The McDonald’s in Shiprock, seen Tuesday, May 21, 2013, has been charging a more than 11 percent tax on its items. Most other businesses only charge
The McDonald's in Shiprock, seen Tuesday, May 21, 2013, has been charging a more than 11 percent tax on its items. Most other businesses only charge the 5-percent Navajo Nation tax. (Jenny Kane/The Daily Times)
SHIPROCK — Would you like extra taxes with that?

McDonald's has been tacking a double-tax onto items sold at its Shiprock franchise, which has left some customers not-so-happy about their meals.

The popular fast food restaurant has been charging a slightly more than 11-percent tax on each ticket.

In part, the tax is comprised of the 5 percent Navajo Nation sales tax because the restaurant is located on the Navajo Nation. All businesses on the Navajo Nation are required to pay the revenue from the sales tax to the tribe, according to Farmington tax attorney Gary Risley.

The other part of the 11-percent tax is the San Juan County gross receipts tax that is paid to the state. Most businesses do not charge the county gross receipts tax if they are located on the reservation.

For instance, a happy meal at McDonald's, which costs $3.49, costs $3.88 including taxes. Normally a happy meals would only be $3.66, including taxes.

The supersized tax has not gone unnoticed by Shiprock residents. Several have complained to the Regional Business Development Office in Shiprock.

"We've asked for an opinion," said Randy Sells, office program manager, who said the query was sent to the Navajo Nation Department of Justice's taxation attorney, though it never received a response.

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That was about three years ago, Sells said, though he did not know how long the business had been attaching two taxes to their sales.

"Me being a Navajo, being on the reservation, they should just charge me the 5-percent tax," Sells said.

It is unlikely, however, that the business is making any money off the tax, Risley said.

If anyone is making the tiniest bit of profit, it would be the state.
On Tuesday, the menu is shown for the McDonald’s in Shiprock, where the restaurant charges more than the 5-percent Navajo Nation tax.
On Tuesday, the menu is shown for the McDonald's in Shiprock, where the restaurant charges more than the 5-percent Navajo Nation tax. (Jenny Kane/The Daily Times)
The state taxation and revenue department, however, did not immediately have information about the issue Wednesday.

"Somewhere along the line, someone probably got confused," Risley said, explaining business can be extremely complicated when dealing with overlapping jurisdictions.

The business likely is paying the respective taxes to both the tribe and the state, Risley said. It could, however, simply pay the tribe the 5-percent tax and receive a credit from the state.

It would then pay the difference between the gross receipts tax and the tribal sales tax to the state, which in this case would be about 1.3 percent because the gross receipts tax is about 6.3 percent in San Juan County, according to New Mexico Taxation and Revenue Department documents.

McDonald's representatives could not be reached for comment Wednesday.

Jenny Kane can be reached at jkane@daily-times.com; 505-564-4636. Follow her on Twitter @Jenny_Kane.