Dianne Goodman
CPA, FCPA
Comprehensive Small Business Solutions, PC

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What is the NM Gross Receipts Tax?

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FOR IMMEDIATE RELEASE:

WHAT IS THE NEW MEXICO GROSS RECEIPTS TAX?

Most states have what is known as a sales tax. New Mexico does not have a sales tax, but it does impose a Gross Receipts Tax. When you engage in business in New Mexico you may be required to pay Gross Receipts Tax. This tax is paid by the selling business and can be passed on to the consumer. In general sales and/or leases of goods are taxable. On January 1, 2005 gross receipts tax was eliminated from certain food sales and certain health care services. In addition, prescription drugs are no longer subject to this tax. Thanks for the relief! However the unfortunate reality is that sales and performance of services are taxable in New Mexico. This includes services performed outside New Mexico for a product initially used in New Mexico. Let's hope someday New Mexico will try to become more competitive with its neighboring states and eliminate the burden of Gross Receipts Tax on services too! You can view the Gross Receipts Rate Schedule at NM GROSS RECEIPTS TAX RATE TABLES and click on the "Rates" tab.

WHAT ARE THE GROSS RECEIPTS TAX OBLIGATIONS OF PURCHASERS IN NEW MEXICO?

If you are a purchaser of nontaxable items you may need the tax exempt certificates provided by the Department in order to avoid paying tax on these items.

WHAT ARE THE GROSS RECEIPTS TAX OBLIGATIONS OF SELLERS IN NEW MEXICO?

If you are a seller of nontaxable items, you will need the tax exempt certificate properly filled out from your purchaser. You only need one certificate for the time period specified in order to comply.

WHAT ARE EXEMPTIONS FROM GROSS RECEIPTS TAX?

There are sales which are exempt from Gross Receipts Tax. If you only have exempt receipts, you do not need to file with the Department or report this information on the CRS-1 form. Examples of exemptions include interest and dividends and receipts of 501C(3) nonprofit groups.

WHAT ARE DEDUCTIONS FROM GROSS RECEIPTS TAX?

There are also deductions from Gross Receipts Tax. If you have receipts and related deductions, you need to file with the department and you will need to complete the CRS-1 form. Be sure that you have the proper documentation for these deductions in case the State audits you. They charge interest and that does not include the penalties that you will also have to pay! In most cases an NTTC Exemption Certificate is an acceptable form of documentation. These forms can be obtained by applying online at NTTC EXEMPTION CERTIFICATE APPLICATION. Deductions include sales for resale, construction material and services sold to a construction contractor for use in a construction project, and sales by suppliers of components in manufacturing processes. Please note that if you are not current on your reporting and payment of the Gross Receipts Tax, the department will not provide you with these forms and you may be forced to pay tax you might otherwise not have owed. You will need to keep your records for up to 10 years if there is evidence of tax fraud. Normally the assessment period is 3 years back from the end of the year the tax was due. If you have under-reported by more than 25%, the department can go back up to six years and seven years for non-filed reports. So don't forget to file those reports if you are required as the penalty could be much higher than if you had filed them.

Go to NM GROSS RECEIPTS TAX LAW CHANGES EFFECTIVE JANUARY 1, 2013 for changes in the tax law on the NM Gross Receipts Tax for your business.

This article was intended to provide general information about New Mexico Gross Receipts Tax. It does not contain all the rules and exceptions that may apply to your situation. If you have further questions regarding this, I can be reached at www.diannegoodman.com.

About the Author

Dianne Goodman, CPA, FCPA - Specializes in servicing Small Businesses and Individuals. Visit www.diannegoodman.com for relevant and current information on a variety of financial and tax issues focusing on small businesses and individuals.

CONTACT INFORMATION:

Dianne Goodman, CPA, FCPA
Comprehensive Small Business Solutions, PC
505 323-2307
www.dgoodmancpa.com

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WHAT IS THE NEW MEXICO GROSS RECEIPTS TAX? by Dianne Goodman, visit www.dgoodmancpa.com for more content like this.

This article is published in the Journal of State Taxation (May-June 2010), published bimonthly by Commerce Clearing House.

 

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