Most states have what is known as a sales tax. New Mexico does not have a sales tax but they have 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 selling business and can be passed on to 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. Prescription drugs are no longer taxable either. Thanks for relief! However 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. Letís hope someday New Mexico will try to become more competitive with its neighboring states and eliminate burden of Gross Receipts Tax on services too!
You can view current Gross Receipts Rate Schedule at http://www.state.nm.us/tax/pubs/gr_rates_dec_05.pdf which is effective through December 31, 2005.
WHAT ARE THE GROSS RECEIPTS TAX OBLIGATIONS OF PURCHASERS IN NEW MEXICO?
If you are a purchaser of nontaxable items you may need tax exempt certificates provided by 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 tax exempt certificate properly filled out from your purchaser. You only need one certificate for 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 Department or report this information on 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 do need to file with Department and you will need to complete CRS-1 form. Be sure that you have proper documentation for these deductions in case State audits you. They charge 15% interest and that doesnít include 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 filling out form at http://www.state.nm.us/tax/forms/year99/acd31050.pdf . 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 paying of Gross Receipts Tax, Department will not provide you with these forms and you may be forced to pay tax you might otherwise not have owed since you wonít have exemption certificates.