraham. “The punitive
component of Larry’s measure is not necessary here,” Parnegg argued.
Realtor Robin Riegor also spoke briefly, noting “I don’t think this is
what we need right now,” given the state of the economy generally and
the depressed housing market.
But the man most responsible for pushing the idea, Dick Foote, chairman
of the now-disbanded Corrales Revenue Advisory Committee, responded to
the objections. He argued it is necessary for Village permit signs to
be posted on home sales and home construction or remodeling projects so
that all parties doing business at that site —plumbers, cabinetmakers,
landscapers, insulation installers, etc.— will be notified that the
gross receipts tax they charge on their invoices should be routed to
the Village of Corrales, not the location of their home offices.
“This is not aimed just at realtors. It is aimed at improvements to
property. We have a problem with vendors not coding the tax on their
CRS (Taxation and Revenue Department) form correctly. We need to try
and solve this.
“The point is, whenever there is property being worked on, we should
require that the [new Village gross receipts tax reporting] sign be up
there. Multiple vendors go in and work on those properties and they
have an obligation to report the tax for that real estate,” Foote
explained.
“The location for gross receipts tax, whenever it deals with real
estate, is the situs of that property, not anywhere else. I’ve even had
realtors tell me they use the location of their office.
“Now, maybe not these realtors [at the council meeting] but maybe others do. And we need to get compliance tightened up here.”
Councillors Jim Fahey and Bonnie Gonzalez suspected that the larger
share of misdirected gross receipts taxes comes from the sale of
materials and services on home construction and remodeling, rather than
realtors’ commission. They felt the law they were about to pass would
help improve tax revenues from those projects.
“The construction would be a bigger [tax] leakage issue,” Gonzales
suggested, “because you’ve got a construction firm that’s buying
supplies outside the village.
Foote replied: “When you’re building a home in Corrales, all the gross
receipt tax on that material is supposed to go to Corrales,
irregardless of where the builder or subcontractor has his office.
“And it’s the same thing for realtors. When there’s a sale on that
property in Corrales, the business location is that property.”
Councillor Gerard Gagliano moved that the ordinance be amended so that
the realtor offering a home did not have to pay for the $35 permit when
the “for sale” sign went up only to wind up not selling the property.
Instead, the permit fee would be charged only at the time the property
sold or construction was initiated. His amendment was approved.
Gasteyer said he learned from the mayor of Los Ranchos that that sister
municipality’s program brought in an additional $400,000 during 2007.
Research by Village staff indicated that Corrales has probably lost
$150,000 over the past five years due to misdirected gross receipts tax
on home sales.
Parnegg agreed the Los Ranchos gross receipts tax reporting program
infuriated realtors initially (“it made us mad as hornets”), even
though they now concur that Mayor Abraham “was getting hosed” by lost
tax revenue.
Parnegg urged the Village to have the $35 permit fee collected by the
title company at closing, but on the advice of Attorney Appel that
suggestion was not accepted.
When Parnegg repeatedly offered suggestions from the audience, Mayor
Gasteyer gaveled him down and threatened to have him evicted by the
police captain.
By that time the council had been debating the ordinance nearly two hours. |
