WHAT IS THE NEW MEXICO GROSS RECEIPTS TAX?
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?
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.
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
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.
Goodman, CPA, FCPA
Comprehensive Small Business Solutions, PC
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This article is published in the Journal of State Taxation (May-June 2010), published bimonthly by Commerce Clearing House.