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CCA Denied Over $2 Million In Tax Deductions

Corrections Corporation of America (CCA) appealed a New Mexico court denial for gross receipts tax deduction claims totaling over $2 million. The denial was affirmed due to the "per diem rate" prisoner housing calculation.

CCA contracts to house prisoners for the State of New Mexico and filed a claim with the Taxation and Revenue Department for a refund of over $2 million paid pursuant to the Gross Receipts Act (Act). The Act imposes a five percent tax on receipts from business activities and also allows any receipts for real property lease or sales to be deducted. The deductions were denied and the district court upheld the denial ruling that prisoner housing contracts were not real property leases. CCA appealed.

On appeal, the Court of Appeals of the State of New Mexico held that due to the "per diem rate" payment calculation for housing prisoners, "the governmental entities did not pay a fixed amount in exchange for the physical guarantee of real property" and hence "there is no lease for real property" under the Act. See: Corrections Corporation of America v. State of New Mexico. 170 P.3d 1017 (N.M. App. 2007).

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Related legal case

Corrections Corporation of America v. State of New Mexico