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New Mexico Sales Tax Guide

By Cristina Garza

New Mexico is a great state to live and do business in! If you are starting or growing a business in New Mexico, one thing you’ll want to make sure of is staying on top of your “sales tax” liability. Which in New Mexico isn’t even a thing! Instead of a sales tax, New Mexico has a Gross Receipts Tax. Sound confusing? Don’t fret! We have put together this guide so that you can be better prepared to meet the tax requirements for a business in New Mexico.

After reading this guide, you will know the answers to some of the most common questions:

  • How to contact the New Mexico Taxation and Revenue Department.
  • How to be prepared for your call with the New Mexico Taxation and Revenue Department.
  • When to charge sales tax (aka gross receipts tax) in New Mexico.
  • What goods and products are taxable in New Mexico.
  • When you establish a gross receipts tax nexus with the state of New Mexico, and the nuances of various thresholds.
  • How to register for a gross receipts tax license in New Mexico.
  • How to collect gross receipts tax in New Mexico.
  • How to file and pay gross receipts tax in New Mexico.

If after reading you have any other questions to help you determine your tax sales obligations in New Mexico and how to fulfill them, we are here for you. Throughout this guide, even though in New Mexico it’s technically a “gross receipts” and not a sales tax, we’ll stick to using the more common term except where it makes sense not to.

 

 

 

New Mexico Sales Tax Contacts

 

✅ Do you need to contact the New Mexico Department of Taxation and Revenue?

✅ Are you unsure if you should visit, call them, or contact them through their website?

✅ Do you wonder what information you should have ready before you contact them?

 

If you answered “Yes” to these questions, we have just the information you need! :)

You can reach the New Mexico Department of Taxation and Revenue by phone at 505-827-0832.

Alternatively, you may also send a message on the New Mexico Website or visit one of their many field and admin offices. If you are looking for help quickly, we highly suggest you call rather than send a message or wait in line.

When you call the New Mexico Department of Taxation and Revenue, you want to have some information on hand. It will save time to have the following information easily accessible before you call:

  • Taxpayer Name
  • EIN
  • Sales & Use Tax ID Number

If you are calling on behalf of an individual or a business, you must have a New Mexico Power of Attorney signed before you call or else you risk wasting your time. Technically, a representative would not be authorized to talk to you unless you have this available.

If you have any more questions, please feel free to contact us so we can assist you with your gross receipts tax needs.

 

 

 

New Mexico Sales Tax Registration

 

Are you a new business selling tangible items in the state of New Mexico? If so, you need to register for a CRS Identification Number so that you can pay your Gross Receipts (aka sales tax) on time.

Trust me, there is no reason to worry as you only need to do this once and we’re about to prepare you. As long as there are no major changes (such as a change in ownership or structure) to your business, you will not be required to renew or make changes to your gross receipts tax license.

We are going to detail the steps below so you are ready to register for your gross receipts license.

Here we go!

 

Remember ...

Preparation is key.

 

Before you start the application process, you will want to know:

  • How to apply for a gross receipts license in New Mexico?
  • Where to apply for a gross receipts license in New Mexico?
  • What information is required for a gross receipts license in New Mexico?
  • How much does it cost to register for a gross receipts license in New Mexico?
  • Are there any other requirements to register for a for a gross receipts license in New Mexico such as a Tax ID or obligations to register with other agencies?

We find that our clients frequently ask these essential questions. To help you be prepared for your first time registering, we are going to give you the knowledge you need.

 

Let’s get started!

 

 

How do I register to collect gross receipts tax in New Mexico?

You can apply or register for a New Mexico CRS Identification Number and gross receipts license by visiting the New Mexico Department of Taxation and Revenue and following the instructions provided.

You have two options when signing up for a CRS Identification Number:

  1. Complete the ACD-31015 Application for Business Tax Identification Number and return it to any local tax office.
  2. Complete the form online here.

We, of course, highly recommend that you use the online form as it will allow your business to get up and running as quickly as possible.

 

 

What information do I need to register for a New Mexico CRS Identification Number and Gross Receipts License?

Great question!

Before you sign up for New Mexico CRS Identification Number and gross receipts license you want to have the following information easily accessible:

  • Business name
  • Business entity type
  • Description of business activities
  • Date business activities began or will begin
  • Business address and mailing address
  • Business contact information
  • NAICS code that best matches the business
  • Federal Employer Identification Number (FEIN)
  • List of business officers, partners, managing members, and/or trustees

Don’t forget! Preparation is key. When you have all this information ready, you can go online and register for your CRS at the New Mexico Department of Taxation and Revenue website.

 

How much does it cost to register for a New Mexico CRS Identification Number and Gross Receipts License?

You are going to love the answer to this question.

There is no cost to register for a CRS Identification Number and Gross Receipts License to collect gross receipts taxes in New Mexico State.

 

Do I need a Federal Tax ID Number or EIN to register for A New Mexico CRS Identification Number and Gross Receipts License?

Yes! Yes! Yes! This is required.

You can register for a Federal EIN here.

Worry not, it won’t be too stressful because if you don’t already have one you can get an EIN in under ten minutes.

 

Which agencies in New Mexico do I need to additionally register with?

You may need to apply to some of the following agencies:

This definitely requires some investigation on your end. Since every business is unique, there are different rules, regulations, and laws that may apply.

We suggest contacting to the New Mexico Department of Taxation and Revenue to verify which government agencies you will be required to register with.

 

*****

 

You’re set!

You are now prepared to register for your CRS Identification Number and Gross Receipts License in New Mexico.

Let’s summarize where we reviewed:

  • Register online, preferably, at New Mexico Department of Taxation and Revenue
  • Have all the required information easily accessible before registering online
  • Acquire a tax ID or EIN before registering for a CRS Identification Number and Gross Receipts License.
  • Look into what other agencies you may have to additionally register with.

Registering for your CRS Identification Number and Gross Receipts License will be stress free as long as you are prepared. I recommend organizing all the essential information in a folder, preferably using a system like Box.com or Dropbox. (Bonus: If you are our client, you get Box for free!)

 

 

 

New Mexico Sales Tax FAQ

By now, you may have communicated with the New Mexico Department of Taxation and Revenue and applied for a CRS Identification Number and Gross Receipts License.

Once you have the license to collect and remit gross receipts taxes in New Mexico, you will probably be asking yourself two questions:

  • When do I charge a gross receipts tax in New Mexico?
  • What good are subject to gross receipts taxes in New Mexico?

We are going to go over some common questions that our clients have asked. I believe these questions will help you appreciate the nuances of taxable goods so you can be confident in fulfilling your tax obligations.

Let’s start with the first question…

 

What products are considered taxable or not taxable in New Mexico

 

As a new business, you want to keep in mind that both products and services can be subject to gross receipts taxes.

 

Governmental gross receipts tax is applied to:

  • Property sales in New Mexico, to include:
    • The sale of tangible personal property, including electricity and manufactured homes, licenses (other than the licenses of copyrights, trademarks, or patents),
    • The sale of franchises.
  • Sales for the performance of services in New Mexico, to include:
    • construction activities and all construction materials that will become part of the construction project.
  • The lease of a property or license to use property located in New Mexico;
  • The grant of a right to use a franchise located in New Mexico; or
  • The sale of research and development services performed outside New Mexico when the product of the service is initially used in New Mexico.

There are a lot of situations when a business needs to collect a sales tax in New Mexico. I have some good news though!

There are some transactions that are exempt from gross receipts taxes in New Mexico. For more details on tax exemptions, you can read more here (PDF).

 

While most states with an actual sales tax exempt services from taxation, New Mexico and the gross receipts tax take a different approach. In other words, gross receipts tax also applies to most services.

There is another question customers ask me that is related to taxable goods.

What is a non-taxable transaction certificate (also known as an NTTC)?

This is a certificate the buyer obtains from the tax authorities in New Mexico to give a seller so the buyer can purchase goods and/or services without paying a sales tax. The seller accepts the buyer’s NTTC in “good faith,” meaning that the seller is assured that the buyer is using their purchases in a nontaxable manner.

The seller will be entitled to then deduct the respective receipts when determining their own taxable gross receipts. The seller only needs to obtain one NTTC for all transactions of the same nature with that one buyer. A buyer looking to enjoy the benefits of a tax exemption in New Mexico must obtain an NTTC, because they will not be able to use resale certificates issued by other states.

If you are a business looking to sell in New Mexico, you want to be familiar with an NTTC and the process for executing one.

Any taxpayer who intends to execute an NTTC must do two things. First, the taxpayer must register with the Taxation and Revenue Department. Second, the taxpayer complete the Application for Nontaxable Transaction Certificates or apply online.

After completing these two steps, there is one other requirement. Taxpayers who wish to apply for NTTCs to support the deduction under Section 7-9-46(B) are also required to complete Form RPD-41378, Application for Type 11 or 12 Nontaxable Transaction Certificates (PDF).

 

The bottom line is …

If you are selling a tangible product or service that is not exempt from gross receipts tax, you must charge gross receipts taxes.

 

*****

Now that we have reviewed the nuances of taxable goods in New Mexico state, let’s dig deeper into New Mexico Sales Taxes.

 

So, I will review some of our clients’ frequently asked questions:

  • Is New Mexico an Origin or Destination gross receipts tax State?
  • What creates a gross receipts tax nexus in New Mexico?
  • What is the economic threshold in New Mexico?
  • Does Amazon have fulfillment centers in New Mexico?
  • Does New Mexico have a Click-Thru Nexus?

To better understand your tax obligations, new businesses need to consider how they are doing business and the type of relationships they have with buyers and any third parties to their transactions.

Let’s discuss some questions that will help you understand the nature of your own business and the subsequent tax implications.

 

Is New Mexico an origin or destination sales tax state?

New Mexico is an Origin-Based gross receipts tax state. As such, sellers need to charge gross receipts taxes based on where the seller is located. If New Mexico was a destination-based sales tax state, you would charge sales taxes based on where the buyer is located. Charging sales taxes based on where the seller is located makes collecting gross receipts tax super easy!

 

Protip: Charge New Mexico Sales Tax based on the location of the seller.

 

If you are a seller located in New Mexico, you want to make sure you correctly charge gross receipts taxes in your point of sale or eCommerce software. Otherwise, you risk under or over collecting.

 

What creates a tax nexus with the state of New Mexico?

This is a very important question for not just New Mexico based business but one outside the state as well. Regardless of your location, you can create a gross receipts tax nexus with New Mexico. Therefore, you are subject to New Mexico tax law.

When asking if your business has established a gross receipts tax Nexus with New Mexico, you should know this is also known as "sufficient business presence.” In other words, this means your business has established a taxing connection with a state. When this happens, you are required to collect and remit gross receipts tax in New Mexico because you created a gross receipts tax Nexus.

Even if your business maintains its main headquarters in another state, you may still have to charge and pay gross receipts tax to the New Mexico Department of Taxation and Revenue even if you never step foot in New Mexico.

So, how do you create a gross receipts tax Nexus in New Mexico?

 

A business establishes a nexus in New Mexico by:

  • having a business location in New Mexico;
  • having property stored in New Mexico;
  • employing any person in New Mexico;
  • contracting with a salesperson or other agent in New Mexico;
  • leasing equipment used in New Mexico;
  • performing services in New Mexico;
  • licensing the use of intangible property in New Mexico, or transporting property in New Mexico using the taxpayer’s vehicles.

Let’s talk a bit more specifically about where your goods are stored such as in the instance of an Amazon warehouse.

 

Does Amazon have fulfillment centers in New Mexico?

Nope!

 

This means that if you sell products via Amazon FBA (Fulfillment by Amazon), your products won’t end up on a shelf in New Mexico… yet! Therefore, you do not need to worry about your business creating sales tax nexus with New Mexico resulting from selling your products through Amazon FBA, until they build a warehouse there (which will eventually happen). However, if you do sell on Amazon in the state of New Mexico (even if the goods aren’t held on a shelf there) will automatically have sales state tax tacked on as described in the video below. 

 

 

Does New Mexico have economic nexus?

No, though this is expected to change in the years to come.

While this is not an issue for businesses now in 2018, it is expected to be in the future. We are going to review the basics of economic nexus to help you feel prepared. Some states determine economic nexus based on gross revenue and the number of transactions generated in its state. You may want to keep this in mind for the future. For now, you do not need to worry about hitting this threshold.

 

Does New Mexico have click-through nexus?

No, New Mexico does not have Click-Through Nexus.

They may change this in the future, so let’s go over the basics.

 

Click Through Nexus

 

Let’s break it down:

A business hires an affiliate marketer in the state of New Mexico, who may hire sales representatives in New Mexico to help promote your products. The marketer and the sales representatives do not directly sell the products. They only advertise them. Your products never actually pass through their hands. Even though they do not directly sell your products, your business creates a gross receipts tax Nexus that is specifically known as Click-Through Nexus.

How?

A Click-Through Nexus is established in New Mexico if:

  • Your business used any in-state entity (individual or business) to refer your products or services to customers. An example would be an affiliate marketer.
  • Your business compensated this entity (located/based in New Mexico) either directly or indirectly for their service, which was referring customers to your company by website link or other methods of advertising or referral. An example would be a commission paid to the marketer and/or sales representatives.
  • The cumulative gross receipts from all the affiliate referrals combined (that are based in New Mexico) exceeded the state threshold. Once you hit the predetermined amount, you have created a nexus relationship moving forward.

PROTIP: It is not the location of the affiliate marketer that necessary matters, but rather the location of the sales representatives the marketer employs and the overall combined sales exceeding the predetermined threshold from their referrals. As the retailer, your business is ultimately responsible for collecting and remitting New Mexico Sales Taxes, a required triggered by establishing a Click-Through Nexus with New Mexico state.

*****

Collecting gross receipts taxes in the state of New Mexico does not need to be burdensome. Just remember to get your license set up and make sure that you pay your taxes on time to avoid penalties and interest.

Before we conclude this topic, I want to go over a related question our clients regularly ask…

 

Is New Mexico a streamlined gross receipts tax state?

No. New Mexico does not participate in the Streamlined gross receipts tax (STT) program, which makes collecting and remitting gross receipts taxes even easier for businesses.

Fingers crossed that they join forces with this organization in the future.

 

*****

It’s time to wrap it up.

  1. Know when to charge gross receipts tax in New Mexico.
  2. Know if you creates a gross receipts tax Nexus.

 

Manage your tax needs more effectively by keeping this guide handy.

You and your business can be better-equipped to avoid situations like paying fines, paying back taxes that you did know you had to pay in the first place, or facing an audit by the tax authorities in New Mexico.

 

 

 

Collecting Gross Receipts Tax in New Mexico

If you are a business who has established a nexus with New Mexico, you are required to collect gross receipts tax in New Mexico. Knowing this is just half the battle. Now, We are going to help you navigate the process of how to go about that.

In fact, We are going to review some common questions our clients have asked regarding their New Mexico Sales Tax obligations.

  • How do I collect New Mexico Sales Tax?
  • Who is eligible for New Mexico Sales Tax exemptions?
  • What should I do if my customer is exempt from gross receipts tax in New Mexico?
  • What happens if I lose a New Mexico nontaxable transaction certificate?

After reading this, you will be better equipped to collect gross receipts taxes.

 

How do I collect New Mexico Sales Tax?

Remember when we noted that New Mexico is an origin-based sales tax state? And how we covered that Because of this, you only pay taxes based on the location of the seller. So, if you live in New Mexico, collect gross receipts tax based on your business location rather than your buyer’s location. Your eCommerce software should be able to calculate this for you on the fly.

 

What are the current New Mexico Sales Tax rates?

Since gross receipts tax Rates change frequently- and vary by what is being sold, We are going to refer you to check out the New Mexico Department of Taxation and Revenue site here.

You always want to double check the gross receipts tax rates.

 

What is exempt from New Mexico Sales Tax?

 

Sales Tax- Blog Images (1)

 

Here is a list of exemptions:

  • purchases for resale
  • most sales to or by the federal and New Mexico State governments, charitable organizations, tribal organization and certain other exempt organizations
  • sales of most food for home consumption
  • sales of prescription and nonprescription medicines.

 

For more information, see Transactions that are not subject to gross receipts tax (PDF) for more details.

 

Who is eligible for New Mexico Sales Tax exemptions?

At this point, you should know what products are exempt from gross receipts tax in New Mexico. You also want to know who may be exempt.

Under New Mexico law, the type of buyer or the way the goods will be used can qualify can buyer for a gross receipts tax exemption. A good example of this is a merchant purchasing goods for resale, aka a wholesaler.

Other common examples of an exempt buyer may include:

  • Government agencies
  • Non-profit organizations
  • Tribal organizations
  • Religious groups
  • Out-of-state buyers (should their business not have nexus in their home state).

Altogether, gross receipts tax exemptions apply if the buyer falls under one of these categories.

See Exemption Certificates for gross receipts tax (PDF) for more in-depth information regarding who qualifies for an exemption.

 

What should I do if my customer is exempt from gross receipts tax in New Mexico?

As a business owner, you will most likely have a buyer who qualifies for a gross receipts tax exemption.

It is up to you to collect a New Mexico nontaxable sales certificate at the point of sale and to keep it on file.

Failure to produce the tax exemption certificate may result in the outstanding tax being passed on to the seller, based on the ordinary care standard which will hold the seller responsible if they failed to collect gross receipts taxes when they knew they should have or if they knew the buyer’s exemption certificate was a fake.

Remember, you want to collect and file a copy of the certificate. Such certificates must be produced upon request in the event of an audit to justify tax-exempt sales.

 

What happens if I lose a New Mexico Sales Tax exemption certificate?

If you are audited and cannot produce an exemption certificate for a buyer, you may be held responsible to pay all taxes on behalf of the buyer. This is a bad scene and can be avoided by taking care with your paperwork.

Happily, it isn’t necessary to get a distinct NTTC for each transaction with a customer as long as it is the same type of exemption. Also you will want to keep in mind that you will need to track and include deductible gross receipts when filing on form CRS-1. You enter the deductible gross receipts as part of the total receipts reported, but then are able to subtract them before tax is calculated.

 

Does New Mexico have a gross receipts tax holiday?

Yes! 🎉🎉🎉

 

There are two different tax holidays in New Mexico; the “Back to School Tax Free Holiday” which occurs in the first weekend in August, and the “Small Business Saturday Tax Holiday” which happens the Saturday after Thanksgiving. Details for the items covered and the limits on applicable deductions can be found on the New Mexico Taxation and Revenue Department website: Back to School Holiday | Small Business Saturday Tax Holiday

 

*****

 

So, we have talked about who you need to collect gross receipts taxes from, whether the goods you are selling are deemed taxable, what goods and services fall under tax exemptions, who is eligible for tax exemption certificates, and the process of collecting gross receipts tax in New Mexico state.

Now that we’re this far into learning what goes into this process, it’s time to bring it on home!

 

 

 

Filing and Paying Gross Receipts Tax in New Mexico

 

It is time to talk about filing and paying your gross receipts taxes in New Mexico. In this section, We are going to cover the following frequently asked questions from our clients:

  • When is New Mexico Sales Tax due?
  • What are the New Mexico Sales Tax thresholds?
  • What if a New Mexico Sales Tax filing date falls on a weekend or holiday?
  • How do I file a New Mexico Sales Tax Return?
  • How do I correct a New Mexico Sales Tax return?
  • What happens if I don’t collect gross receipts tax?
  • What happens if I file or pay my gross receipts tax return late?
  • Do I need to file a return if I don’t collect any gross receipts tax in New Mexico?
  • If I close my business, do I need to file a final gross receipts tax return?
  • Does the New Mexico Department of Taxation and Revenue offer a discount for filing on time?

By the time you finish reading this, you will feel confident enough to file and pay your New Mexico Sales Tax.

 

When is New Mexico Sales Tax due?

You must file and pay your gross receipts tax no later than the 25th day of the month following the period being reported. For example, you will need to pay December gross receipts tax by January 25th to avoid penalties and interest.

 

What are the New Mexico Sales Tax thresholds?

There are three thresholds you need to know.

 

Monthly Liability Threshold: greater than $200.00 average monthly tax liability

Quarterly Liability Threshold: $66.67 - $200.00 average monthly tax liability

Semi-annual Liability Threshold: $0.00 - $66.66 average monthly tax liability

 

Not sure how to determine your tax filing frequency?

You can review your eCommerce or Point of Sale Software to see the volume of sales you have generated.

Don't worry though! The state will let you know when your due dates change. :)

Watch your mail for a letter from the State of New Mexico so that you don't miss any deadlines.

 

What if a New Mexico Sales Tax filing date falls on a weekend or holiday?

The deadline is moved to the next business day, typically the Monday following the weekend or the day after the holiday. However, we always suggest filing before the holiday.

 

How do I file a New Mexico Sales Tax return?

 

Paper: Complete form CRS-1, enclose a check and mail to:

Taxation and Revenue Department

PO Box 25128

Santa Fe NM 87504-5128.

 

Electronic: File online at NMTAP and submit payment via EFT.

 

How do I correct a New Mexico Sales Tax return?

File an amended return on NMTAP.

 

What happens if I don’t collect gross receipts tax?

If you were required to collect gross receipts taxes (nexus in New Mexico and selling taxable goods or services to taxable residents) and failed to do so for whatever reason, you will be held responsible for the tax due. Always collect gross receipts tax at the point of sale. Attempting to collect after the fact will be time consuming and most likely unsuccessful.

 

Protip: You are still responsible for remitting gross receipts taxes even if you failed to collect them.

 

 

What happens if I file or pay my gross receipts tax return late?

If you file your sales tax return after the due date, you need to add penalty and interest to the amount of tax you owe the state.

If you are late filing and don’t owe the state anything, you still owe a $5 penalty. According to the state, the “Penalty is 2% per month or partial month the payment is late up to a maximum of 20% of tax due or a minimum of $5.00.”

Interest is calculated at a rate of 3% on a daily basis.

 

Do I need to file a return if I don’t collect any gross receipts tax in New Mexico?

Yes, New Mexico requires businesses to file a “Zero-Tax” return if they don't have any sales during a taxing period.

 

If I close my business, do I need to file a final gross receipts tax return?

Yes, New Mexico requires businesses to file a “Final gross receipts tax” return when closing a business.

 

Does the New Mexico Department Of Taxation offer a discount for filing on time?

Sadly, there is no discount for filing and paying your taxes on time. Bummer.

 

*****

 

Now that we covered all our bases for filing and paying gross receipts taxes in the state of New Mexico, you should feel more at ease about the process.

 

Some things to remember:

  • Due dates are important. If anything, file and pay your taxes early.
  • There are three payment plans for filing and paying your gross receipts taxes depending on how much you collect in gross receipts tax on average in a month.
  • You can file and pay your taxes electronically or by mail
  • If you need to amend a return, you must do so electronically.
  • If you don’t collect gross receipts tax and you were supposed to, you (not the buyer) is liable to pay the gross receipts tax to the state of New Mexico.
  • You will have to pay late fees if you fail to file your tax return on time and/or if you fail to make your tax payment on time.
  • Even if you collect no gross receipts tax, you still need to file a return.
  • You need to file a “Final gross receipts tax” when you close your business.

 

Now, you are ready to file and pay your gross receipts tax in New Mexico. If you have any more questions, feel free to contact us.

 

📞 Book a Free Consultation Here

  

 


 

Please note: This blog is for informational purposes only and the information is accurate as of 5/2/2019. If you want legal advice on gross receipts tax law for your business, please contact a Sales and Use Tax professional. Keep in mind that gross receipts tax regulations and laws are subject to change at any time. While we strive to keep our blog current, this blog may be out date by the time you review it.