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Changes ahead for tax reporting

Big changes are on the horizon for New Mexico’s tax system, which should make life easier for businesses and New Mexico Taxation and Revenue alike.

The state is overhauling its Combined Reporting System, with the first round of changes expected to go live this summer. Starting July 1, businesses will receive individualized forms targeted to their specific needs, rather than a single combined form.

“That saves the taxpayer a lot of work,” said Stephanie Schardin Clarke, cabinet secretary for the state tax department.

Schardin Clarke said this change should make it easier for businesses to file straightforward tax returns while helping the department spot errors.

While everyone’s tax situation is different, Schardin Clarke said the majority of business owners only pay gross receipts tax, and either wage withholding themselves or through a separate payroll company.

However, the current system requires taxpayers to wade through arcane interstate telecom taxes and vehicle surcharges to fill out the lines they need. That can lead to mistakes that force taxpayers to re-file, or even undergo a costly and time-consuming audit, Schardin Clarke said.

“There’s all these instructions and deductions and credits that don’t apply to most taxpayers, that they have to sort through,” she said.

Stephanie Schardin Clarke

It’s helpful for the tax department as well. Schardin Clarke said having a single combined system leads to processing errors, and she said she expects separating the system makes it easier to process payments and refunds correctly.

For those looking to file online, Schardin Clarke said the website will be overhauled as well, becoming more user-friendly and allowing users to get where they need to go just by answering a few questions.

“Right now, taxpayers have to do quite a bit of searching and sorting to get to the area they need,” Schardin Clarke said.

The CRS overhaul is just one change going into place in July. Taxpayers should also expect the state to fully implement taxes on internet sales at the local level.

Additionally, Schardin Clarke said the department is changing how GRT is collected. That means most sales will be reported at the buyer’s location, rather than the seller’s. More details will be available in the next few weeks, according to the department.

Titan raises private equity

A New Mexico commercial real estate developer recently raised nearly $100 million in private equity – but not in the sector you might be picturing.

Titan Development announced that it raised $95 million in capital toward multifamily and industrial developments across the Southwest.

Ben Spencer, principal and fund manager for Titan’s private equity wing, said in an email the company is focusing on smaller markets for its multi-family development, signaling that the trend away from expensive coastal markets may not be dissipating any time soon.

“While COVID-19 has made an impact, it has largely been a trend accelerator and we believe those trends will continue,” Spencer said.

This isn’t Titan’s first venture into the private equity world. Spencer said the firm launched its first fund in 2017. That fund committed $108M to 20 projects in six states.

Spencer said focusing on private equity makes sense for Titan for a few reasons. He said the firm has a large pipeline of deals, and it makes sense to raise money for all of those deals at once.

The approach also gives investors the opportunity to diversify their real estate portfolio with a single investment, and allows Titan to move quickly when lining up projects.

Spencer said Titan is taking a more targeted approach with this fund. On the industrial side, Titan is focused on the Interstate-35 corridor in Texas, which encompasses Dallas, Austin and San Antonio.

For multi-family development, Titan is expecting people to continue leaving large, expensive markets in favor of smaller cities, like Albuquerque that offer more room and a lower cost of living.

“Ultimately, our job is to focus on our bigger convictions about the market and asset types we have identified for investment,” Spencer said.

Stephen Hamway covers economic development, healthcare and tourism for the Journal. He can be reached at shamway@abqjournal.com.

 

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