Are a cell-tower company's receipts from site agreements with wireless carriers deductible from New Mexico gross receipts tax as receipts from leasing real property?

View original ruling (PDF)

Plain-English summary

Three affiliated cell-tower companies — Spectrasite Communications, ATC Ponderosa K, and American Tower — filed claims for refund of about $6.17 million in New Mexico gross receipts tax for late 2017 through early 2021. They argued that the money wireless carriers pay them under tower-site agreements is really rent from leasing real property, which New Mexico lets you deduct from gross receipts under NMSA 1978, Section 7-9-53(A). The Department denied the refunds, and the Administrative Hearings Office denied the consolidated protests.

The case came down to lease versus license. New Mexico's deduction covers receipts from the sale or lease of real property, and under New Mexico law a lease requires granting exclusive possession of a defined space — "the right of possession against the world" — while a license is just permission to use property in a limited way and creates no interest in the land. The Hearing Officer examined the tower-site agreements as a whole and found the carriers did not get exclusive possession of a distinct, self-contained space: the tower owner kept control of the site, other carriers and licensees had similar access and space rights, and the arrangements were shared, coordinated occupancy rather than a tenant's exclusive control. Because the agreements were licenses, not leases, the receipts were not "receipts from leasing real property," and — since tax deductions are construed strictly and the taxpayer must show it clearly qualifies — the companies did not meet their burden.

What this means for you

Cell-tower, billboard, and other site-rental businesses

Calling a site agreement a "lease" does not by itself make the receipts deductible as real-property rent in New Mexico. What matters is whether the customer actually gets exclusive possession of a defined space for a term. If the owner keeps control and multiple users share access to the site, the arrangement looks like a license, and the receipts are subject to gross receipts tax.

Businesses claiming any gross receipts deduction

New Mexico construes deductions strictly against the taxpayer: "the right to a deduction must be clearly and unambiguously expressed in the statute," and on a refund claim the taxpayer carries the burden of proving it clearly qualifies. Build the record around the statute's exact terms — here, exclusive possession — not the labels the contract uses.

Tax professionals

The decision applies Section 7-9-53(A) through New Mexico's lease-versus-license case law — Quantum Corp. v. N.M. Taxation & Revenue Dep't (exclusive control and possession of a definite space for a definite term) and Grogan v. N.M. Taxation & Revenue Dep't (a license creates no interest in the land) — and evaluates the agreement "as a whole," disregarding the parties' "lease"/"license" labels. It also reaffirms the strict-construction rule for deductions (TPL, Inc. v. N.M. Taxation & Revenue Dep't) and the refund-claimant's burden (Corrections Corp. of America v. State).

Common questions

Q: Are cell-tower site fees deductible from New Mexico gross receipts tax as real-property rent?
A: Not here. The Hearing Officer found the tower-site agreements were licenses to use tower space, not leases granting exclusive possession of real property, so the receipts did not qualify for the Section 7-9-53(A) deduction and the refund was denied.

Q: What is the difference between a lease and a license for this deduction?
A: A lease grants exclusive possession of a defined space for a term — "the right of possession against the world." A license is only limited permission to use property and creates no interest in the land. Only lease receipts qualify for the real-property deduction.

Q: Does labeling my contract a "lease" settle the question?
A: No. The Hearing Officer looked at the agreements as a whole and the surrounding circumstances, not the "lease" or "license" labels, to decide whether exclusive possession was actually granted.

Q: Can I rely on this decision for my own refund claim?
A: Not directly. A Decision and Order resolves one taxpayer's protest on its specific facts; it is not a general ruling or advisory opinion of the Department, and another taxpayer with different facts should not assume it applies. It does show how the Hearing Officer analyzes the lease-versus-license question.

Citations and references

Statutes:

• NMSA 1978, § 7-9-53(A) — gross receipts deduction for receipts from the sale or lease of real property
• Gross Receipts and Compensating Tax Act, NMSA 1978, § 7-9-1 et seq.

Cases:

• Quantum Corp. v. N.M. Taxation & Revenue Dep't, 1998-NMCA-050 (lease requires exclusive control and possession of a definite space for a definite term)
• Grogan v. N.M. Taxation & Revenue Dep't, 2003-NMCA-033 (a license creates no interest in the land)
• TPL, Inc. v. N.M. Taxation & Revenue Dep't, 2003-NMSC-007 (deductions construed strictly; taxpayer must show it is clearly entitled)
• Corrections Corp. of America v. State, 2007-NMCA-148 (refund claimant bears the burden of proof)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Spectrasite Communications LLC, ATC Ponderosa K LLC, and American Tower LLC
• Decision PDF: D&O 26-04

Original ruling text

1 STATE OF NEW MEXICO
2 ADMINISTRATIVE HEARINGS OFFICE
3 TAX ADMINISTRATION ACT

4 SPECTRASITE COMMUNICATIONS, LLC, AHO No. 23.12-065R
5 ATC PONDEROSA K, LLC, and AHO No. 24.01-005R
6 AMERICAN TOWER, LLC AHO No. 24.02-007R

7 v. D&O 26 – 04

8 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

9 DECISION AND ORDER

10 On May 19, 2025, Hearing Officer Chris Romero, Esq., of the Administrative Hearings

11 Office conducted an administrative hearing on the merits of the consolidated tax protests of

12 Spectrasite Communications, LLC (AHO No. 23.12-065R), ATC Ponderosa K, LLC (AHO No.

13 24.01-005R), and American Tower, LLC (AHO No. 24.02-007R) (collectively, “Taxpayer”)

14 pursuant to the Tax Administration Act and the Administrative Hearings Office Act. The record

15 closed upon the filing of the parties’ post-hearing submissions on August 5, 2025.

16 The Administrative Hearings Office is an independent agency tasked with the fair and

17 impartial adjudication of protests under the Tax Administration Act. As explained by Regulation

18 22.600.1.20(C) NMAC, the Hearing Officer is not “responsible to or subject to the direction of

19 any officer, employee or agent of the taxation and revenue department or the department of

20 finance and administration[.]”

21 Patrick Loynes and Sarah Horn of KPMG, LLP appeared on behalf of Taxpayer and

22 presented testimony and documentary evidence in support of the protest. David Mittle, Esq.,

23 appeared on behalf of the New Mexico Taxation and Revenue Department (“Department”),

24 accompanied by Daniel Coleman, protest auditor. Ryan S. Taylor, Daniel Broe, and Audra

25 Mitchell testified for Taxpayer. Daniel Coleman testified for the Department.

26 Taxpayer’s Exhibits 1 through 6 and Department Exhibit A were admitted into the

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 1 of 31
1 evidentiary record. The Department offered Exhibits C, D, and E not to establish the contents of

2 the agreements, which were already admitted in unredacted form through Taxpayer’s exhibits,

3 but to highlight the redactions. Because the unredacted agreements are already in evidence and

4 the circumstances of the redactions do not bear on the statutory lease-versus-license issue

5 decided here, the redacted exhibits are excluded as cumulative and not material.

6 This protest arises from the Department’s denial of Taxpayer’s claims for refund of gross

7 receipts tax for the periods beginning December 31, 2017, through March 31, 2021. Taxpayer

8 contends that certain receipts derived from agreements with wireless telecommunications carriers

9 constitute receipts from leasing real property and are therefore deductible under NMSA 1978,

10 Section 7-9-53(A). The Department disputes this characterization and maintains that the

11 agreements grant only a limited license or access right for the placement and operation of

12 telecommunications equipment, and therefore do not qualify for the deduction.

13 As explained in greater detail below, the central question in this protest is whether the

14 agreements between Taxpayer and the wireless carriers convey a possessory interest in real

15 property consistent with a lease, or whether they instead grant a non-possessory right to use

16 property for a limited purpose, more akin to a license.

17 Having carefully reviewed the testimony, exhibits, and arguments presented by the

18 parties, the Hearing Officer enters the following Findings of Fact and Conclusions of Law. As

19 reflected in the Findings of Fact and Discussion below, the testimony largely provided

20 foundational context for the exhibits, and the dispositive evidence in these consolidated protests

21 is the written record, particularly the carrier agreements and related contract documents admitted

22 at hearing. Based on that record, the Hearing Officer concludes that the agreements at issue are

23 more properly characterized as licenses or limited rights of use, rather than leases of real

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 2 of 31
1 property, and that Taxpayer therefore has not established entitlement to the claimed deduction.

2 IT IS DECIDED AND ORDERED AS FOLLOWS:

3 FINDINGS OF FACT

4 Witnesses

5 1. Ryan S. Taylor testified on behalf of Taxpayer. He is employed by KPMG and

6 has experience relating to the ownership, operation, and leasing (or licensing) of

7 telecommunications tower sites. He has expertise in the establishment and administration of Real

8 Estate Investment Trusts, also known as REITs. [Testimony of Taylor]

9 2. Daniel Broe is employed by Taxpayer’s parent corporation as vice-president. His

10 areas of expertise include customer contracts and construction of telecommunications towers.

11 [Testimony of Broe; Taxpayer Ex. 5; 6]

12 3. Audra Mitchell is managing director of KPMG’s national tax practice. Ms.

13 Mitchell was not tendered or qualified as an expert witness. To the extent her testimony offered

14 specialized opinions, the Hearing Officer assigns it little weight and does not rely on it to resolve

15 any disputed material fact. [Testimony of Audra Mitchell]

16 4. Daniel Coleman testified on behalf of the Department. He serves as a tax protest

17 auditor and participated in the Department’s review of the refund claims at issue in this protest.

18 [Testimony of Coleman]

19 Taxpayer’s Business Operations

20 5. Telecommunications towers are permanently affixed to the land on which they are

21 situated and, once installed, function as fixed improvements to real property. With proper

22 maintenance, a telecommunications tower may remain in service for more than 30 years.

23 [Testimony of Taylor; Testimony of Broe]

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 3 of 31
1 6. Taxpayer owns or controls numerous telecommunications tower sites located

2 throughout the United States, including sites located in New Mexico. [Testimony of Broe]

3 7. The tower sites consist of tall steel structures designed to support antennas and

4 other telecommunications equipment used in wireless communications networks. [Testimony of

5 Broe; Taxpayer Ex. 5; 6]

6 8. Communications towers are constructed through a process that includes site

7 preparation, excavation, installation of reinforced concrete foundations, and installation of the

8 tower structure onto anchor bolts embedded in the foundation. [Testimony of Broe; Taxpayer Ex.

9 5; 6]

10 9. The construction process includes the installation of a reinforced concrete mat and

11 pier structure designed to permanently support the tower. [Testimony of Broe; Taxpayer Ex. 5;

12 6]

13 10. The majority of the tower foundation structure is installed below ground and

14 remains permanently embedded in the land. [Testimony of Broe; Taxpayer Ex. 5; 6]

15 11. Once installed, the tower structure functions as a fixed improvement to real

16 property. [Testimony of Broe; Testimony of Taylor; Taxpayer Ex. 5; 6]

17 12. Photographs show representative examples of telecommunications towers owned

18 or operated by Taxpayer or its affiliates at locations within New Mexico. [Testimony of Broe;

19 Taxpayer Ex. 5; 6]

20 13. The tower sites are used to support wireless telecommunications networks

21 operated by various carriers. [Testimony of Broe; Taxpayer Ex. 5; 6]

22 14. Wireless carriers install antennas and related telecommunications equipment at

23 tower sites to transmit and receive radio signals necessary to support their communications

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
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1 networks. [Testimony of Broe; Taxpayer Ex. 5; 6]

2 15. In exchange for the right to install and operate equipment at the tower sites,

3 carriers enter into written agreements with Taxpayer and pay recurring fees. [Testimony of Broe;

4 Taxpayer Ex. 1; 2; 3; 4]

5 16. These agreements typically identify a specific location on a tower or tower site

6 where a carrier’s equipment may be installed and operated. [Testimony of Broe; Taxpayer Ex. 1;

7 2; 3; 4]

8 17. Wireless carriers install their own antennas and telecommunications equipment on

9 the towers and maintain those installations in order to operate their communications networks.

10 [Testimony of Broe; Taxpayer Ex. 1; 2; 3; 4]

11 18. The agreements also address matters such as site access, maintenance, safety

12 requirements, and operational coordination among carriers utilizing the same tower structure.

13 [Testimony of Broe; Taxpayer Ex. 1; 2; 3; 4]

14 19. Multiple wireless carriers may install equipment on a single tower or tower site.

15 [Testimony of Broe; Taxpayer Ex. 1; 2; 3; 4]

16 20. The tower owner retains responsibility for maintaining the structural integrity and

17 operational functionality of the tower and surrounding site. [Testimony of Broe; Taxpayer Ex. 1;

18 2; 3; 4]

19 21. Carriers are granted access to the tower site for purposes of installing, operating,

20 and maintaining their equipment subject to the terms and conditions of the applicable agreement.

21 [Testimony of Broe; Taxpayer Ex. 1; 2; 3; 4]

22 The Department’s Determination

23 22. Taxpayer filed claims for refund asserting that receipts derived from the

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 5 of 31
1 agreements constitute receipts from the lease of real property deductible under NMSA 1978,

2 Section 7-9-53(A). [Testimony of Coleman; Dept. Ex. A]

3 23. The Department reviewed the refund claims and determined that the agreements

4 do not constitute leases of real property but instead grant limited rights to use tower

5 infrastructure for telecommunications purposes. [Testimony of Coleman; Dept. Ex. A]

6 24. The Department determined that the arrangements constitute licenses rather than

7 leases. [Testimony of Coleman; Dept. Ex. A]

8 25. Based on that determination, the Department denied the refund claims at issue in

9 this protest. [Testimony of Coleman; Dept. Ex. A]

10 The Nature of the Agreements

11 26. The agreements between Taxpayer and wireless carriers permit carriers to install

12 antennas and related telecommunications equipment at designated locations on tower structures

13 or associated ground areas. [Testimony of Broe; Taxpayer Ex. 1; 2; 3; 4; Testimony of Coleman;

14 Dept. Ex. A]

15 27. The agreements also permit carriers to access the tower sites for purposes of

16 installing, maintaining, repairing, and operating their equipment. [Testimony of Broe; Taxpayer

17 Ex. 1; 2; 3; 4; Testimony of Coleman; Dept. Ex. A]

18 28. The agreements impose technical and operational requirements intended to ensure

19 compatibility among multiple carriers utilizing the same tower structure, including provisions

20 addressing interference among users. [Testimony of Broe; Taxpayer Ex. 1; 2; 3; 4; Testimony of

21 Coleman; Dept. Ex. A]

22 29. Taxpayer retains authority to regulate access to the site and to manage the

23 structural and operational aspects of the tower facilities. [Testimony of Broe; Taxpayer Ex. 1; 2;

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 6 of 31
1 3; 4; Testimony of Coleman; Dept. Ex. A]

2 30. The agreements generally contemplate the use of the tower structure by multiple

3 carriers simultaneously. [Testimony of Broe; Taxpayer Ex. 1; 2; 3; 4; Testimony of Coleman;

4 Dept. Ex. A]

5 Key Contractual Provisions Relevant to Lease vs. License Characterization

6 31. The record contains representative agreements styled as “Tower Space Lease

7 Agreements” that use conventional lease terminology, including references to “Landlord” and

8 “Tenant.” [Taxpayer Ex. 4]

9 32. The representative tower-space lease defines the “Leased Space” by reference to a

10 specified vertical band on the tower (between identified elevation levels) and a defined ground

11 area for an equipment shelter, described by exhibit. [Taxpayer Ex. 4]

12 33. The representative tower-space lease provides a stated initial term, extension

13 terms, and a fixed annual rent payable in monthly installments. [Taxpayer Ex. 4]

14 34. The agreements expressly contemplate co-location and shared access and reserve

15 to the tower owner ongoing control over tower modifications and approval of installations.

16 [Taxpayer Ex. 1; 2; 3; 4]

17 35. The record includes lease-form provisions granting a lessee a non-exclusive right

18 of access and ingress and egress to the property 24 hours a day, seven days a week. [Taxpayer

19 Ex. 1]

20 36. The record includes lease-form provisions granting a lessee an easement and right

21 to install and maintain wires, cables, conduits, and pipes within, over, under, or along the

22 property as shown in the applicable supplement. [Taxpayer Ex. 1]

23 37. The representative tower-space lease reflects that the landlord has easements

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 7 of 31
1 needed for access and utilities (access easement/utility easement) as described in attached

2 exhibits. [Taxpayer Ex. 4]

3 38. The record includes lease-form provisions providing that a lessee may make a

4 claim in a condemnation proceeding for losses related to antennas and equipment and relocation

5 costs, but not for the loss of its leasehold interest. [Taxpayer Ex. 1]

6 39. The record includes lease-form provisions requiring the lessee to pay or reimburse

7 the lessor for taxes, fees, assessments, utilities, and other similar expenses attributable to the

8 lessee’s equipment or use of the property, and allowing the lessee to appeal or challenge real

9 estate tax assessments for which the lessee is responsible. [Taxpayer Ex. 1]

10 40. The record includes lease-form casualty provisions allowing termination where

11 damage cannot reasonably be repaired within a stated period or is reasonably expected to disrupt

12 operations beyond a stated period, and providing for rental abatement during periods the lessee

13 cannot operate due to casualty. [Taxpayer Ex. 4]

14 41. The record includes lease-form condemnation provisions allowing termination

15 where condemnation is reasonably expected to disrupt operations beyond a stated period, and

16 providing for adjustment of payments due as of termination. [Taxpayer Ex. 4]

17 42. The agreements reserve to American Tower the right to replace, rebuild, or

18 modify tower infrastructure, and they address how the carrier will be accommodated during such

19 work to maintain operations. [Taxpayer Ex. 1; 2; 3]

20 43. Other agreements in the record are styled as tower-space “license” agreements

21 between American Tower, LLC and wireless carriers. [Taxpayer Ex. 2; 3]

22 44. In the license-styled agreements, the recurring payment obligation is described as

23 a monthly “License Fee,” and the agreements refer to “space licensed” or “Licensed Space.”

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 8 of 31
1 [Taxpayer Ex. 2; 3]

2 45. The AT&T master license agreement contains a “Destruction or Condemnation”

3 provision describing restoration and return of “substantially the same space licensed” and

4 providing for abatement of the License Fee during periods the tower has not been restored and

5 AT&T is unable to operate from a temporary location during restoration. [Taxpayer Ex. 2]

6 46. Under the AT&T Restated MLA, a site “Schedule” (or amendment) does not

7 constitute licensed space unless and until executed by both parties, and an offer of license may

8 expire if not accepted within a specified period. [Taxpayer Ex. 2]

9 47. The AT&T Restated MLA contemplates that site schedules may include

10 equipment descriptions, site drawings, “as-built” drawings, and regulatory compliance materials

11 (including FCC/FAA materials) relating to the installation. [Taxpayer Ex. 2]

12 48. The AT&T Restated MLA contains assignment and subletting restrictions

13 providing that AT&T may not license, sublicense, or sublet any site (or any portion thereof) to

14 any party other than an AT&T affiliate, and provides for an administrative fee in connection with

15 consent/assignment and certain lender-related documentation requests. [Taxpayer Ex. 2]

16 49. The T-Mobile license agreement contains assignment provisions allowing

17 assignment in specified corporate transactions and prohibiting subletting, subleasing, licensing,

18 or similar use of any site by any party other than an affiliate (as defined in the agreement).

19 [Taxpayer Ex. 3]

20 50. The T-Mobile license agreement provides ingress and egress for authorized

21 personnel and provides that other tenants and their authorized representatives shall have similar

22 access rights. [Taxpayer Ex. 3]

23 51. The AT&T agreement provides that site access is generally accomplished via

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 9 of 31
1 access codes/keys; if authorized AT&T personnel arrive without the required access codes/keys,

2 American Tower will provide access only by pre-arrangement and may charge an hourly fee.

3 [Taxpayer Ex. 2]

4 52. The carrier agreements expressly provide for co-location in a shared facility and

5 state that other licensees/tenants and their authorized representatives shall have similar access,

6 ingress, and egress rights to the site/tower facilities. [Taxpayer Ex. 2; 3]

7 53. The carrier agreements contemplate a multi-occupant tower environment and

8 recognize that the tower site may be used by other tenants/licensees (and their representatives),

9 requiring coordination of access and operations among multiple occupants. The agreements do

10 not restrict the tower owner from hosting additional occupants, provided interference and

11 coordination requirements are satisfied. [Taxpayer Ex. 2; 3]

12 54. The record includes license-form provisions addressing surrender and post-

13 termination obligations, including surrender of the facilities where equipment was installed,

14 removal by qualified personnel, repair of damage caused by removal, and delivery of a release in

15 recordable form upon request. [Taxpayer Ex. 2; 3]

16 55. The AT&T license agreement provides that if equipment is not removed within a

17 specified period after termination or expiration, such equipment is deemed abandoned and

18 American Tower, LLC may remove and store it at AT&T’s expense, sell it, and/or deem title

19 transferred to American Tower, LLC. [Taxpayer Ex. 2]

20 56. The T-Mobile license agreement contains subordination-to-ground-lease

21 provisions acknowledging that American Tower’s rights may derive from a ground lease and

22 stating that the terms of the master agreement and licenses are subordinate to the ground lease

23 and that the licensee agrees to be bound by the ground lease as applicable to access and

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 10 of 31
1 occupancy of the licensed space. [Taxpayer Ex. 3]

2 57. In connection with co-location requests and equipment changes, the agreements

3 authorize American Tower to require structural analysis and/or shared-site interference studies as

4 part of its approval process, and to deny, condition, or delay installation where structural

5 capacity or interference contingencies are not satisfied. [Taxpayer Ex. 2; 3]

6 Procedural History

7 58. The refund claims at issue total approximately $6,170,711.89 across the

8 consolidated protests. [Administrative File]

9 59. On July 2, 2021, Spectrasite Communications, LLC submitted an Application for

10 Refund for the period December 31, 2017, through March 31, 2021, in the amount of

11 $2,578,823.83. [Administrative File]

12 60. On July 20, 2021, Spectrasite Communications, LLC and ATC Ponderosa K,

13 LLC, by and through Jared Morley (VP – Finance Business Operations), executed Tax

14 Information Authorizations authorizing Patrick Loynes and Carolyn Owens of KPMG, LLP to

15 “receive Federal and State confidential information on behalf of the taxpayer listed above in tax

16 matters related to this form per NMSA 1978, § 7-1-8 and 26 U.S.C. § 6103.” [Administrative

17 File]

18 61. On January 24, 2022, the Department issued a Full Refund Denial for American

19 Tower, LLC’s claim totaling $3,480,905.34 for the period from December 31, 2017 to March 31,

20 2021. [Administrative File (Letter ID L0630082480)]

21 62. On March 23, 2022, the Department issued a Full Refund Denial for Spectrasite

22 Communications, LLC’s claim totaling $2,578,823.83 for the period from December 31, 2017 to

23 March 31, 2021. [Administrative File (Letter ID L1858403248)]

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
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1 63. On June 1, 2022, the Department issued a Full Refund Denial for ATC Ponderosa

2 K, LLC’s claim totaling $110,982.72 for the period from December 31, 2017 to March 31, 2021.

3 [Administrative File (Letter ID 2004094896)]

4 64. American Tower, LLC timely protested the Department’s Full Refund Denial. On

5 June 10, 2022, the Department acknowledged the protest of American Tower, LLC for the period

6 from December 31, 2017 – March 31, 2021. [Administrative File (Letter ID No. L2040410032)]

7 65. Spectrasite Communications, LLC timely protested the Department’s Full Refund

8 Denial. On June 28, 2022, the Department acknowledged the protest of Spectrasite

9 Communications, LLC for the period from December 31, 2017 – March 31, 2021.

10 [Administrative File (Letter ID No. L0284581808)]

11 66. On August 30, 2022, ATC Ponderosa K, LLC protested the Department’s denial

12 of its request for refund. On October 27, 2022, the Department acknowledged the protest of ATC

13 Ponderosa K, LLC for the period from December 31, 2017 – March 31, 2021. [Administrative

14 File (Letter ID No. L1695361136)]

15 67. On December 18, 2023, Spectrasite Communications, LLC, by and through Jared

16 Morley (VP – Finance Business Operations) executed a Tax Information Authorization

17 authorizing Patrick Loynes and Carolyn Owens of KPMG, LLP to “receive Federal and State

18 confidential information on behalf of the taxpayer listed above in tax matters related to this form

19 per NMSA 1978, § 7-1-8 and 26 U.S.C. § 6103.” [Administrative File]

20 68. On December 18, 2023, the Department filed a Request for Hearing arising from

21 the protest of Spectrasite Communications, LLC to the denial of its request for refund for the

22 period from December 31, 2017 – March 31, 2021. The Request for Hearing was accompanied

23 by New Mexico Taxation and Revenue Department’s Answer to Protest. [Administrative File]

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 12 of 31
1 69. On December 27, 2023, the Administrative Hearings Office issued a Notice of

2 Telephonic Scheduling Hearing in Case No. 23.12-065R, setting an initial hearing on Spectrasite

3 Communications, LLC’s protest for January 19, 2024. [Administrative File]

4 70. On January 18, 2024, the Department filed a Request for Hearing arising from the

5 protest of ATC Ponderosa K, LLC to the denial of its request for refund for the period from

6 December 31, 2017 – March 31, 2021. The Request for Hearing was accompanied by New

7 Mexico Taxation and Revenue Department’s Answer to Protest. [Administrative File]

8 71. At the initial hearing on January 19, 2024, neither party objected to the hearing

9 proceeding as satisfying the 90-day statutory requirement and the protest was set for a hearing on

10 the merits. [Administrative File]

11 72. On January 22, 2024, the Administrative Hearings Office issued a Notice of

12 Telephonic Scheduling Hearing in Case No. 24.01-005R, setting an initial hearing on ATC

13 Ponderosa K, LLC’s protest for February 16, 2024. [Administrative File]

14 73. On January 25, 2024, the Administrative Hearings Office entered a Scheduling

15 Order and Notice of Administrative Hearing which set a hearing on the merits of the protest of

16 Spectrasite Communications, LLC, for April 17 – 18, 2024. [Administrative File]

17 74. On February 6, 2024, the Administrative Hearings Office issued a Notice of

18 Telephonic Scheduling Hearing in Case No. 24.02-007R, setting an initial hearing on American

19 Tower, LLC’s protest for February 23, 2024. [Administrative File]

20 75. On February 5, 2024, the Department filed a Request for Hearing arising from the

21 protest of American Tower, LLC to the denial of its request for refund for the period from

22 December 31, 2017 – March 31, 2021. The Request for Hearing was accompanied by New

23 Mexico Taxation and Revenue Department’s Answer to Protest. [Administrative File]

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
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1 76. On February 12, 2024, the Department filed a motion seeking leave to amend its

2 answer in the protest of Spectrasite Communications, LLC, (AHO No. 23.12-065R). The request

3 was approved, and the Department filed its amended answer to the protest. [Administrative File]

4 77. On February 28, 2024, the individual taxpayers in the consolidated protest moved

5 to consolidate their respective protests. [Administrative File]

6 78. On March 19, 2024, upon verifying that all protests subject of the consolidation

7 request were received and ripe for further scheduling, the Administrative Hearings Office

8 entered a Consolidation Order and Amended Scheduling Order and Notice of Administrative

9 Hearing. [Administrative File]

10 79. On March 20, 2024, the Department filed a substitution of counsel and an

11 unopposed motion seeking to continue the hearing. [Administrative File]

12 80. On March 22, 2024, the Administrative Hearings Office granted the Department’s

13 request to continue and set a telephonic scheduling hearing for April 12, 2024. [Administrative

14 File]

15 81. On April 15, 2024, the Administrative Hearings Office entered a Scheduling

16 Order and Notice of Administrative Hearing which set a merits hearing on the consolidated

17 protests for August 27 – 28, 2024. [Administrative File]

18 82. On August 22, 2024, the Department filed its Unopposed Motion to Vacate Merits

19 Hearing and Request for a Scheduling Hearing. [Administrative File]

20 83. On August 26, 2024, the Administrative Hearings Office entered a Continuance

21 and Telephonic Scheduling Notice that granted the unopposed motion and set a scheduling

22 hearing for September 13, 2024. [Administrative File]

23 84. On September 24, 2024, the Administrative Hearings Office entered a Notice of

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
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1 Telephonic Scheduling Hearing which set a scheduling hearing for December 6, 2024.

2 [Administrative File]

3 85. On December 9, 2024, the Administrative Hearings Office entered a Notice of

4 Telephonic Scheduling Hearing which set a scheduling hearing for March 28, 2025.

5 [Administrative File]

6 86. On January 13, 2025, the Administrative Hearings Office entered an Amended

7 Notice of Telephonic Scheduling Hearing which set a scheduling hearing for April 4, 2025.

8 [Administrative File]

9 87. On April 11, 2025, the Administrative Hearings Office entered a Scheduling

10 Order and Notice of Administrative Hearing which set a hearing on the merits of the

11 consolidated protests for May 19 – 20, 2025. [Administrative File]

12 88. On May 5, 2025, the Department and Taxpayer filed their respective pre-hearing

13 statements. [Administrative File]

14 89. On May 20, 2025, at the conclusion of the hearing, the Administrative Hearings

15 Office entered an Order Addressing Objection to Disclosure of Communications. The order

16 arose from the Department’s request that Taxpayer disclose written communications between

17 Patrick Loynes or Sarah Horn—employees of KPMG, LLP and authorized representatives for

18 the above-captioned entities—and Audra Mitchell, Managing Director, National Tax, at KPMG,

19 LLP, in connection with her witness testimony in these consolidated protests. The order

20 requested legal authority addressing the confidentiality of communications among non-attorney

21 KPMG, LLP employees, if any. [Administrative File]

22 90. On May 20, 2025, the Administrative Hearings Office entered a Post-Hearing

23 Scheduling Order which established deadlines for filing written closing statements. The order

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 15 of 31
1 adopted the parties agreed-upon deadline of July 18, 2025, but also permitted the parties the

2 option to stipulate to reasonable extensions of time. [Administrative File]

3 91. By email dated May 30, 2025, the Department withdrew its request for written

4 communications between Ms. Horn, Mr. Loynes, and Ms. Mitchell in preparation for her

5 testimony in this matter. [Administrative File]

6 92. By email dated June 4, 2025, KPMG, LLP responded to the Department’s email.

7 Although the Department had withdrawn its request for disclosure of communications, the June 4

8 response addressed additional issues. The parties thereafter exchanged further post-hearing

9 correspondence regarding those issues. On June 9, 2025, the Department filed a response to

10 Taxpayer’s June 4, 2025 email. [Administrative File]

11 93. On June 20, 2025, the Department filed a Notice of Completion of Briefing on the

12 Order Addressing Objection to Disclosure of Communications. [Administrative File]

13 94. On July 2, 2025, the Administrative Hearings Office entered an order directing

14 the parties to proceed with preparation of written closing arguments. The order further advised

15 the parties that the issues raised in the post-hearing emails were taken under advisement and that

16 any ruling would be addressed by subsequent order. 1

17 95. On July 9, 2025, the Department filed notice of Agreed Extension to File Closing

18 Briefs. The stipulated deadline was August 5, 2025. [Administrative File]

19 96. On August 5, 2025, the Department and Taxpayer filed their closing briefs.

20 [Administrative File]

21 DISCUSSION

22 This protest concerns whether receipts Taxpayer received from wireless carriers under

1
The Department’s request concerning the June 4, 2025 post-hearing email is denied as moot in part and otherwise
denied.

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 16 of 31
1 tower-site agreements are properly characterized as receipts from “leasing real property” deductible

2 under NMSA 1978, Section 7-9-53(A), or whether the agreements instead grant only limited rights

3 to use tower facilities and therefore constitute “licensing” excluded from “leasing” under the Gross

4 Receipts and Compensating Tax Act.

5 Taxpayer’s Position

6 Taxpayer contends that the carrier agreements convey the right to occupy and use defined,

7 physical space at tower sites, including identified tower elevations and, where applicable, ground

8 space for equipment, for a term and for recurring consideration. Taxpayer emphasizes that

9 telecommunications towers are permanent improvements to real property and that carriers place and

10 maintain equipment at specific physical locations on those towers. Taxpayer further asserts that

11 carriers receive exclusive rights to their delineated tower and ground areas, and that the agreements

12 are not revocable at will but instead contain stated terms, defaults, cure provisions, and notice-based

13 termination mechanisms.

14 Department’s Position

15 The Department denies that the carrier agreements constitute leases of real property. The

16 Department determined, and continues to argue, that the agreements grant only limited rights to use

17 tower infrastructure for telecommunications purposes and therefore constitute licensing rather than

18 leasing. The Department emphasizes provisions reflecting shared site access, retained owner

19 control, technical coordination, and a multi-user tower environment, and contends that the

20 agreements do not convey exclusive possession of real property consistent with a lease.

21 Burden of Proof

22 Taxpayer seeks a refund based on its claimed entitlement to a deduction under NMSA 1978,

23 Section 7-9-53(A). The burden is therefore on Taxpayer to prove entitlement to the claimed

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 17 of 31
1 deduction and refund. See Corr. Corp. of Am. v. State of N.M., 2007-NMCA-148, ¶ 17, 142 N.M.

2 779, 782, 170 P.3d 1017, 1020; TPL, Inc. v. New Mexico Taxation & Revenue Dept., 2003-NMSC-

3 007, ¶ 10, 133 N.M. 447, 451, 64 P.3d 474, 478.

4 The applicable standard of proof in this administrative protest is preponderance of the

5 evidence. See Gemini Las Colinas, LLC v. New Mexico Taxation & Revenue Dep't, 2023-NMCA-

6 039, ¶¶ 17, 29, 531 P.3d 622. If the evidence is in equipoise on a material point, Taxpayer has not

7 carried that burden. Id.

8 A related but distinct principle also applies. Under New Mexico law, deductions are

9 construed strictly against the taxpayer. “[T]axation is the rule and the claimant for an exemption

10 must show that his demand is within the letter as well as the spirit of the law.” See Sec. Escrow

11 Corp. v. State Taxation & Revenue Dept., 1988-NMCA-068, ¶ 10, 107 N.M. 540, 543, 760 P.2d

12 1306, 1309. “The right to a deduction must be clearly and unambiguously expressed in the statute”

13 and “[t]he taxpayer must show that it is clearly entitled to the statutory deduction.” See TPL, 2003-

14 NMSC-007, ¶ 9.

15 Accordingly, Taxpayer bears the burden to prove, by a preponderance of the evidence, that

16 the receipts at issue are receipts from leasing real property within the meaning of Section 7-9-53(A),

17 rather than receipts from licensing.

18 The testimony was largely foundational and provided authentication and context for the

19 parties’ exhibits. The dispositive evidence consists primarily of the agreements themselves and their

20 operative provisions.

21 Application of NMSA 1978, Section 7-9-53(A)

22 Section 7-9-53(A) allows a deduction from gross receipts for receipts from “the sale or lease

23 of real property.” Taxpayer bears the burden of proving that the receipts at issue fall clearly within

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 18 of 31
1 that deduction. See NMSA 1978, Sections 7-9-53(A); TPL, 2003-NMSC-007, ¶ 9.

2 New Mexico appellate authority confirms that the availability of the Section 7-9-53(A)

3 deduction turns on the substance of the property interest conveyed, not the labels used by the

4 parties. See Quantum Corp. v. State Taxation & Revenue Dept., 1998-NMCA-050, ¶ 12, 125 N.M.

5 49, 52, 956 P.2d 848, 851. In Quantum, the Court of Appeals explained that the inquiry is whether

6 “exclusive control and possession of a definite space for a definite term has been granted,”

7 evaluated from the agreement as a whole and the surrounding circumstances. In Grogan v. New

8 Mexico Taxation & Revenue Dept., 2003-NMCA-033, ¶ 27, 133 N.M. 354, 361, 62 P.3d 1236,

9 1243, the Court of Appeals distinguished a lease from a license by explaining that “a lease gives to

10 the tenant the right of possession against the world, while a license creates no interest in the land,

11 but it is simply the authority or power to use it in some specific way.”

12 Other authorities reflect the same principle. In Chavez v. Comm’r of Revenue, 1970-NMCA-

13 116, 82 N.M. 97, 476 P.2d 67, the Court of Appeals treated a fixed, yearly lease of an entire motel

14 premises as deductible leasing, distinguishing that arrangement from transient lodging receipts. In

15 S.S. Kresge Co. v. Bureau of Revenue, 1975-NMCA-015, 87 N.M. 259, 531 P.2d 1232, the Court of

16 Appeals concluded that agreements granting space and access within a store were licenses rather

17 than leases. Moreover, in Corr. Corp. of Am., the Court of Appeals rejected characterizing a private-

18 prison contract as a lease for purposes of this deduction.

19 Department regulations illustrate the same distinction. Renting motel rooms, even on a so-

20 called permanent basis, does not constitute deductible leasing, whereas leasing an entire motel does.

21 See Regulation 3.2.211.14(A) NMAC. Similarly, receipts from furnishing locker rooms are not

22 deductible because users lack exclusive access and must rely on the owner for entry, while receipts

23 from leasing self-contained storage units are deductible because the occupant has exclusive access

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 19 of 31
1 to a defined unit. See Regulation 3.2.211.16 NMAC.

2 Accordingly, the dispositive question in these consolidated protests is whether the carrier

3 agreements, viewed as a whole and in their operational context, convey a possessory interest in real

4 property consistent with leasing, or instead grant limited permission to use tower facilities for a

5 specific telecommunications purpose within an owner-managed, shared site. In resolving that

6 question, the Hearing Officer considers whether the agreements confer exclusive possession of

7 defined premises, the extent of Taxpayer’s retained control, the degree to which the arrangements

8 contemplate shared occupancy and coordinated access, and the practical effect of the agreements as

9 reflected in the record.

10 The Hearing Officer does not conclude that shared facilities, common access features, or the

11 absence of enclosure alone preclude a lease. Rather, the conclusion reached here rests on the

12 combined effect of the agreements’ shared-occupancy structure, owner-controlled access, retained

13 authority over structural modifications and installations, interference-management requirements,

14 and the absence of a demonstrated right in the carriers to exclude others from the integrated tower

15 facility in the manner required for tenant-like possession.

16 This Decision and Order resolves the lease-versus-license issue litigated at hearing.

17 Although Taxpayer was prepared to address sourcing, the Department represented on the record that

18 any sourcing issue would depend on the outcome of the protest and that the parties were unlikely to

19 have any significant dispute in that regard. If a dispute nevertheless arose that the parties could not

20 resolve on their own, they agreed to return to the Administrative Hearings Office for future

21 determination.

22 A. Defined Space, Term, and Recurring Payments Do Not Alone Establish a Lease

23 Taxpayer’s principal argument is that the carrier agreements identify specific physical space

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 20 of 31
1 on the tower and, in some instances, a defined ground area for equipment, for a stated term and for

2 recurring consideration. The Hearing Officer agrees that these are lease-like indicia. The record

3 contains agreements styled as “Tower Space Lease Agreements,” uses terms such as “Landlord”

4 and “Tenant,” and defines “Leased Space” by reference to specified tower elevations and ground

5 areas. The record also contains provisions establishing fixed terms, renewal terms, and recurring

6 payments.

7 However, under New Mexico law, defined space, a stated term, and recurring payments are

8 not by themselves dispositive. Quantum directs the inquiry to whether the agreement as a whole

9 grants “exclusive control and possession of a definite space for a definite term.” See Quantum,

10 1998-NMCA-050, ¶ 12. Grogan likewise emphasizes that the distinguishing feature of a lease is

11 possession “against the world,” not merely permission to use property in some specific way. See

12 Grogan, 2003-NMCA-033, ¶ 27.

13 Here, even where the agreements define a carrier’s equipment location with precision, the

14 record shows that the carrier’s interest remains bounded by the owner’s continuing dominion over

15 the integrated tower facility. The agreements contemplate co-location, reserve to Taxpayer ongoing

16 control over modifications and installations, and permit use of the same tower environment by

17 multiple occupants. These features weigh against characterizing the identified space as premises

18 possessed by the carrier in the tenant-like sense required for a leasehold estate.

19 The same is true of the agreements’ fixed terms and recurring payments. Those features

20 support the existence of a stable commercial relationship, but they do not establish that the

21 payments are consideration for possession of real property rather than for a controlled right to use

22 tower infrastructure for a particular telecommunications purpose. The agreements’ non-revocable,

23 term-based structure is likewise lease-like, but it does not overcome the absence of exclusive

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 21 of 31
1 possession and tenant-like dominion reflected in the agreements as a whole.

2 This case is materially different from Quantum. There, despite retained owner controls and

3 nontraditional limitations, the Court of Appeals found a lease based on payment of rent, possession

4 for definite periods, exclusive possession of the floor safes and secure storage closets, and the

5 taxpayer’s inability to revoke at will. See Corr. Corp. of Am., 2007-NMCA-148, ¶ 20 (summarizing

6 Quantum). Here, by contrast, the carriers did not receive exclusive possession of a distinct, self-

7 contained premises or tenant-like dominion over a meaningful, self-controlled portion of the

8 property comparable to the areas identified in Quantum. Rather, the agreements granted only a

9 limited right to install and operate equipment within a larger tower facility that remained under

10 continuing owner control and subject to coordinated access, structural oversight, co-location, and

11 technical approval.

12 B. Shared Occupancy and Similar Access Rights Weigh Against Exclusive Possession

13 The record reflects that the tower sites operate as shared, multi-user facilities. Multiple

14 carriers may install equipment on the same tower or tower site, and the agreements impose technical

15 and operational requirements intended to ensure compatibility among users, including provisions

16 addressing interference and operational coordination.

17 The agreements also reflect shared access. The record includes provisions recognizing that

18 other tenants or licensees, and their authorized representatives, have similar rights of access, ingress,

19 and egress. This shared-access structure is difficult to reconcile with the carrier possessing the

20 premises “against the world” in the sense required for a lease. While modern leases may involve

21 shared common areas, the agreements here do not merely allocate neutral common space. Instead,

22 they operate within a single integrated facility where access, safety, and operations are centrally

23 managed among multiple co-located occupants.

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 22 of 31
1 Taxpayer argues that a carrier may exercise exclusivity with respect to its particular

2 equipment footprint or installation area. The record supports that carriers have contractual

3 protections concerning their own installed equipment. However, that type of equipment-specific

4 exclusivity is not the same as possession of real property with the dominion and right to exclude

5 others from the premises as a whole that is characteristic of a leasehold estate.

6 This case is also unlike In re Protest of Support Terminals Operating P’ship, Decision &

7 Order No. 03-14, 2006 WL 1806400 (July 9, 2003) (non-precedential), which is cited by Taxpayer.

8 Although that decision recognized that retained owner services and on-site operational involvement

9 do not necessarily defeat lease treatment, it did so because the record nevertheless showed that the

10 federal government, as the tenant under the storage contracts, had exclusive control and possession

11 of a dedicated storage facility for a definite term. The government had an on-site representative, 24-

12 hour access to the storage terminal and the two tanks, control over movement of fuel into and out of

13 the tanks, control over third-party access to the terminal, and the right to exclude third parties from

14 the premises. Here, by contrast, the present record does not show comparable dominion by the

15 carriers over the tower facilities as a whole, comparable authority to control third-party access to the

16 premises, or comparable exclusive control over a dedicated facility.

17 C. Retained Owner Control Is More Consistent with Licensing Than Leasing

18 Retained owner control does not automatically defeat lease characterization. Many modern

19 commercial leases contain approval rights, access restrictions, safety requirements, and operational

20 limitations. The question here is not whether Taxpayer retained any control, but whether the scope

21 and character of that retained control, considered together with the shared-site structure, are

22 consistent with a transfer of possessory dominion or instead reflect a permission-based right to use

23 tower facilities within an owner-managed operation.

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 23 of 31
1 The record reflects retained owner control that goes beyond ordinary landlord oversight. The

2 agreements reserve to American Tower the right to replace, rebuild, or modify tower infrastructure

3 and address carrier operations during such work through accommodation provisions. The

4 agreements authorize American Tower to require structural analysis and interference studies, and to

5 deny, condition, or delay installation where structural capacity or interference contingencies are not

6 satisfied. The record further reflects that access may be owner-controlled through required access

7 codes or keys, and that when authorized personnel arrive without those credentials, access may be

8 provided only by pre-arrangement and for an hourly charge.

9 Taken together, and considered in the context of the agreements as a whole, these provisions

10 reflect continuing owner control over the facility and the conditions of occupancy and are more

11 consistent with licensing than with the transfer of tenant-like possession. The agreements authorize

12 the carrier to use tower infrastructure in a specific way, but they do not convey dominion over

13 premises in the manner contemplated by Quantum and Grogan. See Quantum, 1998-NMCA-050, ¶

14 12; Grogan, 2003-NMCA-033, ¶ 27.

15 This conclusion is reinforced by the regulations discussed above. The distinction between

16 locker-room use and leasing a self-contained storage unit illustrates that physical specificity alone

17 does not create leasing if access and use remain subject to ongoing owner control and shared

18 occupancy. See Regulation 3.2.211.16 NMAC.

19 D. Lease-Form Provisions and Property-Like Clauses Do Not Control the Characterization

20 Taxpayer relies on lease-form provisions as evidence that the agreements should be treated

21 as leases. The record includes provisions addressing taxes, fees, utilities, casualty, condemnation,

22 easements, conduit rights, and related matters commonly associated with commercial leasing. The

23 Hearing Officer agrees that these provisions are lease-like and reflect sophisticated commercial

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 24 of 31
1 drafting.

2 They do not, however, control the characterization. New Mexico law requires the Hearing

3 Officer to evaluate the agreement as a whole and determine whether it conveys exclusive possession

4 of premises, not simply whether it contains clauses often found in leases. See Quantum, 1998-

5 NMCA-050, ¶ 12; Grogan, 2003-NMCA-033, ¶ 27.

6 The casualty and condemnation provisions, for example, show that the parties allocated risk

7 if tower facilities become unavailable. The tax and utility provisions show cost allocation associated

8 with a carrier’s equipment and operations. The access, easement, conduit, and related property-like

9 clauses facilitate installation and operation of telecommunications equipment. These clauses may be

10 probative of the parties’ commercial expectations, but they do not substitute for the required

11 showing that the carrier acquired possession of real property in the tenant-like sense necessary for a

12 lease. Nor do provisions concerning recordation, quiet enjoyment, or protection against interference

13 alter the analysis where the agreements, viewed as a whole, still do not convey tenant-like

14 possession of premises against the world.

15 The same is true of the fact that some agreements are styled as leases while others are styled

16 as licenses. The Hearing Officer does not decide this protest based on those labels. The agreements

17 must be evaluated in substance.

18 E. Assignment, Subletting, Surrender, and Subordination Provisions Further Support a
19 License Characterization

20 The record also includes provisions addressing assignment, subletting, sublicensing,

21 surrender, post-termination removal obligations, and subordination to upstream ground leases.

22 These provisions are not dispositive in isolation. Conventional leases may also contain assignment

23 restrictions and subordination clauses. But in the context of this record, they further support the

24 conclusion that the agreements convey limited use rights within a managed tower system rather than

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 25 of 31
1 a possessory estate in land.

2 The assignment and subletting restrictions reflect that the carrier’s rights are identity-

3 dependent and closely tied to the owner’s need to control who may place equipment on the

4 structure. The surrender and removal provisions likewise reinforce that the carrier’s rights concern

5 installed equipment and occupancy within managed facilities, not possession of premises in the

6 broader tenant-like sense.

7 The subordination provisions are also significant. The record reflects that Taxpayer’s rights

8 at some sites may derive from an underlying ground lease and that the carrier’s rights are

9 subordinate to that upstream arrangement. That layered structure is more consistent with a

10 controlled chain of site-use rights than with a conveyance of possession against the world. This

11 reinforces that the carrier’s interest is derivative of Taxpayer’s site rights, not a leasehold estate in

12 real property.

13 F. Weighing the Record as a Whole

14 The record contains meaningful lease-like indicia. The agreements often define carrier space

15 with precision, provide for recurring payments over stated terms, allocate risk through casualty and

16 condemnation provisions, and in some instances use conventional lease terminology. The Hearing

17 Officer has considered those features carefully.

18 However, the issue is not whether the agreements contain some characteristics often

19 associated with leases. The issue is whether, viewed as a whole and in context, the agreements

20 convey “exclusive control and possession” of defined premises for a term, or instead grant only

21 authority to use tower facilities in a specific way. See Quantum, 1998-NMCA-050, ¶ 12; Grogan,

22 2003-NMCA-033, ¶ 27.

23 On the record presented in these consolidated protests, the stronger indicia point to licensing

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 26 of 31
1 rather than leasing. Viewed as a whole, the agreements grant carriers a purpose-limited right to

2 install and operate telecommunications equipment within a shared, owner-managed tower

3 environment, rather than exclusive possession of defined premises. The record reflects coordinated

4 multi-user occupancy, shared access rights, and continuing owner control over access, structural

5 modifications, installation approval, and interference and capacity determinations. Those features

6 are more consistent with a controlled right to use tower facilities than with the transfer of tenant-like

7 dominion over real property.

8 In that setting, the fact that the agreements identify a carrier’s equipment location with

9 physical specificity does not establish that the carrier possesses real property against the world. At

10 most, the record shows exclusivity as to the carrier’s own equipment footprint and contractual

11 protection against interference with that equipment. That is not equivalent to the dominion and right

12 to exclude necessary to establish a leasehold estate under New Mexico law. See Grogan, 2003-

13 NMCA-033, ¶ 27.

14 Accordingly, the Hearing Officer concludes that Taxpayer did not prove by a preponderance

15 of the evidence that the receipts at issue arose from leasing real property within the meaning of

16 Section 7-9-53(A). Instead, the agreements are more properly characterized as licensing

17 arrangements. Because the receipts are not receipts from leasing real property, they do not qualify

18 for the deduction claimed, and the Department’s denial of the refund claims must be sustained.

19 Finally, even if some individual provisions could be viewed as pointing in both directions,

20 Taxpayer retains the ultimate burden of persuasion. If the evidence is in equipoise on a material

21 point, Taxpayer has not carried that burden. See Gemini, 2023-NMCA-039, ¶¶ 17, 29. On this

22 record, Taxpayer has not met its burden to establish entitlement to the deduction under Section 7-9-

23 53(A).

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 27 of 31
1 CONCLUSIONS OF LAW

2 A. The Administrative Hearings Office conducted an initial scheduling hearing within

3 90 days of the hearing requests, in accordance with NMSA 1978, Section 7-1B-8 (2019). Neither

4 party objected to the adequacy of the hearing under that provision.

5 B. The Administrative Hearings Office has jurisdiction over the parties and the subject

6 matter of this protest pursuant to NMSA 1978, Sections 7-1-24 and 7-1-60, and 22.600.3 NMAC.

7 C. Taxpayer bears the burden of proving its entitlement to the refund claims and the

8 deduction on which those claims depend. See Corr. Corp. of Am. v. State, 2007-NMCA-148, ¶ 17;

9 TPL, Inc. v. N.M. Taxation & Revenue Dep’t, 2003-NMSC-007, ¶ 10.

10 D. The applicable standard of proof in this administrative protest is preponderance of

11 the evidence. See Gemini Las Colinas, LLC v. N.M. Taxation & Revenue Dep’t, 2023-NMCA-039,

12 ¶¶ 17, 29.

13 E. If the evidence is in equipoise on a material point, Taxpayer has not carried its

14 burden of persuasion. See Gemini, 2023-NMCA-039, ¶¶ 17, 29.

15 F. All gross receipts of a person engaging in business in New Mexico are presumed

16 taxable unless specifically exempted by statute. See NMSA 1978, Section 7-9-5(A) (2019).

17 G. Deductions are construed strictly against the taxpayer. “Taxation is the rule and the

18 claimant must show that his demand is within the letter as well as the spirit of the law.” The right

19 to a deduction must be “clearly and unambiguously expressed” in the statute, and the taxpayer

20 must show it is “clearly entitled” to the deduction claimed. See TPL, Inc. v. N.M. Tax’n & Revenue

21 Dep’t, 2003-NMSC-007, ¶ 9.

22 H. The protesting entities were persons engaging in business in New Mexico during

23 the tax periods at issue within the meaning of NMSA 1978, Sections 7-9-3.3 and 7-9-4.

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 28 of 31
1 I. NMSA 1978, Section 7-9-53(A) provides a deduction for receipts from “leasing

2 real property,” subject to the conditions and limitations of the Gross Receipts and Compensating

3 Tax Act.

4 J. For purposes of the Gross Receipts and Compensating Tax Act, licensing and

5 leasing are distinct concepts, and “the granting of a license to use property is licensing and is not a

6 lease.” See NMSA 1978, Section 7-9-3(E).

7 K. Under New Mexico law, “a lease gives to the tenant the right of possession against

8 the world, while a license creates no interest in the land, but it is simply the authority or power to

9 use it in some specific way.” See Grogan v. N.M. Tax’n & Revenue Dep’t, 2003-NMCA-033, ¶ 27.

10 L. In determining whether an agreement is intended as a lease, courts consider the

11 agreement as a whole and surrounding circumstances to determine whether “exclusive control and

12 possession of a definite space for a definite term has been granted.” See Quantum Corp. v. N.M.

13 Tax’n & Revenue Dep’t, 1998-NMCA-050, ¶ 12.

14 M. Because the agreements constitute licensing rather than leasing, receipts derived

15 from the agreements are not receipts from “leasing real property” within the meaning of NMSA

16 1978, Section 7-9-53(A), and do not qualify for the deduction claimed.

17 For the reasons stated, Taxpayer’s protest is respectfully DENIED.

18 DATED: March 13, 2026

19
20 Chris Romero
21 Hearing Officer
22 Administrative Hearings Office
23 P.O. Box 6400
24 Santa Fe, NM 87502

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 29 of 31
1 NOTICE OF RIGHT TO APPEAL

2 Pursuant to NMSA 1978, Section 7-1-25 (2015), the parties have the right to appeal this

3 decision by filing a notice of appeal with the New Mexico Court of Appeals within 30 days of the

4 date shown above. If an appeal is not timely filed with the Court of Appeals within 30 days, this

5 Decision and Order will become final. Rule of Appellate Procedure 12-601 NMRA articulates

6 the requirements of perfecting an appeal of an administrative decision with the Court of Appeals.

7 Either party filing an appeal shall file a courtesy copy of the appeal with the Administrative

8 Hearings Office contemporaneous with the Court of Appeals filing so that the Administrative

9 Hearings Office may begin preparing the record proper. The parties will each be provided with a

10 copy of the record proper at the time of the filing of the record proper with the Court of Appeals,

11 which occurs within 14 days of the Administrative Hearings Office receipt of the docketing

12 statement from the appealing party. See Rule 12-209 NMRA.

13

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 30 of 31
1 CERTIFICATE OF SERVICE
2 I hereby certify that I served the foregoing on the parties listed below this 13th day of March

3 2026 in the following manner:

4 INTENTIONALLY BLANK

In the Matter of the Consolidated Protests of Spectrasite Communications, et al.
Page 31 of 31