Do I use the gross receipts tax rate where my business is located?

Beginning July 1, 2021, most businesses were required to use the gross receipts tax rate for where their customers are located. But (there's always a "but" in taxes) this is not quite as simple as it might seem. The following is an overview of the general rules.

The concept is that the applicable gross receipts tax rate is determined by where goods or services are delivered. It is simple when products or services are delivered to customers at the seller's location - as happens at a retail store - the rate to use is the one for the seller's location. On the other hand, when businesses ship products, sell over the internet or deliver their services to customers who are located somewhere else, the applicable rate is the one for the customer's location. Businesses located outside of New Mexico who sell or deliver to customers in the state will pay the tax rate for the location in New Mexico where the product is delivered or the service is initially used.

Exceptions

Marketplace sellers - If you sell through websites such as Etsy, eBay or Amazon you still must report those sales but will be able to deduct them from total gross receipts if you obtain documentation for the marketplace provider that the provider is registered with the N.M. Taxation & Revenue Dept. and has remitted or will remit the taxes due.

Special circumstances - The location code for gross receipts for professional services reported by persons requiring a license from the State of Ne Mexico or a master's degree or higher is that person's place of business. Gross receipts from construction and construction-related services are reported at the location of the construction project.

There are many fine points that might affect your business. For more details read N.M. Taxation & Revenue Dept. Publication FYI-200.

Bookkeeping requirements

Your bookkeeping system must be able to determine the amount of sales for each location you sell into within New Mexico and an additional total for all out-of-state sales. You'll need this information to report multiple gross receipts locations.