Does New Mexico's motor vehicle excise tax exemption for a vehicle 'acquired for subsequent lease' apply to someone who is not in the business of leasing vehicles?

Plain-English summary

A New Mexico attorney, Jeremy M. Gay, bought a $108,995 camper van, paid $6,539.70 in motor vehicle excise tax (MVET) to title and register it, and then asked for a refund. He argued the van was exempt because New Mexico exempts a vehicle "acquired for subsequent lease" — and he had leased the van (through his law firm) to a nonprofit for a term of about a year.

The New Mexico Administrative Hearings Office rejected the refund and granted the Department summary judgment. The exemption in NMSA 1978, Section 7-14-6(F) is not for anyone who happens to lease a vehicle once. Its own text limits it to a person who does not use the vehicle "in any manner other than holding it for lease or sale or leasing or selling it in the ordinary course of business." Reading the statute as a whole, the Hearing Officer held that "in the ordinary course of business" governs the entire list — so the exemption reaches only people who are actually in the business of leasing or selling vehicles. Because the attorney admitted that neither he nor his law office leases vehicles in the ordinary course of business, a single lease did not qualify, and he owed the tax.

What this means for you

People buying a vehicle to lease out

Buying a vehicle and leasing it to someone else does not, by itself, exempt the purchase from New Mexico's motor vehicle excise tax. The "acquired for subsequent lease" exemption is aimed at vehicle-leasing and vehicle-sales businesses. If leasing vehicles is not part of your ordinary business, expect to pay MVET even if you sign a lease.

Businesses structuring purchases through an entity

The attorney tried to route the van through his law firm and a capital-contribution agreement, then lease it to a nonprofit. The Hearing Officer looked at whether the taxpayer himself qualified and found the paperwork did not change the answer: the exemption depends on being in the ordinary course of the leasing or selling business, not on how the ownership and lease documents are arranged.

Tax professionals

The decision is a statutory-construction ruling. It applies the series-qualifier canon (from the Scalia & Garner treatise) and NMSA 1978, Section 12-2A-18 to hold that the postpositive phrase "in the ordinary course of business" modifies every verb in Section 7-14-6(F)(1), not just "leasing or selling." It also distinguishes the Leased Vehicle Gross Receipts Tax Act (Section 7-14A-1 et seq., which requires a lease of six months or less) and discusses the Department's own Revenue Ruling # 600-02-1 (2002).

Common questions

Q: Does leasing a vehicle I bought make it exempt from New Mexico motor vehicle excise tax?
A: Not on its own. The exemption for a vehicle "acquired for subsequent lease" applies only to a person who holds, leases, or sells vehicles in the ordinary course of business. A one-off lease by someone not in that business does not qualify.

Q: What does "in the ordinary course of business" mean here?
A: New Mexico courts define "course of business" as a practice that is "routine, regular, usual, or normally done." The Hearing Officer required that holding or leasing the vehicle be part of the taxpayer's regular business, and the taxpayer admitted it was not.

Q: Did moving the van through a law firm and a nonprofit lease change the result?
A: No. The Hearing Officer analyzed whether the taxpayer established his own entitlement to the exemption on the undisputed facts and concluded he did not, regardless of the capital-contribution agreement and the lease to the nonprofit.

Q: Can I rely on this decision for my own situation?
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 reads the exemption.

Citations and references

Statutes and rules:

• NMSA 1978, § 7-14-6(F) (2023) — motor vehicle excise tax exemption for a vehicle acquired for subsequent lease
• NMSA 1978, § 7-14-6(F)(1) — "holding it for lease or sale or leasing or selling it in the ordinary course of business"
• NMSA 1978, § 12-2A-18 — Uniform Statute and Rule Construction Act
• NMSA 1978, § 7-14A-1 et seq. — Leased Vehicle Gross Receipts Tax Act (six-month lease definition)
• NM Taxation & Revenue Department Revenue Ruling # 600-02-1 (May 7, 2002)

Cases:

• Public Service Co. of New Mexico v. N.M. Taxation & Revenue Dep't, 2007-NMCA-050 ("course of business" means routine, regular, usual, or normally done)
• Regents of the Univ. of New Mexico v. N.M. Federation of Teachers, 1998-NMSC-020 (plain-wording canon of statutory construction)

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Jeremy M. Gay
• Decision PDF: D&O 26-05

Original ruling text

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

4 JEREMY M. GAY

5 v. Case Number 26.01-002R, D&O No. 26-05

6 NEW MEXICO TAXATION AND REVENUE DEPARTMENT

7 DECISION AND ORDER GRANTING SUMMARY JUDGMENT

8 IN FAVOR OF THE DEPARTMENT

9 On February 24, 2026, the New Mexico Taxation and Revenue Department

10 (Department), through Attorney Richard Pener, submitted a Motion and Memorandum in

11 Support for Summary Judgment. On March 11, 2026, Jeremy M. Gay, Esq. (Taxpayer),

12 submitted Protestant’s Response to Respondent’s Motion for Summary Judgment. On March 12,

13 2026, the Department submitted its Notification that the New Mexico Taxation and Revenue

14 Department’s Motion for Summary Judgment is Ripe for Ruling. On April 7, 2026, the parties

15 appeared by videoconference for oral argument on the motion. Additional stipulations were

16 taken and exhibits A through R, offered by the Department, were admitted without objection. On

17 April 8, 2026, the Department submitted supplemental authority. Being fully advised, Hearing

18 Officer Ignacio V. Gallegos, Esq., considered the motion for summary judgment pursuant to the

19 Tax Administration Act, the Motor Vehicle Excise Tax Act and the Administrative Hearings

20 Office Act.

21 In summary, this protest concerns Taxpayer’s request for refund of Motor Vehicle Excise

22 Taxes paid in connection with the purchase of a recreational vehicle. Taxpayer contends the vehicle

23 qualified for the Motor Vehicle Excise Tax exemption provided by NMSA 1978, Section 7-14-6 (F)

24 (2023) because it was acquired for subsequent lease. The Department contends the exemption does

In the Matter of the Protest of Jeremy M. Gay, page 1 of 15.
1 not apply because neither Taxpayer nor his law practice holds or leases vehicles in the ordinary

2 course of business. The dispositive issue is whether Section 7-14-6(F)(1) extends the exemption to a

3 person who acquires a vehicle for lease outside the ordinary course of business. It does not.

4 STIPULATED FACTS

5 The purchase transaction

6 1. On or around November 19, 2024, Taxpayer purchased a 2024 Dave & Matt Van

7 LV7.1 (Van) from a motor vehicle dealer in Colorado. The purchase price was $108,995.00.

8 After a down payment, the transaction was financed by BMO Bank, N.A. (BMO). [Department’s

9 Motion for Summary Judgment; Exhibit B; Exhibit C; Exhibit O, Admission #1, #3;

10 Administrative file].

11 2. Taxpayer did not pay a Colorado sales tax, affirming that Taxpayer would register

12 the vehicle within 30 days outside of Colorado. [Department’s Motion for Summary Judgment;

13 Exhibit E; Administrative file].

14 The subsequent transfer and lease

15 3. Taxpayer affirmed that he took possession of the Van on or about December of

16 2024. [Department’s Motion for Summary Judgment; Exhibit O, Interrogatory #4 (a);

17 Administrative file].

18 4. Taxpayer affirmed that possession was transferred to Sebaste, a nonprofit

19 corporation, on or about December 2024. [Department’s Motion for Summary Judgment; Exhibit

20 J; Exhibit O, Interrogatory #4 (c); Administrative file].

In the Matter of the Protest of Jeremy M. Gay, page 2 of 15.
1 5. Taxpayer is an attorney, who is sole owner, shareholder, director, and corporate

2 officer of “Advocate Law Center, P.A” (ALC), his law office. [Department’s Motion for

3 Summary Judgment; Exhibit P, Interrogatory #6; Administrative file].

4 6. On January 1, 2025, Taxpayer, individually, and the ALC law office entered into

5 a “Capital Contribution Agreement” (CCA) whereby Mr. Gay retained title to the Van for

6 administrative convenience, but the Van served as a capital contribution to ALC. Under the

7 CCA, ALC would utilize the Van for business purposes, assume responsibility for payments and

8 liabilities, and accept any tax advantages available under relevant tax statutes. The CCA

9 bypassed BMO, the company that financed the purchase of the Van. [Department’s Motion for

10 Summary Judgment; Exhibit H; Exhibit J; Exhibit O, Admission #34, 36, 37,38; Administrative

11 file].

12 7. On January 15, 2025, the ALC, as lessor, entered into a written “Vehicle Lease

13 Agreement” with Sebaste, a New Mexico Nonprofit Corporation, as lessee, whereby the Van was

14 leased for a term exceeding six months, for consideration. [Department’s Motion for Summary

15 Judgment; Exhibit I; Administrative file].

16 8. On May 27, 2025, Taxpayer executed an “Affidavit of Intent and Use of Vehicle”

17 whereby Taxpayer affirmed that the Van had not been used for any personal or business

18 purposes other than the immediate lease to Sebaste. [Department’s Motion for Summary

19 Judgment; Exhibit J; Administrative file].

20 9. On September 4, 2025, Taxpayer registered and titled the Van in the State of New

21 Mexico. Taxpayer paid six percent (6%) of $108,995.00 for a total of $6,539.70 in motor vehicle

22 excise tax in order to obtain title and registration for the Van. In addition, the Department, Motor

23 Vehicle Division (MVD) charged Taxpayer a net registration fee of $86.00, a late transfer fee of

In the Matter of the Protest of Jeremy M. Gay, page 3 of 15.
1 $20.00, a transaction fee of $3.00, an administration fee of $2.00, a tire recycling fee of $1.50,

2 and a beautification fee of $0.50. The total paid by Taxpayer was $6,652.70. [Department’s

3 Motion for Summary Judgment; Exhibit F; Exhibit G; Exhibit P, Admission #4; Administrative

4 file].

5 The refund request and protest

6 10. On September 4, 2025, Taxpayer paid the Motor Vehicle Excise Tax “under

7 protest.” [Department’s Motion for Summary Judgment; Exhibit F; Exhibit G; Exhibit K;

8 Administrative file].

9 11. Within the protest letter of September 4, 2025, Taxpayer reserved the right to

10 request a refund in the amount of “approximately $6,720.00” for Motor Vehicle Excise Taxes

11 paid stemming from the above-described transaction. The Department interpreted this

12 reservation as a “full refund” request. [Department’s Motion for Summary Judgment; Exhibit K;

13 Administrative file, Request for Hearing dated 9/9/25].

14 12. The Department submitted a Request for Hearing (on behalf of Taxpayer) and the

15 Department’s Answer to Protestant’s Protest to the Administrative Hearings Office on

16 September 9, 2025, and September 10, 2025, respectively. [Department’s Motion for Summary

17 Judgment; Exhibit K; Administrative file, Request for Hearing dated 9/9/25].

18 Evidence in support of business activities of ALC and Taxpayer

19 13. In response to the Department’s discovery requests, the Taxpayer disclosed that

20 Taxpayer is not a licensed motor vehicle dealer, and his law office ALC does not lease vehicles

In the Matter of the Protest of Jeremy M. Gay, page 4 of 15.
1 in the ordinary course of business. [Department’s Motion for Summary Judgment; Exhibit O,

2 Admissions 8, 10, 13, 19, 21, 23, 27, 28, 32; Exhibit P, Admission 2, 3; Administrative file].

3 14. In response to the Department’s discovery requests, the Taxpayer disclosed that

4 Taxpayer held this Van for lease and has, in the past, leased at least one other vehicle to a

5 nonprofit corporation. Taxpayer provided the example of a 2020 Ford Transit, purchased and

6 leased without a written lease agreement in 2022. The Taxpayer paid MVET for the purchase of

7 the 2020 Ford Transit. [Department’s Motion for Summary Judgment; Exhibit O, Admissions #

8 12, 14, 15, 17, 25, 30, Interrogatories #1, 4; Exhibit P, Interrogatory #3; Exhibit Q;

9 Administrative file].

10 15. In response to the Department’s discovery requests, the Taxpayer affirmed he was

11 “not claiming that the transaction at issue was necessarily conducted in the ordinary course of

12 business.” [Department’s Motion for Summary Judgment; Exhibit P, Interrogatory #4;

13 Administrative file].

14 DISCUSSION

15 Summary Judgment Standard

16 Although the Rules of Civil Procedure for the District Courts do not apply in tax protest

17 hearings under the Administrative Hearings Office Act, the Hearing Officer may refer to them

18 for guidance. Rule 1-056 NMRA establishes that summary judgment is only appropriate when

19 there is no dispute of material fact and the moving party is entitled to a judgment as a matter of

20 law. See Roth v. Thompson, 1992-NMSC-011, ¶17, 113 N.M. 331, 825 P.2d 1241. Summary

21 judgment is a drastic remedy that should be exercised with extreme caution. See Cebolleta Land

22 Grant ex rel. Bd. of Trs. of the Cebolleta Land Grant v. Romero, 1982-NMSC-043, ¶3, 98 N.M.

23 1, 644 P.2d 515. See Enduro Operating LLC v. Echo Prod., 2017-NMCA-018, ¶11, 388 P.3d

In the Matter of the Protest of Jeremy M. Gay, page 5 of 15.
1 990. Summary judgment is reserved only for instances where there is no genuine dispute of fact

2 and the law compels a judgment. See Great W. Constr. Co. v. N. C. Ribble Co., 1967-NMSC-

3 085, ¶13, 77 N.M. 725, 427 P.2d 246. Trials are preferred over the granting of summary

4 judgment. See Romero v. Philip Morris Inc., 2010-NMSC-035, ¶8, 148 N.M. 713, 242 P.3d 280.

5 When the factual record is insufficiently developed or where further factual resolution is

6 necessary, summary judgment is inappropriate. See Nat’l Excess Ins. Co. v. Bingham, 1987-

7 NMCA-109, ¶13, 106 N.M. 325, 742 P.2d 537. When there is the slightest doubt about whether a

8 material dispute of fact exists, summary judgment is inappropriate. See Las Cruces Country

9 Club, Inc. v. City of Las Cruces, 1970-NMSC-016, ¶3, 81 N.M. 387, 467 P.2d 403. The burden

10 is on the movant to prove no issues of material fact, and once the movant has made a prima facie

11 case, the burden shifts to the non-moving party to prove the existence of a material fact.

12 Goodman v. Brock, 1972-NMSC-043, ¶ 6-11, 83 N.M. 789, 498 P.2d 676.

13 In this instance, although a formal statement of stipulated facts was not filed, the parties

14 rely on the same core documents and discovery responses, and no genuine dispute of material

15 facts exists. The issues presented are legal ones: whether Section 7-14-6 (F)(1) requires that

16 holding a vehicle for lease occur in the ordinary course of business, and whether the capital

17 contribution arrangement constituted disqualifying use. See Las Cruces Country Club, Inc. v.

18 City of Las Cruces, 1970-NMSC-016, ¶3, 81 N.M. 387, 467 P.2d 403. The appropriate manner

19 of resolving a factual dispute is through hearing on the merits at which time the Hearing Officer

20 may determine the facts. “It is the sole responsibility of the trier of fact to weigh the testimony,

21 determine the credibility of the witnesses, reconcile inconsistencies, and determine where the truth

22 lies.” N.M. Taxation & Revenue Dep’t v. Casias Trucking, 2014-NMCA-099, ¶ 23, 336 P.3d 436. It

23 is improper for a court “to grant summary judgment based on its weighing of the evidence and

In the Matter of the Protest of Jeremy M. Gay, page 6 of 15.
1 assessment of credibility.” Ocana v. Am. Furniture Co., 2004-NMSC-018, ¶22, 135 N.M. 539,

2 91 P.3d 58, (as corrected, June 9, 2004). Because the material facts are not in dispute, these

3 questions may be resolved as matters of statutory interpretation on summary judgment.

4 The lease to Sebaste was executed by ALC, not by Taxpayer individually. But ALC is

5 not a party to this protest, and the vehicle was titled and registered in Taxpayer’s name. The

6 question presented, therefore, is whether Taxpayer established his own entitlement to the

7 exemption under Section 7-14-6(F). On the undisputed record, he did not.

8 Motor Vehicle Excise Tax

9 The pertinent statutory law in this case is the Motor Vehicle Excise Tax Act (MVET),

10 which imposes a tax on the sale of any motor vehicle subject to registration within New Mexico,

11 subject to limited exceptions. NMSA 1978, Section 7-14-3 (1991).

12 The MVET statute which imposes the tax reads:

13 The rate of the motor vehicle excise tax is four percent and is
14 applied to the price paid for the vehicle. If the price paid does not
15 represent the value of the vehicle in the condition that existed at
16 the time it was acquired, the tax rate shall be applied to the
17 reasonable value of the vehicle in such condition at such time.
18 However, allowances granted for vehicle trade-ins may be
19 deducted from the price paid or the reasonable value of the vehicle
20 purchased. NMSA 1978, Section 7-14-4 (2019).

21 Ordinarily, the seller collects and remits the MVET. However, in this instance the seller was in

22 Colorado, and the Taxpayer was able to affirm that Taxpayer would register the vehicle in New

23 Mexico, thereby avoiding a Colorado tax. Taxpayer paid the MVET when Taxpayer registered

24 the vehicle within the state, after the initial purchase. The imposition of accompanying fees is not

25 at issue here.

26 Here, the Taxpayer was charged $6,539.70 on a sale of $108,995.00, which equates to six

27 percent (6%) rather than the statutory four percent (4%) excise tax. The additional two percent

In the Matter of the Protest of Jeremy M. Gay, page 7 of 15.
1 (2%) was due to an application of the penalty for late application for a certificate of title,

2 pursuant to NMSA 1978, Section 7-14-8 (A). The calculation of tax is not at issue.

3 MVET tax exemption for vehicles acquired for subsequent lease.

4 The crux of the dispute is whether the acquisition of the vehicle for subsequent lease was

5 exempt from tax. The MVET provides a tax exemption for vehicles acquired for subsequent

6 lease. The exemption is contained within NMSA 1978, Section 7-14-6 (F) (2023). The statute

7 reads:

8 F. A person who acquires a vehicle for subsequent lease shall be
9 exempt from the tax if:

10 (1) the person does not use the vehicle in any manner other than
11 holding it for lease or sale or leasing or selling it in the ordinary
12 course of business;
13 (2) the lease is for a term of more than six months;
14 (3) the receipts from the subsequent lease are subject to the gross
15 receipts tax; and
16 (4) the vehicle does not have a gross vehicle weight of over
17 twenty-six thousand pounds.

18 The Department did not challenge subsections (2), (3), or (4) apply to this vehicle and

19 subsequent lease. The subsequent lease was for more than six months, the receipts from that

20 lease are subject to gross receipts tax, 1 and the vehicle does not have a gross vehicle weight of

21 over twenty-six thousand pounds.

22 The parties’ primary contention concerns the interpretation of the first subsection,

23 concerning whether this Taxpayer qualifies as “a person [who] does not use the vehicle in any

24 manner other than holding it for lease or sale or leasing or selling it in the ordinary course of

1
This long-term lease would not qualify for the Leased Vehicle Gross Receipts Tax Act, under NMSA 1978,
Section 7-14A-1 (1991) et seq. Leasing, as defined by Section 7-14A-2 (D) of that act, requires a lease period of not
more than six months to qualify (this lease was for nearly a year), and a vehicle is defined under the same section (F)
as part of a fleet of five or more, and sized to accommodate six or fewer adults (this 14-seat vehicle was not part of a
fleet and made to accommodate more than six adults). As the parties did not argue or brief this point, it must be
given that the parties agreed some other provision of the Gross Receipts and Compensating Tax Act applied to this
lease.

In the Matter of the Protest of Jeremy M. Gay, page 8 of 15.
1 business.” Section 7-14-6 (F)(1). The conflict has been divided into two parts, first, whether the

2 statute requires that the Taxpayer’s holding the vehicle for lease was “in the ordinary course of

3 business,” and second, whether the Taxpayer used the Van in any manner other than for holding

4 it for lease or leasing it.

5 The First Issue.

6 The dispositive question is whether Section 7-14-6(F)(1) exempts a person who acquires

7 a vehicle for lease even when leasing vehicles is not part of that person’s ordinary course of

8 business. As detailed below, the Hearing Officer concludes it does not. Reading the phrase

9 “holding it for lease or sale or leasing or selling it in the ordinary course of business” as a whole,

10 the ordinary-course-of-business limitation applies to the exempt activity described in the

11 subsection. Because Taxpayer admitted that neither he nor ALC leases vehicles in the ordinary

12 course of business, the exemption does not apply.

13 Concerning the first issue of holding the vehicle for lease, the Taxpayer’s contention can

14 be summarized as follows: the phrase of “holding it for lease or sale or leasing or selling it in the

15 ordinary course of business” can be divided into two distinct and independent phrases. The first

16 phrase is “holding it for lease or sale” and the second phrase, separated by “or,” is “leasing or

17 selling it in the ordinary course of business.” Under Taxpayer’s interpretation, the “ordinary

18 course of business” only modifies “leasing or selling it,” and so “holding it for lease or sale” is

19 separate and does not require one be in the business of leasing or selling. Under Taxpayer’s

20 interpretation there are two types of allowed beneficiaries of the exemption, notably, those who

21 are engaged in holding a vehicle for lease or sale, and those who engage in the ordinary course of

22 business of leasing and selling vehicles. The Department described this as utilizing the “last

23 antecedent” canon of construction. The Department’s authority comes from a treatise on

In the Matter of the Protest of Jeremy M. Gay, page 9 of 15.
1 statutory construction co-authored by Justice Antonin Scalia. See A. SCALIA & B. GARNER,

2 READING LAW: THE INTERPRETATION OF LEGAL TEXTS (2012). Paraphrasing from a Supreme

3 Court hypothetical, Justice Scalia provided the example of admonishing a teenager “you will be

4 punished if you throw a party or engage in any other activity that damages the house.” Id., 144-

5 146. In the example, the parents intended to prevent both a party, and any other activity that

6 damages the house.

7 The Department’s contention on the first issue can be summarized as follows: the phrase

8 “holding it for lease or sale or leasing or selling it in the ordinary course of business” requires

9 that both sections of the phrase require that the action is “the ordinary course of business.” The

10 Department contends that one instance of leasing is not “the ordinary course of business” for a

11 lawyer or a law office, which the Taxpayer did not challenge. 2 In essence the Department

12 contends the exemption applies only where the taxpayer is engaged in vehicle leasing or selling

13 in the ordinary course of business, which the Department argues is not the case here.

14 The Department, again citing to the treatise on statutory construction co-authored by

15 Justice Antonin Scalia, encourages use of the “series-qualifier canon” which states “when there

16 is a straightforward, parallel construction that involves all nouns or verbs in a series, a

17 prepositive or postpositive modifier normally applies to the entire series.” Id., 147-151. As such,

18 the Department encourages the interpretation of the phrase “holding it for lease or sale or leasing

19 or selling it in the ordinary course of business” using the postpositive modifier of “in the

20 ordinary course of business” to modify all preceding verbs, i.e., holding a vehicle for lease in the

21 ordinary course of business; holding a vehicle for sale in the ordinary course of business; or,

2
In New Mexico, the courts have adopted a definition of “course of business” to mean “a business practice that is
routine, regular, usual, or normally done.” Public Service Company of New Mexico v. N.M. Tax & Rev. Department,
2007-NMCA-050, ¶ 16, 141 N.M., 520, 157 P.3d 85.

In the Matter of the Protest of Jeremy M. Gay, page 10 of 15.
1 leasing a vehicle in the ordinary course of business; or, selling a vehicle in the ordinary course of

2 business.

3 Under the Uniform Statute and Rule Construction Act, NMSA 1978, Section 12-2A-18,

4 “[a] statute or rule is construed, if possible, to (1) give effect to its objective and purpose; (2)

5 give effect to its entire text; and (3) avoid an unconstitutional, absurd or unachievable result.” It

6 is a canon of statutory construction in New Mexico to adhere to the plain wording of a statute

7 except if there is ambiguity, error, an absurdity, or a conflict among statutory provisions. See

8 Regents of the Univ. of New Mexico v. New Mexico Fed’n of Teachers, 1998-NMSC-020, ¶28,

9 125 N.M. 401, 962 P.2d 1236.

10 Looking first to statutory interpretations published by the Department, the Department

11 website provides Revenue Ruling # 600-02-1, issued May 7, 2002. 3 It is within this ruling we

12 find the only instance of a published interpretation of the specific language of the statute, prior to

13 renumbering of the statute subsections, dealing with a different issue of a contract for lease with

14 an option to purchase. The ruling states “Section 7-14-6 (E) exempts from the motor vehicle

15 excise tax vehicles that are acquired for subsequent lease, provided that the person acquiring the

16 vehicles does not use the vehicles in any manner other than by holding them for lease or sale, or

17 leasing or selling them in the ordinary course of business…” Notably, there is a comma placed in

18 the ruling where none exists in the statute. The comma within the ruling in the phrase “other than

19 holding them for lease or sale, or leasing or selling them in the ordinary course of business”

20 appears to imply and emphasize a separation between the phrases “holding a vehicle for lease or

21 sale”, and “leasing or selling them in the ordinary course of business,” which is an interpretation

3
Revenue Ruling 600-02-1 can be found at https://klvg4oyd4j.execute-api.us-west-
2.amazonaws.com/prod/PublicFiles/34821a9573ca43e7b06dfad20f5183fd/e8dcaa0a-526b-4c2a-a5de-
847e585f0631/600-02-01.pdf (Last accessed 03/20/26). Also available thru https://www.tax.newmexico.gov/forms-
publications/.

In the Matter of the Protest of Jeremy M. Gay, page 11 of 15.
1 more akin to Taxpayer’s interpretation. However, as noted above, the interpretation of Ruling

2 600-02-1 places a comma between the phrases where no comma exists in the statute.

3 The only case that addresses a similar statute regards a coin-operated laundry. In the case

4 of Strebeck Properties, Inc. v. New Mexico Bureau of Revenue, 1979-NMCA-035, 93 N.M. 262,

5 599 P.2d 1059, the taxpayer argued that his out-of-state purchase of laundry washing and drying

6 equipment was not subject to the compensating tax because his laundromat customers leased the

7 laundry equipment every time the customers used them, citing to an earlier iteration of NMSA

8 1978, Section 7-9-78. The statute at issue in the case provides an exemption to people who

9 purchase tangible personal property, who, among other things, “do not use the tangible personal

10 property in any manner other than holding it for lease or sale, or leasing or selling it either by

11 itself or in combination with other tangible personal property in the ordinary course of business.”

12 Id. Although the statutory construction was not specifically addressed, the court quoted the

13 statute as “holding it for lease . . . in the ordinary course of business.” Strebeck Properties, Inc.,

14 1979-NMCA-035, ¶9 (ellipsis in original). This lends some weight to the Department’s

15 interpretation that the statute requires using the postpositive modifier “in the ordinary course of

16 business” to each of the previous sections. While somewhat odd to think that an idle laundry

17 machine is being “held” for lease to the next customer, it is akin to a car leasing business which

18 may “hold” several cars in a lot while others are out on lease to customers.

19 Other statutes apply the same structure and both federal and state courts apply the same

20 interpretation. See Alpern v. Ferebee, 949 F.3d 546, 550 (10th Cir. 2020) (a statute which

21 provides a parking fee exception “[s]olely for parking, undesignated parking, or picnicking along

22 roads or trailsides” interpreted to apply the postpositive modifier “along roads or trailsides” to

23 each of the preceding elements). In a recent case before the New Mexico Court of Appeals, State

In the Matter of the Protest of Jeremy M. Gay, page 12 of 15.
1 v Bailey, 2026-NMCA-____, 2026 WL 575083 (Cert. denied 3/25/2026, S-1-SC-41340), the

2 court interpreted the language of the Implied Consent Act in a similar manner in interpreting the

3 statutory language: “Only a physician, licensed professional or practical nurse or laboratory

4 technician or technologist employed by a hospital or physician shall withdraw blood from any

5 person in the performance of a blood-alcohol test.” NMSA 1978, Section 66-8-103. The Court

6 found that as a self-employed phlebotomist, the person who drew blood from the defendant was

7 a “laboratory technician” who must be “employed by a hospital or physician.” Bailey, ¶12, ¶25,

8 ¶30. This is an example of using the phrase: “laboratory technician or technologist employed by

9 a hospital or physician” to use the series qualifier postpositive modifier to apply to the two

10 sections “laboratory technician” or “technologist” which immediately precede it. However, the

11 court did not address whether the postpositive modifier “employed by a hospital or physician”

12 would apply to the antecedents further removed in the sentence, i.e., “a physician, licensed

13 professional or practical nurse.” To do so would require that a physician would have to be

14 employed by a physician or hospital, which would be redundant, but would not undercut the

15 legislative intention of providing an acceptable manner of oversight for those conducting the

16 intrusive procedure of drawing blood to be used as evidence in court.

17 The Department has also argued that the reading is supported by the “natural

18 construction” of the statutory language. The Department emphasized that “when several words

19 are followed by a clause which is applicable as much to the first and other words as to the last,

20 the natural construction of the language demands that the clause be read as applicable to all.”

21 Paroline v. U.S., 572 U.S. 434, 447 (2014). Here, adopting the Department’s construction of the

22 statute, it stands to reason that the “ordinary course of business” should apply to both those who

23 hold a vehicle for lease or sale, and those engaged in the leasing or selling of vehicles, as they

In the Matter of the Protest of Jeremy M. Gay, page 13 of 15.
1 are most often one and the same. As with many tax statutes, the legislative purpose of many

2 restrictions is to prevent double taxation, to close loopholes, and to prevent evasion of tax. The

3 legislative intent of limiting this exemption to those in the business of holding, leasing, and

4 selling vehicles is reasonable and achieves those common purposes. The limitation of “the

5 ordinary course of business” applies to all the preceding sections of the sentence, as the

6 Department has argued. The statute does not create an exemption for a person who merely holds

7 a vehicle for lease outside the ordinary course of business.

8 Because the Taxpayer is not in the business of holding, leasing, or selling vehicles, the

9 exemption provided under Section 7-14-6 (F) does not provide relief from payment of the Motor

10 Vehicle Excise Tax nor grounds to refund the tax paid under Section 7-14-9. With this

11 conclusion, there is no need to address the secondary contention that the transfer of the vehicle as

12 a capital contribution to the law office constitutes an improper use of the vehicle, as moot.

13 However, the matter will be addressed briefly.

14 The Second Issue.

15 Because the Taxpayer is not in the business of holding, leasing, or selling vehicles in the

16 ordinary course of business, the exemption in Section 7-14-6(F) does not apply. That conclusion

17 is dispositive, so the Hearing Officer does not reach the parties’ alternative arguments regarding

18 whether the capital contribution arrangement constituted a disqualifying “use” of the vehicle.

19 IT IS THEREFORE ORDERED that the Department’s Motion for Summary Judgment is

20 GRANTED and the protest is DENIED.

21 DATED: April 29, 2026

In the Matter of the Protest of Jeremy M. Gay, page 14 of 15.
1
2 Ignacio V. Gallegos
3 Hearing Officer
4 Administrative Hearings Office
5 P.O. Box 6400
6 Santa Fe, NM 87502

7 CERTIFICATE OF SERVICE

8 On April 29, 2026, a copy of the foregoing Decision and Order Granting Summary

9 Judgment in Favor of The Department was submitted to the parties listed below in the following

10 manner:

11 INTENTIONALLY BLANK
12

In the Matter of the Protest of Jeremy M. Gay, page 15 of 15.