New Mexico imposes a gross receipts tax (GRT) on the privilege of engaging in business in the state. This tax is levied on the gross receipts of a business, without deductions for the cost of goods sold or other business expenses. However, certain exemptions and credits are available to reduce the tax burden. For a business operating in New Mexico, understanding the application of these provisions is crucial for accurate tax compliance. The New Mexico Department of Taxation and Revenue administers these taxes. The question pertains to the deductibility of certain expenses for GRT purposes. Specifically, it examines whether a business can deduct payments made for the acquisition of tangible personal property that is subsequently resold in the ordinary course of business. New Mexico GRT law generally allows for a deduction for receipts from the sale of tangible personal property if the property is purchased for resale. This is a common feature of sales and use tax systems, often referred to as a “resale exemption.” The rationale is to avoid taxing the same tangible property multiple times as it moves through the supply chain. The business acquiring the property must provide a valid resale certificate to the seller to claim this exemption on their purchase. Without a valid resale certificate, the seller would be obligated to collect GRT on the transaction. Therefore, the deduction is available for the receipts of the seller when selling to a buyer who provides a valid resale certificate for property intended for resale.

In New Mexico, the taxation of certain services is a complex area governed by the Gross Receipts and Compensating Tax Act. Services are generally subject to gross receipts tax unless specifically exempted. For a service to be considered “rendered” in New Mexico for gross receipts tax purposes, the activity that produces the service must occur within the state. This is often referred to as the “where the service is performed” or “where the benefit is received” nexus, depending on the specific service and the interpretation of the law. New Mexico’s tax regulations, particularly those related to services, emphasize the location of the economic activity. For a service performed outside New Mexico for a New Mexico customer, the taxability hinges on whether the service’s benefit is primarily received within New Mexico. If the service is performed entirely outside New Mexico and the benefit is also entirely received outside New Mexico, it is not subject to New Mexico gross receipts tax. Conversely, if the service is performed outside but the benefit is received in New Mexico, it can be taxable. However, if a service is performed within New Mexico, it is taxable regardless of where the customer is located. The key is the situs of the service activity. The New Mexico Taxation and Revenue Department provides specific guidance on the taxability of various services, often referencing the location where the service is physically performed or where the direct benefit of the service is realized by the customer. For instance, consulting services are typically taxed based on where the consultant’s advice is delivered or applied, and if that is within New Mexico, the receipts are taxable.

The New Mexico Gross Receipts Tax (GRT) is a tax on the privilege of engaging in business in New Mexico. It is generally imposed on the total amount of gross receipts of a business. However, certain receipts are specifically exempted or deductible. For services, the GRT is typically imposed at the point where the service is performed. In this scenario, “Consulting Solutions Inc.” provides business consulting services to a client located in Texas. The services are performed entirely within New Mexico by Consulting Solutions Inc.’s employees. Since the service is performed in New Mexico, the gross receipts derived from this service are subject to New Mexico GRT, regardless of the client’s location. The tax rate applicable would be the combined state and local GRT rate for the location where the services are performed in New Mexico. New Mexico law generally taxes services performed within the state. The location of the customer for services is generally not the determining factor for taxability when the service is physically rendered within New Mexico. Therefore, Consulting Solutions Inc. must report and remit GRT on the receipts from this transaction. The key principle is the situs of the service delivery.

New Mexico’s gross receipts tax (GRT) is a tax on the privilege of engaging in business in the state. It is levied on the total amount of gross receipts of any person engaging in business in New Mexico. The tax applies to sales of tangible personal property, services, and intangible property. For services, the GRT is generally imposed on the location where the service is performed or where the benefit of the service is received, depending on the nature of the service and specific sourcing rules. In this scenario, a consulting firm located in Colorado provides strategic planning services to a client with its primary operations and decision-making headquarters in New Mexico. The consulting work, including meetings and report generation, is primarily conducted at the client’s New Mexico location, and the strategic decisions derived from the consultation directly impact the client’s business operations within New Mexico. Therefore, the gross receipts derived from these services are sourced to New Mexico. The tax rate applicable would be the combined state and local GRT rates in effect at the location of the client in New Mexico. The explanation focuses on the sourcing rules for services under New Mexico’s GRT, emphasizing the importance of where the benefit of the service is received and where the business activity is conducted. The key principle is that if the economic activity and benefit of the service occur within New Mexico, the gross receipts are subject to New Mexico GRT, regardless of where the service provider is physically located. This aligns with New Mexico Taxation and Revenue Department’s interpretations and regulations concerning the extraterritorial application of its GRT on services.

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally applied to the total amount of gross receipts of any person engaging in business in the state. However, New Mexico law provides for various exemptions and deductions that can reduce the tax liability. One such exemption is for receipts from sales of tangible personal property to a qualified New Mexico business for resale. This exemption is crucial for businesses operating within the state’s supply chain. For instance, if a New Mexico wholesaler purchases inventory from an out-of-state supplier and intends to resell that inventory to other New Mexico businesses, the receipts from those sales to the other New Mexico businesses are generally subject to GRT. Conversely, if a New Mexico manufacturer purchases raw materials from a New Mexico supplier for the purpose of manufacturing goods that will be resold, the receipts from the sale of those raw materials by the supplier to the manufacturer are exempt from GRT. The key is that the sale must be to a business that will resell the tangible personal property. The scenario presented involves a New Mexico-based distributor acquiring specialized manufacturing components from an out-of-state supplier. These components are then incorporated into custom-built machinery, which is subsequently sold to other businesses within New Mexico. The initial purchase of components from the out-of-state supplier is not subject to New Mexico GRT because the transaction occurs outside of New Mexico. The crucial aspect for the New Mexico GRT is the sale of the finished custom-built machinery by the distributor to the other New Mexico businesses. Since the distributor is selling tangible personal property (the machinery) to businesses within New Mexico for their use, and not for resale of those specific components, the receipts from these sales are subject to the New Mexico Gross Receipts Tax. Therefore, the New Mexico distributor must collect and remit GRT on the sales of the custom-built machinery to its New Mexico customers. The exemption for resale applies to the sale of tangible personal property *for resale*, meaning the buyer intends to resell the identical property. In this case, the components are consumed in the manufacturing process, and the final product is the machinery itself, which is sold for use, not for resale of the original components.

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally imposed on the gross receipts of any person engaging in business in the state. However, New Mexico law provides for various exemptions and deductions from this tax. One such exemption is for receipts from the sale of tangible personal property which is to be shipped outside of New Mexico by the seller or the seller’s agent to a destination outside New Mexico. This is often referred to as an interstate commerce exemption. For this exemption to apply, the tangible personal property must be physically transported out of New Mexico by the seller or their agent. If the buyer picks up the goods in New Mexico and then transports them out of state, the seller’s receipts are generally subject to GRT, as the delivery and transfer of possession occur within New Mexico. The key element is the seller’s or their agent’s involvement in the out-of-state shipment. This distinction is crucial for businesses operating in New Mexico and selling to customers in other states.

The New Mexico Gross Receipts Tax (GRT) is a tax levied on the privilege of engaging in business in New Mexico. It is generally imposed on the gross receipts of any person engaging in business. The tax is collected by the seller and remitted to the state. For services, the tax is generally imposed at the location where the service is performed. In this scenario, the accounting firm, “Precision Ledger LLC,” is providing accounting services to a client located in Texas. Since the services are performed within New Mexico by Precision Ledger LLC, the gross receipts derived from these services are subject to New Mexico GRT, regardless of the client’s location outside of New Mexico. The key factor for services is the situs of performance. Therefore, Precision Ledger LLC must collect and remit New Mexico GRT on the \$25,000 in accounting fees. The applicable GRT rate in New Mexico varies by location, but for the purpose of determining taxability, the specific rate is not required, only the principle of taxability. The question tests the understanding of the territoriality principle of New Mexico’s GRT, particularly concerning services performed within the state for out-of-state clients.

The New Mexico Gross Receipts Tax (GRT) is a tax levied on the privilege of engaging in business in New Mexico. It is generally imposed on the gross receipts of any person engaging in business. However, New Mexico law provides for various exemptions and deductions. One such exemption pertains to receipts from services performed outside of New Mexico by a business located within New Mexico, provided certain conditions are met. Specifically, if a New Mexico-based consulting firm provides strategic planning services exclusively to clients located and operating solely within Texas, and all services are rendered and delivered electronically or by mail from the firm’s New Mexico office, then the gross receipts derived from these services are generally exempt from New Mexico GRT. This is because the tax is typically imposed on the location where the service is rendered or the benefit is received. When the entire service is performed and delivered outside New Mexico, and the customer is outside New Mexico, the nexus for taxation in New Mexico is absent for that specific transaction under these circumstances. The key is that the business activity giving rise to the gross receipts occurs entirely outside the state’s taxing jurisdiction for that particular service.

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally imposed on the total amount of gross receipts of any person engaging in business. However, certain receipts are specifically exempted or deductible. One such exemption pertains to receipts from the sale of tangible personal property that is delivered to a common carrier for shipment outside of New Mexico, or delivered to the buyer outside of New Mexico. This exemption is crucial for businesses operating in New Mexico but serving customers in other states. The underlying principle is that the state should not tax transactions that are constitutionally beyond its taxing jurisdiction, particularly when the final destination of the goods is outside the state. This is often referred to as the “interstate commerce exemption” or “destination test” in sales and use tax contexts, though New Mexico’s GRT is a gross receipts tax, the concept of interstate commerce limitations applies. For a sale of tangible personal property to qualify for this exemption, the seller must have proof of delivery outside New Mexico. This proof can include shipping manifests, bills of lading, or receipts from common carriers indicating delivery to an out-of-state address. Without such documentation, the receipts are presumed to be taxable in New Mexico. Therefore, a New Mexico business selling goods to a customer in Colorado, and arranging for shipment via a common carrier directly to the customer’s address in Colorado, would not owe New Mexico GRT on that sale. The business must retain records demonstrating this out-of-state delivery.

The New Mexico Taxation and Revenue Department may issue a jeopardy assessment when it finds that a taxpayer’s actions may jeopardize the collection of any tax. This assessment is an immediate demand for payment of taxes, interest, and penalties. The legal basis for such assessments is typically found within state tax codes that grant the department authority to act swiftly to prevent tax evasion or the dissipation of assets. For instance, New Mexico Statute § 7-1-22 outlines the department’s authority to make jeopardy assessments. A taxpayer receiving a jeopardy assessment has the right to request an administrative review of the assessment. This review allows the taxpayer to present evidence and arguments against the assessment’s validity or amount. If the administrative review is unfavorable, the taxpayer can then appeal to the New Mexico District Court. The key aspect of a jeopardy assessment is its immediate nature, bypassing the standard assessment and protest procedures when the department believes collection is in jeopardy. This power is a crucial enforcement tool for the state to secure tax revenue.

New Mexico imposes a gross receipts tax (GRT) on the privilege of engaging in business in the state. This tax is levied on the total amount of receipts from sales of tangible personal property and services, with certain exceptions and deductions. For services, the GRT is generally imposed at the location where the service is performed. However, New Mexico has specific sourcing rules for various types of services. For services performed both inside and outside New Mexico, the taxability is determined by the extent to which the service is performed within the state. If a service is performed partly within New Mexico and partly outside, the receipts attributable to the New Mexico portion of the service are subject to GRT. The Department of Taxation and Revenue provides guidance on how to apportion receipts for services performed across state lines. The key principle is to tax the portion of the service that provides a direct economic benefit within New Mexico. For a consulting firm providing strategic advice to a New Mexico-based corporation, the location of the client and the primary benefit derived from the advice are crucial for sourcing. If the majority of the strategic planning and decision-making facilitated by the consulting services occurs within New Mexico, then the receipts associated with that portion of the service would be taxable. The tax is on the gross receipts, meaning the total amount received before deducting any business expenses. This is a destination-based tax for tangible goods, but for services, it’s generally origin-based unless specific sourcing rules dictate otherwise. In this scenario, since the consulting services are directly benefiting a New Mexico business and influencing its operations within the state, the receipts are sourced to New Mexico.

The New Mexico Gross Receipts Tax (GRT) is a tax levied on the privilege of engaging in business in New Mexico. It is generally imposed on the total amount of gross receipts of a business. However, certain receipts are specifically exempted or deductible under New Mexico law. The question concerns the taxability of services performed by an out-of-state contractor for a New Mexico client. New Mexico imposes GRT on receipts from services performed within the state. If the service is performed entirely outside New Mexico, and the benefit of the service is received in New Mexico, the taxability depends on whether the service is considered “consummated” in New Mexico. For services that are intangible in nature, such as consulting or design work, the location where the benefit is received is often determinative. In this scenario, the architectural design services were performed by a firm located in Colorado for a construction project in Santa Fe, New Mexico. The crucial element is where the economic benefit of the service is realized. Since the design is for a building to be constructed and used in New Mexico, the client receives the benefit of that design within New Mexico. Therefore, the receipts from these services are subject to New Mexico GRT. The tax rate applied would be the applicable municipal or county GRT rate in Santa Fe, New Mexico, where the project is located. The explanation does not involve any calculations as the question is conceptual. The core principle is the situs of the economic benefit for intangible services. New Mexico statutes, particularly under NMSA 1978, Section 7-9-3, define gross receipts and specify exemptions. Services are generally taxable if performed within New Mexico. For services where the performance may occur outside the state but the benefit is received within the state, the Department of Taxation and Revenue often asserts taxability based on the location of the ultimate use or benefit. This is a common area of inquiry in New Mexico tax law, distinguishing between services performed outside the state with no nexus to New Mexico versus services performed outside the state but with a direct economic impact and benefit within New Mexico.

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally imposed on the gross receipts of any person engaging in business. However, certain receipts are exempt from this tax. One such exemption pertains to receipts from the sale of tangible personal property that is shipped by the seller to a destination outside of New Mexico. This is often referred to as an “out-of-state delivery” exemption. For the exemption to apply, the seller must be the one arranging and completing the shipment to the out-of-state destination. If the buyer picks up the goods in New Mexico and then arranges their own transportation, the receipts from that sale are generally subject to New Mexico GRT. The core principle is that New Mexico taxes business activity within its borders. When goods are irrevocably destined for and delivered outside the state by the seller, the economic activity generating those receipts is considered to have occurred outside New Mexico, thus qualifying for the exemption. This is consistent with principles of interstate commerce and avoiding double taxation.

New Mexico imposes a gross receipts tax (GRT) on the privilege of engaging in business in the state. This tax is levied on the total amount of gross receipts of a person engaging in business. However, New Mexico law provides for various exemptions and deductions that can reduce the taxable base. One significant aspect of New Mexico GRT is the treatment of services performed outside the state for a New Mexico customer. Generally, if a service is performed entirely outside of New Mexico, the receipts from that service are not subject to New Mexico GRT, even if the customer is located in New Mexico. This principle is rooted in the state’s taxing jurisdiction, which is typically based on where the economic activity or benefit of the service is realized. In this scenario, the software development and cloud hosting services were performed by a company located in Texas, and the servers were physically located in Texas. Therefore, the economic activity of providing these services occurred outside of New Mexico. Consequently, the gross receipts derived from these services are not subject to New Mexico’s gross receipts tax.

New Mexico law distinguishes between “gross receipts” and “sales of tangible personal property” for tax purposes. While both are subject to gross receipts tax, the specific tax base and potential exemptions can differ. Gross receipts tax is levied on the total amount of gross receipts of a person from engaging in business in New Mexico. Sales of tangible personal property are a component of this, but the definition of gross receipts is broader and can include services. The key distinction for this scenario lies in how the New Mexico Taxation and Revenue Department defines and taxes these transactions. Specifically, the taxability of software, whether delivered electronically or on a tangible medium, has evolved. Generally, electronically delivered software is considered a service or intangible right, whereas software delivered on a tangible medium is treated as tangible personal property. The taxability of services in New Mexico is limited, with specific exemptions and inclusions. However, the sale of tangible personal property is generally taxable unless an exemption applies. In this case, the physical delivery of the software on a disk means it is treated as tangible personal property. Therefore, the transaction falls under the taxation of tangible personal property sales, and the full gross receipts derived from this sale are subject to the state’s gross receipts tax rate, assuming no specific exemption applies to this type of sale. The rate for gross receipts tax in New Mexico is a combined state and local rate, which varies by locality. For the purpose of this question, we assume a hypothetical combined state and local gross receipts tax rate of 7.4%. The calculation is straightforward: Gross Receipts Tax = Gross Receipts x Tax Rate. So, \( \$5,000 \times 0.074 = \$370 \).

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally levied on the gross receipts of a business, with certain exemptions and deductions. For a business operating in multiple jurisdictions within New Mexico, understanding the sourcing rules is crucial for accurate tax remittance. New Mexico generally follows a destination-based sourcing rule for services, meaning that services are sourced to the location where the benefit of the service is received. For tangible personal property, the sourcing is typically at the point of delivery. In the case of a consulting firm providing strategic planning services to a client with offices in both Albuquerque and Santa Fe, and where the final decision-making and implementation planning occur primarily at the Santa Fe location, the receipts from this service would be sourced to Santa Fe. The GRT rate applicable would then be the rate in effect at the Santa Fe location. This principle is fundamental to complying with New Mexico’s tax regulations, ensuring that taxes are paid to the jurisdiction where the economic activity is deemed to have occurred.

The New Mexico Gross Receipts Tax (GRT) is a privilege tax imposed on the privilege of engaging in business in New Mexico. It is generally imposed on the gross receipts of any person engaging in business in the state. Section 3-37-2 NMSA 1978 defines “engaging in business” broadly to include commencing, conducting, or continuing any business or activity for which a privilege tax is imposed. This includes the sale of tangible personal property, performance of services, and other business activities. The tax is applied to the total amount of gross receipts derived from these activities within New Mexico. For a business operating solely within New Mexico, all gross receipts are subject to the GRT unless specifically exempted by law. Exemptions are narrowly construed and must be explicitly provided for in the statutes. For instance, certain sales of food for home consumption or sales to governmental entities might be exempt. However, without specific statutory exemption, the general rule applies. Therefore, a business solely operating within New Mexico and selling goods would be subject to GRT on all its gross receipts.

New Mexico imposes a gross receipts tax (GRT) on the privilege of engaging in business in the state. For services, the GRT is generally applied to the gross receipts of the person performing the service. However, there are specific exemptions and deductions available. One such deduction is for services performed by an independent contractor where the receipts are subject to GRT by that independent contractor. This is often referred to as the “contractor’s GRT deduction.” The purpose is to prevent double taxation of the same service when it is subcontracted. If a general contractor hires a subcontractor, and the subcontractor pays GRT on their portion of the work, the general contractor can deduct the amount paid to the subcontractor from their own GRT liability on the total project. This deduction is crucial for businesses operating in New Mexico to manage their tax obligations effectively and avoid cascading taxes on services. The deduction is claimed by the general contractor on their New Mexico Tax and Wage Report (NM TWR) or equivalent tax return. The subcontractor’s GRT liability is satisfied by the subcontractor paying the tax on their gross receipts from the general contractor. The general contractor then reports the gross receipts from the customer and deducts the payments made to the qualified subcontractor.

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally applied to the total amount of gross receipts of a business. However, certain receipts are specifically exempted from this tax under New Mexico law. The question concerns the taxability of services performed by a consulting firm based in Texas for clients located in New Mexico. In New Mexico, for services, the taxability is determined by the location where the service is performed. If a service is performed within New Mexico, the gross receipts derived from that service are subject to GRT. If the service is performed outside of New Mexico, even if the benefit of the service is received in New Mexico, the receipts are generally not subject to GRT, unless specific exceptions apply, such as when the service is considered “tangible property” or when specific nexus rules are met for certain types of services. In this scenario, the consulting firm is based in Texas, and the services are performed by their employees in Texas. Therefore, the receipts from these services are not subject to New Mexico Gross Receipts Tax. This is a key distinction in New Mexico’s tax law regarding services versus the sale of tangible personal property, where the destination of the property often dictates taxability. The origin of service performance is the primary factor for services.

New Mexico’s gross receipts tax (GRT) is a tax levied on the privilege of engaging in business in the state. It is generally imposed on the total amount of gross receipts of a person engaged in business in New Mexico. However, certain receipts are deductible or exempt from the GRT. One such deduction, under New Mexico law, pertains to receipts from the sale of tangible personal property that is shipped by the seller to a destination outside of New Mexico for use or consumption outside of New Mexico. This is often referred to as an “out-of-state delivery” exemption or deduction. The critical element is that the seller must be the one to ship the goods out of state. If the buyer picks up the goods in New Mexico and arranges for their own transportation out of state, the receipts are generally subject to the GRT, as the seller did not facilitate the out-of-state delivery. This principle aligns with the state’s interest in taxing economic activity occurring within its borders. The New Mexico Taxation and Revenue Department provides specific guidance on what constitutes proper out-of-state shipment for GRT purposes, often requiring documentation to substantiate the out-of-state destination and delivery.

The New Mexico Gross Receipts Tax (GRT) is a privilege tax imposed on the privilege of engaging in business in New Mexico. It is generally levied on the gross receipts of a business. However, specific exemptions and deductions are provided by law. One such exemption pertains to receipts from the sale of tangible personal property that is purchased for resale. In New Mexico, when a business purchases inventory for the purpose of reselling it to customers, the receipts from that sale are generally subject to GRT. However, the *purchase* of that inventory by the business is typically exempt from GRT if the business provides a valid resale certificate to the seller. This is because the tax is intended to be borne by the final consumer. If the business itself is not the final consumer but rather a conduit for resale, the tax is deferred until the point of final sale. Therefore, when a New Mexico retailer buys goods from a supplier within New Mexico with the intent to resell those goods, the retailer should provide a resale certificate to the supplier to claim an exemption on that purchase. The tax will then be collected from the end customer when the retailer makes the sale. This mechanism prevents double taxation.

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally imposed on the gross receipts of any person engaging in business. However, the law provides for various exemptions and deductions. Specifically, the receipts from the sale of tangible personal property that is delivered to a common carrier for shipment to a point outside New Mexico are generally exempt from GRT, provided that the seller obtains a valid exemption certificate from the buyer. This exemption is crucial for businesses operating in New Mexico that engage in interstate commerce. The exemption is based on the principle that states generally cannot tax sales that occur entirely outside their borders. For the exemption to apply, the tangible personal property must be shipped out of New Mexico, and the seller must have documentation to support this claim. This documentation typically includes a bill of lading or a common carrier’s receipt indicating the destination outside New Mexico. Without proper documentation, the receipts would be subject to GRT.

New Mexico’s gross receipts tax (GRT) is a broad-based tax levied on the privilege of engaging in business in the state. It is generally imposed on the total amount of gross receipts of a person engaged in business. However, certain receipts are specifically exempted or deductible. One such exemption, relevant to businesses operating across state lines, is the sale for resale exemption. This exemption applies when a business sells tangible personal property or taxable services to another person who will then resell that property or service in the ordinary course of their business. The key principle is that the tax is ultimately intended to be paid by the final consumer, not by intermediaries in the distribution chain. For the exemption to apply, the buyer must provide a valid resale certificate to the seller, certifying that the purchase is for the purpose of resale. If the buyer does not provide a valid resale certificate, the seller is generally liable for the gross receipts tax on the transaction, even if the buyer ultimately resells the item. This underscores the importance of proper documentation and compliance for businesses claiming this exemption in New Mexico.

The New Mexico Taxation and Revenue Department administers various taxes, including gross receipts tax (GRT). GRT is a privilege tax imposed on the privilege of engaging in business in New Mexico. It is generally imposed on the total amount of gross receipts of a person engaging in business. However, certain receipts are exempt from GRT. For example, receipts from the sale of tangible personal property for resale are generally exempt. This is known as the resale exemption. To claim the resale exemption, the seller must obtain a valid resale certificate from the buyer, which certifies that the buyer intends to resell the property. The buyer then reports the GRT when they sell the property to the final consumer. If a business purchases items for its own use and consumption, rather than for resale, those receipts are subject to GRT. The exemption is intended to prevent a cascading tax effect where tax is levied at each stage of the distribution chain. The seller claiming the exemption must maintain proper records, including the resale certificate, to substantiate the exemption in case of an audit by the New Mexico Taxation and Revenue Department. Failure to obtain or properly maintain a resale certificate can result in the seller being liable for the GRT on those transactions.

New Mexico imposes a gross receipts tax (GRT) on the privilege of engaging in business in the state. The GRT is applied to the total amount of gross receipts of the taxpayer, with certain deductions and exemptions allowed. For a business selling tangible personal property into New Mexico from out-of-state, the key consideration for GRT liability is whether the business has sufficient nexus with New Mexico. Nexus refers to the connection or link between a business and a state that allows the state to impose its tax. In New Mexico, nexus can be established through physical presence, economic presence, or agency presence. Physical presence involves having property, employees, or agents physically located within the state. Economic presence, particularly for remote sellers, is established when a business derives significant sales from the state, even without a physical presence. This is often triggered by exceeding certain sales or transaction thresholds, as defined by state law or economic nexus rules. The question revolves around identifying which of the provided scenarios establishes a taxable presence for a business selling goods into New Mexico, thereby subjecting its receipts to the state’s gross receipts tax. The scenario that involves a physical presence, such as maintaining a warehouse or having employees regularly working within New Mexico, unequivocally establishes nexus. Economic nexus, while also a basis for taxation, is often defined by specific monetary thresholds for sales or number of transactions, and without those specific details, a physical presence is a more direct and certain indicator of tax liability. Therefore, the presence of a physical distribution facility directly creates the necessary connection for New Mexico’s GRT to apply to the receipts generated from sales into the state.

New Mexico’s gross receipts tax (GRT) is a tax on the privilege of engaging in business in the state. It is generally imposed on the total amount of gross receipts of a person engaging in business. However, certain receipts are exempt or deductible. One such exemption pertains to receipts from sales of tangible personal property to a qualified tribal government for use within its reservation or pueblo lands. This exemption is codified under the New Mexico Gross Receipts and Compensating Tax Act, specifically within provisions addressing tribal sovereignty and tax exemptions. For a tribal government to qualify, it must be recognized by the federal government and its purchases must be for the direct use and benefit of the tribal government itself, not for resale or for the use of individual tribal members in their private capacity. The intention is to respect tribal self-governance and to avoid imposing a tax burden on essential governmental functions conducted within sovereign tribal territories. This exemption is distinct from other sales tax exemptions that might apply to non-tribal entities. The critical element is the identity of the purchaser (a qualified tribal government) and the intended use of the property (for governmental purposes on tribal lands).

New Mexico imposes a gross receipts tax (GRT) on the privilege of engaging in business in the state. This tax is levied on the total amount of gross receipts of a person engaging in business in New Mexico. However, certain receipts are deductible or excludable from the tax base. One such exclusion pertains to receipts from sales for resale. Under New Mexico law, receipts from selling tangible personal property are generally excluded from gross receipts tax if the buyer will engage in the business of reselling that property in the ordinary course of their business. This exclusion is crucial for preventing the cascading effect of taxation on goods as they move through the supply chain. The burden is on the seller to obtain proper documentation, typically a valid resale certificate, from the buyer to substantiate the exclusion. Without this documentation, the seller may be liable for the GRT on those receipts. Therefore, a business selling goods to another business that intends to resell those goods must ensure they have a valid resale certificate on file to properly claim the exclusion.

New Mexico imposes a gross receipts tax (GRT) on the privilege of engaging in business in the state. This tax is levied on the total amount of gross receipts of a person engaged in business in New Mexico. The GRT is a transaction privilege tax, meaning it is imposed on the privilege of conducting business, not directly on income. For services performed outside of New Mexico but for a customer located within New Mexico, the sourcing of the gross receipts is critical. Generally, receipts from services are sourced to the location where the benefit of the service is received. In this scenario, the software development and ongoing maintenance are performed by a company based in Colorado for a client in New Mexico. The client in New Mexico is the direct recipient of the benefit of the software’s functionality and the maintenance services. Therefore, under New Mexico GRT law, the gross receipts derived from these services are sourced to New Mexico, making them subject to the state’s gross receipts tax. This principle applies even if the physical act of performing the service occurs elsewhere, as the economic benefit and utilization occur within New Mexico. The tax is on the privilege of conducting business within New Mexico, and the business conducted here is the provision of these software services to a New Mexico-based client.

The New Mexico Taxation and Revenue Department has specific rules regarding the taxation of services. Gross receipts tax (GRT) applies to the total amount of gross receipts of any person engaging in business in New Mexico. However, certain services are specifically exempted or have unique tax treatments. For services that are not explicitly exempted, the GRT is generally imposed on the gross receipts derived from performing those services within New Mexico. This includes services provided to businesses located outside New Mexico if the service is performed within New Mexico, or if the benefit of the service is received within New Mexico by a customer who is a New Mexico resident or business. The tax is levied on the provider of the service unless specific resale exemptions apply. A common point of confusion arises with services that have an out-of-state component or benefit. New Mexico’s GRT is characterized as a tax on the privilege of engaging in business in the state, and its reach extends to receipts from services performed within the state, regardless of where the customer is located, if the service activity itself occurs in New Mexico.

The New Mexico Gross Receipts Tax (GRT) is a tax imposed on the privilege of engaging in business in New Mexico. It is generally applied to the total amount of gross receipts of a business. However, certain receipts are specifically exempted by law. One such exemption pertains to receipts from the sale of tangible personal property that is shipped by the seller to a destination outside of New Mexico. This exemption is crucial for businesses operating in New Mexico that engage in interstate commerce. The underlying principle is that New Mexico should not tax business activities that are fundamentally occurring outside its borders. For this exemption to apply, the tangible personal property must be delivered by the seller or the seller’s agent to a common carrier for shipment outside New Mexico, or it must be delivered by the seller to the buyer outside New Mexico. The intent is to avoid double taxation and to encourage businesses to conduct sales into other states. The exemption is not automatic; it requires proper documentation and adherence to specific delivery requirements. For instance, if a business in Albuquerque sells goods to a customer in Texas and arranges for a common carrier to deliver those goods to the customer’s address in Texas, the gross receipts from that sale are generally not subject to New Mexico GRT. Conversely, if the Texas customer picks up the goods directly from the New Mexico business’s location, the sale would typically be subject to New Mexico GRT, as the delivery, and thus the taxable event from a New Mexico perspective, occurs within the state. This distinction is vital for compliance and tax planning for businesses involved in cross-border transactions within the United States.