Sales Tax Guide for New Mexico

What Is Taxable in New Mexico?

In New Mexico, the main tax levied on retail sales is called the Gross Receipts Tax (GRT). Unlike traditional sales tax, it’s a tax on businesses for the privilege of doing business within the state, although it’s common for businesses to pass this cost onto consumers. Most tangible personal property and some services are subject to GRT. However, there are exemptions for items such as prescription drugs and certain groceries.

If your business sells taxable goods or services, you must collect and remit the appropriate GRT. Businesses should also verify if they owe any additional use taxes when purchasing products out-of-state.

Who Needs to Collect Gross Receipts Tax?

Businesses required to collect GRT include:

• Retailers with a physical presence in New Mexico
• Online sellers and remote businesses meeting specific economic nexus thresholds
• Service providers offering taxable services

New Mexico enforces an economic nexus threshold of $100,000 in sales in the previous calendar year. Businesses exceeding this threshold must register and collect GRT irrespective of physical presence. Non-compliance can result in penalties and the requirement to pay back taxes, making doola’s Bookkeeping service invaluable to ensure adherence to regulations.

How to Register for a Gross Receipts Tax Permit in New Mexico

Registering for a Gross Receipts Tax permit in New Mexico is straightforward:

1. Prepare necessary documents such as EIN, business license, and company details.
2. Visit the New Mexico Taxation and Revenue website to access the Taxpayer Access Point (TAP).
3. Complete the online application to obtain your CRS Identification Number.
4. Once registered, begin collecting GRT and file periodic returns as required.

It is unlawful to collect GRT without proper registration. Ensure registration is completed before transacting in taxable goods or services. doola’s bookkeeping experts can assist with this process, simplifying compliance and letting you focus on growing your business.

How to Calculate Gross Receipts Tax in New Mexico

To accurately calculate GRT, follow these steps:

Step 1:
Identify the applicable GRT rate based on your business location and the location of your customer.

Step 2:
Collect the appropriate amount during sales transactions.

Step 3:
Maintain precise records of all sales transactions.

Businesses are generally required to file GRT returns monthly, quarterly, or annually depending on sales volume. Stay aware of various local rates and timely filing to avoid penalties.

Common Gross Receipts Tax Exemptions in New Mexico

Certain transactions may qualify for GRT exemptions, such as:

• Sales for resale, requiring a nontaxable transaction certificate (NTTC)
• Sales to government agencies and certain nonprofit organizations
• Business-to-business transactions for specific qualified services

To receive exemptions, businesses must use the correct NTTC and track all related documentation accurately to avoid audits and penalties.

Remote Seller and Marketplace Sales Tax Rules in New Mexico

For remote sellers and marketplace facilitators, New Mexico imposes specific rules for GRT collection.

If a remote seller or marketplace facilitator exceeds the $100,000 in sales threshold, it must comply with the state’s requirements to collect and remit GRT.

New Mexico requires marketplace facilitators to collect GRT on behalf of third-party sellers using their platforms. This includes platforms like Amazon, eBay, Shopify, and Etsy.

What Triggers a Gross Receipts Tax Audit

The New Mexico Taxation and Revenue Department may audit businesses due to reasons including; inaccurate or missing GRT filings, consistent late payments, discrepancies between reported and actual sales revenue, and improper use of NTTCs.

To diminish audit risks, businesses should maintain meticulous records of sales, exemptions, and tax payments. Regular internal reviews can also help ensure accuracy in tax filings.

FAQs About Gross Receipts Tax in New Mexico

Frequently asked questions regarding New Mexico GRT include:

Are digital goods taxed in New Mexico? 

Yes, digital goods are typically subject to GRT.

Do out-of-state businesses need to collect New Mexico GRT? 

Yes, if they exceed the $100,000 sales threshold.

What if I overcharge or undercharge GRT? 

Corrective measures may be necessary, such as refunds or additional payments to the state. Accurate record-keeping is crucial to prevent these issues.

Are any services taxable in New Mexico? 

Many services are subject to GRT; however, certain professional services may be exempt.

Stay Compliant With doola

Navigating compliance with New Mexico’s tax laws doesn’t have to be complicated. By staying informed and utilizing effective tools, you can prevent penalties and ensure seamless business operations.

doola can offer you the guidance and resources you need to remain compliant, supporting you with comprehensive financial solutions, tax compliance assistance, and reliable bookkeeping services.