Gallery owners and the town fix tax misunderstanding

By Jesse Moya
jmoya@taosnews.com
Posted 8/8/19

A casual conversation with town of Taos manager Rick Bellis raised questions for art gallery owner David Mapes about just how the town was counting the revenue …

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Gallery owners and the town fix tax misunderstanding

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A casual conversation with town of Taos manager Rick Bellis raised questions for art gallery owner David Mapes about just how the town was counting the revenue contributions from the arts.

And Mapes believed art galleries were contributing a lot more to the Taos economy than town officials realized.

Town officials agree. "The galleries and art community are an important part of our local economy," said town of Taos Marketing and Tourism Director Karina Armijo. "Understanding how GRT contributions are allocated is critical to identifying the significance of each particular economy - whether it be outdoor rec, arts, medical, transportation, etc."

Officials from the town of Taos have recently been looking at the amount of gross receipts tax coming in from different sectors - such as real estate, construction and agriculture - to figure out ways to increase revenues coming into the town's coffers.

Gross receipts taxes earned by those different sectors are counted under specific business classifications. The GRT revenues help drive the town's budget.

A division of the state business classifications labeled "arts, entertainment and recreation" has been coming up with gross receipts tax revenues hardly exceeding $2,000 per month in the Taos area. Town officials assumed galleries were listed under that classification and assumed that was the contribution to GRT.

This classification had gallery owners like Mapes, of David Anthony Fine Art gallery on Kit Carson Road, scratching their heads - as their sales would indicate gallery owners are contributing much more than that to the town's income.

"We are significant contributors to the economy and we are able to show that," Mapes said in a conversation with the Taos News on Monday (Aug. 5).

When starting a new business, all owners must apply for a tax identification number and specify a business classification through the state. Galleries are listed under the retail classification as "art dealers," not necessarily under "arts and entertainment."

Because of this, Mapes realized that the GRT money coming in from art dealers was being counted in the retail section, not the art section. When town officials see GRT revenues under the retail classification, they can't tell how much of it is from galleries and how much of it is from other types of stores.

Mapes said that all of the galleries he spoke with in his research labeled themselves under the retail trade, not the arts and entertainment category.

According to New Mexico Tax and Revenue spokesman Charlie Moore, New Mexico is a "self-identifying state" meaning business owners are able to check off all descriptions that apply to their business.

"I don't know why it took us so long to snap to this," Mapes said.

Mapes is the executive director of the Taos Gallery Association and wanted to ensure his fellow gallery owners were being fairly represented as contributors to the town of Taos.

Of the $15 million of taxable GRT collected by the state in Taos County for March, 11 art dealers contributed over $116,000 for the month alone.

Mapes spoke with several gallery owners in the town and has been working with them to bring a report to the town tallying their contributions during an August meeting.

"The important thing is the conversation with the town and showing them we are big contributors," said Tony Walker of Jones Walker Gallery. "Now the communication lines are open."

Walker said he has no negativity toward the town and wants this to be a clarification going forward that gallery owners are filing under the retail box, not the arts section.

Moore said he did not believe there was any benefit or fallback of checking one category over the other and believed the designation to be primarily for classification and data gathering purposes.

New gallery owners applying for a business identification should check the retail box on the state form and designate themselves as an "art dealer" by writing in the label and including the number 453920 with their application.

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