Governor Michelle Lujan Grisham signs Senate Bill 106 into law, officially eliminating Exemption G from the Lodgers' Tax Statute
On February 4, New Mexico Governor Michelle Lujan Grisham signed Senate Bill 106 into law, officially eliminating Exemption G from the Lodgers’ Tax Statute (Section 3-38-16 NMSA 1978).
SB 106 was included in a package of bills that were fast-tracked to Gov. Lujan Grisham’s desk after receiving bipartisan support in previous Legislative Sessions. SB 106 was nearly identical to legislation drafted to address Exemption G of the Lodgers’ Tax Statute during the 2017 Legislative Session that was vetoed despite receiving bipartisan support in both Legislative Chambers. This year’s bill, sponsored by Senator John M. Sapien, passed the Senate on a vote of 36-5 on Jan. 24 and passed the House of Representatives by a vote of 56-9 on Jan. 31.
With the expanding popularity of private vacation rental websites like Airbnb and VRBO, Exemption G had effectively created a tax loop-hole that allowed many property owners to avoid paying Lodgers’ Tax on revenue generated by the short-term rental of these properties. Though some local governmental entities had entered into Voluntary Collection Agreements (VCAs) with online-booking platforms, Exemption G made negotiating and administering those VCAs difficult. Given the fact that revenue generated by the Lodgers’ Tax is essential to adequately promote tourism in local communities and with the dramatic increase in the impact of online-booking platforms, collecting Lodgers’ Tax from the short-term rental of private properties in an efficient manner is key to the continued diversification of local economies throughout the state.
“Passage of Senate Bill 106 is a tremendous victory for New Mexico tourism,” said New Mexico Hospitality Association CEO Kathy Komoll. “Removal of this outdated exemption is a first step towards creating a balanced and fair business environment for lodging and hospitality, and this will also provide more resources for communities to further promote their destination for the purpose of travel.
The law will go into effect beginning January 1, 2020.
This blog post has been updated to reflect a correction. The article previously stated the law will go into effect beginning July 1, 2019, and was updated to reflect the effective date of January 1, 2020 as listed in the final version of the bill.