New Mexico Administrative Code
Title 3 - TAXATION
Chapter 1 - TAX ADMINISTRATION
Part 4 - FILING
Section 3.1.4.13 - REPORTING ACCORDING TO BUSINESS LOCATION (Applicable to periods beginning July 1, 2021)
Universal Citation: 3 NM Admin Code 3.1.4.13
Current through Register Vol. 35, No. 18, September 24, 2024
A. DEFINITIONS: As used in 3.1.4.13 NMAC, these terms have the following definitions:
(1)
"Gross
receipts." Under Section
7-1-14 NMSA 1978, "gross receipts"
is defined as that term is used in the Gross Receipts and Compensating Tax Act,
the Leased Vehicle Gross Receipts Tax Act, or the Interstate Telecommunications
Gross Receipts Tax Act, as applicable. As used in
3.1.4.13 NMAC, the term "gross
receipts from" or similar terms indicates that under the applicable tax acts,
the gross receipts would be treated as derived from a particular source or
characterized as relating to a particular activity such as the lease or
property or the sale of services.
(2)
"In-person service." Under
Section 7-1-14 NMSA 1978 "professional
service," as defined, "does not include an in-person service." The term
"in-person service" means a service physically provided in person by the
service provider, where the customer or the customer's real or tangible
personal property upon which the service is performed is in the same location
as the service provider at the time the service is performed. If the service is
not generally provided, or does not generally need to be provided, physically
in the presence of or upon the customer or upon the customer's property, it is
not an "in-person service" simply because it may be or sometimes is performed
in the presence of the customer or at the location of the customer's property.
(a) Examples of services that will generally
be treated as in-person services include, but are not limited to:
(i) Services provided by healthcare workers
that are generally performed or required to be performed on or in the presence
of the patient.
(ii) Mental health
services, unless the provider generally provides the particular service either
only in-person, or with limited exceptions.
(iii) Services provided by athletic trainers
or physical therapists for clients.
(iv) Services provided by barbers and
cosmetologists.
(v) Home healthcare
services.
(b) Examples
of services that will generally not be treated as in-person services include,
but are not limited to:
(i) Architectural and
engineering services. Note, however, that when performed as part of or billed
to a construction project, these services are considered "construction-related
services" rather than professional services pursuant to Subsection C of Section
7-9-3.4 NMSA 1978, and the
reporting location for gross receipts from these services is the construction
site per Paragraph (2) of Subsection F of Section
7-1-14 NMSA 1978.
(ii) Legal services.
(iii) Accounting, auditing, and tax
preparation services.
(iv) Real
estate appraisal services.
(3)
"Professional service." The
term "professional service" as defined in Section
7-1-14 NMSA 1978 means a service,
other than an in-person service or construction-related service, that requires
either an advanced degree from an accredited post-secondary educational
institution or a license from the state to perform. As provided in Paragraph
(2) of Subsection A of
3.1.4.13 NMAC, just because a
service is provided in person by the service provider does not make it an
"in-person" service if the service is not generally provided, or does not
generally need to be provided, physically in the presence of or upon the
customer or upon the customer's property.
(4)
"Reporting location."
3.1.4.13 NMAC uses the term
"reporting location" in place of the term "business location," the term that is
used in Sections
7-1-3 and
7-1-14 NMSA 1978 as well as local
option taxes to refer to the location code designated by the department and
required to be used to report the gross receipts and related deductions subject
to gross receipts tax or the value of items whose taxable use is subject to the
compensating tax. Like the term "business location," the term "reporting
location" refers to the location code and applicable tax rate for reporting
gross receipts tax and compensating tax, as designated by the
department.
(5)
"Seller's
location" or "place of performance." This regulation may use the terms
"seller's location" or "place of performance" or similar terms to refer to the
general facts that may be essential for determining the reporting location. In
general, a seller's location may include a particular building, including a
store or office, or other physical location maintained or operated by or for
the seller, or used by the seller, where some designated activity giving rise
to gross receipts takes place. If the seller uses no such physical location in
New Mexico, and if the seller's domicile is not in New Mexico, then the
"seller's location" as used in this regulation is deemed to be outside the
state.
B. REPORTING ACCORDING TO REPORTING LOCATION - GENERAL:
(1) Reporting location and rate of tax for
gross receipts and taxable use. Section
7-1-14 NMSA 1978, amended effective
July 1, 2021, determines the proper reporting jurisdiction and rate of tax that
apply under the Gross Receipts and Compensating Tax Act, Interstate
Telecommunications Gross Receipts Tax Act, Leased Vehicle Gross Receipts Tax
Act and any act authorizing the imposition of a local option gross receipts or
compensating tax.
(2) Effect of the
substantive tax provisions on the rules for reporting location. Unless
otherwise indicated, the provisions of
3.1.4.13 NMAC should be read
consistently with the provisions of the Gross receipts and Compensating Tax
Act, Interstate Telecommunications Gross Receipts Tax Act, Leased Vehicle Gross
Receipts Tax Act, as appropriate, and any acts authorizing imposition of local
option gross receipts or compensating tax, and any regulations issued under
these acts. No provisions of
3.1.4.13 NMAC should be read as
subjecting to tax items that are not subject to tax, or excluding from tax
items that are subject to tax, under these substantive tax
provisions.
(3) State reporting
location and application of the state rate. In some cases, taxable gross
receipts or the value of items whose taxable use is subject to the compensating
tax may not be required to be reported to a particular reporting location in
this state. In those cases, the reporting location is the state reporting
location and only the state tax rate will apply.
(a) Example: Gross receipts from a
professional service performed outside New Mexico, the product of which is
delivered to a New Mexico customer for initial use in the state, are taxable in
the state. Because Paragraph (9) of Subsection C of
3.1.4.13 NMAC provides that the
reporting location of gross receipts from professional services is the location
where the services are performed or sold, the gross receipts would be reported
to the reporting location for the state and taxed at the state rate.
(b) Example: A nonresident individual with no
regular place of business in the state is hired by an out-of-state seller to
represent the seller. In order to perform this service, the individual obtains
tangible personal property in a tax-free transaction outside the state, which
would have been subject to the gross receipts tax had it been acquired inside
the state. After acquiring the property, the individual brings that property
into New Mexico, using the property in the service performed at various
locations throughout the state. The compensating tax on the value of this
property would be reported to the reporting location for the state and taxed at
the state rate. See Item (ii) of Subparagraph (e) of Paragraph (5) of
Subsection C, and Subsection E of
3.1.4.13 NMAC.
(c) Example: Under Subparagraph (e) of
Paragraph (5) of Subsection C of
3.1.4.13 NMAC, a seller that does
not have access to sufficient information for reporting sales of tangible
personal property to the location where the customer receives that property may
report to the gross receipts from those sales to the seller's location. So an
out-of-state seller may have certain sales that would be reported to the
reporting location for the state and taxed at the state rate. As explained
under Subparagraph (e) of Paragraph (5) of Subsection C of
3.1.4.13 NMAC, however, sellers who
have access to reliable information from which they can determine an estimate
of receipts by reporting location must use that information.
(4) Gross receipts tax not
required to be charged or collected. Nothing in Section
7-1-14 NMSA 1978 or
3.1.4.13 NMAC requires the person
that engages in activity or transactions resulting in taxable gross receipts to
charge or collect the tax from purchasers. The gross receipts tax is a tax on
the seller and under Section
7-9-6 NMSA 1978, the taxpayer need
only affirmatively state on the billing to its purchaser whether gross receipts
tax is included in the amount billed. Furthermore,
3.2.6.8 NMAC provides that the
amount of gross receipts tax owed may be "backed out" of the total charged to
the customer.
(5) Gross receipts of
commissioned sales agents versus consignors/consignees and marketplace
sellers/providers.
(a) Commissioned sales
agents. Under Subparagraph (a) of Paragraph (2) of Subsection A of Section
7-9-3.5 NMSA 1978 and applicable
regulations, commissioned sales agents report only their commission or fee when
the property or services which they promote for sale are those of a third
party. Under Section
7-1-14 NMSA 1978, the commission is
gross receipts from the performance of a service by the sales agent and the
reporting location of those receipts is determined in accordance with Paragraph
(9) of Subsection C of
3.1.4.13 NMAC.
(b) Gross receipts of consignors/consignees
and marketplace sellers/providers. Under Subparagraphs (b) and (g) of Paragraph
(2) of Subsection A of Section
7-9-3.5 NMSA 1978 and applicable
regulations, the gross receipts and related deductions for sales on consignment
and for sales facilitated by marketplace providers are generally defined as all
amounts paid or collected from the sale, lease, or licensing of property or
services even where a third party consignor or marketplace seller also has
gross receipts from selling the related property or service provided. The
reporting location of gross receipts and related deductions of the
consignor/consignee or the marketplace seller/provider is determined under
3.1.4.13 NMAC as follows:
(i) By looking to the nature of the
transaction or activity from which the gross receipts are derived, as though
the consignor and consignee, or the marketplace seller and marketplace
provider, is each the seller or provider of that transaction or activity to the
customer; and, except as provided in Items (ii) and (iii) of this Subparagraph
(b), imputing to both parties information known by either party that may be
relevant in properly determining the reporting location of the gross
receipts.
(ii) In a case where the
consignor or marketplace seller may properly claim a deduction under the Gross
Receipts and Compensating Tax Act and applicable regulations on account of the
transaction with the consignee or marketplace provider, respectively, the
consignor or marketplace seller may report these deductions and related gross
receipts to the reporting location based on information available to them,
without imputing of information known by the consignee or marketplace
provider.
(iii) In a case where the
marketplace provider, in determining the reporting location of gross receipts
reasonably relies on erroneous information provided by the marketplace seller
as provided in Subsection C of Section
7-9-5 NMSA 1978, the correct
information that may be known to the marketplace seller will not be imputed to
the marketplace provider.
(c) Examples:
(i) Commissioned sales agent X works for
business y to sell tangible personal property owned by y to customers in New
Mexico. Agent X receives a commission based on the amount of the sale made on
behalf of business Y to a customer. Business Y will have gross receipts from
selling tangible personal property. The reporting location of Y's gross
receipts from the sale of the property is the location of Y's customer,
determined under the provisions of Paragraph (5) of Subsection C of
3.1.4.13 NMAC. Agent X is
performing a service sourced under Subparagraph (e) of Paragraph (9) of
Subsection C of
3.1.4.13 NMAC. The product of the
service performed by agent X is the completion of the order and sale to a
customer of Y's products. Therefore, the reporting location of agent X's gross
receipts from commissions paid by Y for services performed is also the location
of Y's customer and this location should be determined consistent with the
provisions of Paragraph (5) of Subsection C of
3.1.4.13 NMAC.
(ii) Same facts as Item (i) of Subparagraph
(c) of Paragraph (5) of Subsection B of
3.1.4.13 NMAC, except that, rather
than a commissioned sales agent, X is a consignee and Y is a consignor. Under
the consignment arrangement, X receives receipts from customers for Y's
tangible personal property and agrees to pay Y a portion of those receipts.
Under the Gross Receipts and Compensating Tax Act and applicable regulations,
both X and Y have gross receipts from selling tangible personal property. The
reporting location for the gross receipts and any related deductions of both X
and Y is the location of the customer determined under the provisions of
Paragraph (5) of Subsection C of
3.1.4.13 NMAC.
(iii) Same facts as Item (ii) of Subparagraph
(c) of Paragraph (5) of Subsection B of
3.1.4.13 NMAC, except that rather
than the consignee/consignor relationship described, X is a marketplace
provider and y is a marketplace seller. Under the Gross Receipts and
Compensating Tax Act and applicable regulations, both X and Y have gross
receipts from selling or facilitating the sale of tangible personal property.
The reporting location for the gross receipts and any related deductions of
both X and Y is the location of the customer determined under the provisions of
Paragraph (5) of Subsection C of
3.1.4.13 NMAC.
(iv) Same facts generally as Items (ii) and
(iii) of Subparagraph (c) of Paragraph (5) of Subsection B of
3.1.4.13 NMAC. In addition, while
the consignee or marketplace provider offers the tangible personal property for
sale to the customer and collects the payment, it is the consignor or
marketplace seller that ships the tangible personal property to the customer.
Information as to the customer's location is imputed to the consignee or
marketplace provider when determining reporting location of its gross receipts,
but the marketplace provider is also allowed to reasonably rely on information
provided by the marketplace seller, even if erroneous, in determining the
reporting location.
(v) Same facts
generally as Items (ii) and (iii) of Subparagraph (c) of Paragraph (5) of
Subsection B of
3.1.4.13 NMAC. In addition, the
consignee or marketplace provider offers the tangible personal property for
sale to the customer, collects the payment, and also ships the tangible
personal property to the customer. The consignor or marketplace seller may
report gross receipts for which a proper deduction can be taken on account of
the sale by the consignee or marketplace seller based on information known by
the consignor or marketplace seller, without imputing information known by the
consignee or marketplace provider.
C. GENERAL RULES FOR DETERMINING REPORTING LOCATION:
(1) Meaning of
certain terms. Unless otherwise defined in Subsection A of
3.1.4.13 NMAC, Section A or
otherwise indicated by the context, the terms used in these rules have the same
meaning as under the Gross Receipts and Compensating Tax Act.
(2) Effect of the reporting location. A
person that has gross receipts and a person making taxable use of property or
services in New Mexico subject to the compensating tax shall report the gross
receipts or compensating tax to the proper reporting location as provided in
this section. The gross receipts and compensating taxes imposed by the Gross
Receipts and Compensating Tax Act may include both a state rate of tax as well
as applicable local option rates authorized by state law and imposed by county
and municipal governments. The reporting location, as that term is used in
3.1.4.13 NMAC, determines the local
jurisdiction to which the tax will be reported as well as the gross receipts or
compensating tax rate that applies.
(3) Reporting to multiple locations. Any
person that must report gross receipts or taxable use of items to more than one
reporting location under one identification number is required to report gross
receipts, deductions, and the value of items used for each location on the tax
return and in accordance with the reporting location codes as designated by the
Secretary under Section
7-1-14 NMSA 1978 and
3.1.4.13 NMAC.
(4) Gross receipts from transactions
involving real property. If the gross receipts are from the sale, lease or
granting of a license to use real property located in New Mexico, then the
reporting location for those gross receipts and any related deductions is the
location of the real property.
(5)
Gross receipts from sale or license of tangible personal property and from
certain licenses and other services. If the gross receipts are from the sale or
license of tangible personal property, or if the receipts are from activity
described in Subparagraph (e) of Paragraph (9) or Paragraph (6) of Subsection
C, of 3.1.4.13 NMAC the reporting
location for the gross receipts and related deductions is determined as
follows:
(a) If the gross receipts are from
the property or the product of a service that is delivered by the seller and
received by the purchaser from the seller at the seller's location, then the
reporting location of the gross receipts and any related deductions, is the
seller's location.
(b) If the gross
receipts are from property or the product of a service that is not delivered by
the seller and received by the purchaser at the seller's location as described
in Subparagraph (a) of Paragraph (5) of Section C of
3.1.4.13 NMAC, the reporting
location is the location indicated by instructions for delivery to the
purchaser, or the purchaser's donee, when known to the seller.
(c) If Subparagraphs (a) and (b) do not
apply, the reporting location is the location indicated by an address for the
purchaser available from the business records of the seller that are maintained
in the ordinary course of business; provided that use of the address does not
constitute bad faith.
(d) If
Subparagraphs (a) through (c) do not apply, the reporting location is the
location for the purchaser obtained during consummation of the sale, including
the address of a purchaser's payment instrument, if no other address is
available; provided that use of this address does not constitute bad
faith.
(e) If Subparagraphs (a)
through (d) do not apply, including a circumstance in which the seller is
without sufficient information to apply those provisions, then the reporting
location for the gross receipts and related deductions is the location from
which the property or product of the service was shipped or transmitted to the
purchaser.
(i) Except as provided in provision
in Item (ii) of Subparagraph (e) of Paragraph (5) of Subsection C of
3.1.4.13 NMAC below, the seller is
not considered to be without sufficient information to apply provisions of
Subparagraphs (a) through (d) if it obtains or has access to sufficient
information at the time of the sale, or subsequently, but simply fails to
maintain that information in its records; or it has access to sufficient
information from other reliable sources to make a reasonable estimate of the
reporting location under Subsection F of this regulation at the time the gross
receipts are required to be reported. Examples of information from other
reliable sources includes population or market-penetration information that may
be used to develop a reasonable estimate of the location of consumers of
certain products.
(ii) If gross
receipts are derived from a single sale or transaction where the property or
the product of a service provided is determined to be delivered simultaneously
at multiple locations throughout the state, the seller is deemed not to have
sufficient information to determine the reporting location under Subparagraph
(e) of Paragraph (5) of Subsection C of
3.1.4.13 NMAC.
(iii) Example: Company X provides an
advertising service to Customer Y that will be distributed or displayed to
persons in New Mexico through general access to particular media. The product
of the advertising service is delivered to the location of the person accessing
or viewing the advertising. Under Subparagraph (e) of Paragraph (5) of
Subsection C of
3.1.4.13 NMAC, the reporting
location of the gross receipts and related deductions from this service is the
location of Company X as determined by the location from which the advertising
service was primarily provided.
(iv) Example: Company x provides customer Y
with a license to use digital goods by customer Y at various locations
throughout the state. The license is delivered to customer Y throughout the
state. Under Subparagraph (e) of Paragraph (5) of Subsection C of
3.1.4.13 NMAC, the reporting
location of the gross receipts and related deductions of company X from
providing the license to use digital goods is the location of company X as
determined by the location from which the digital goods were primarily
provided. A person may report different gross receipts and deductions to
different reporting locations under the rules of this Paragraph (5) of
Subsection C of
3.1.4.13 NMAC, as
applicable.
(v) Example: Company X
provides a digital advertising service to customer Y that can be viewed in New
Mexico, and is intended to be viewed only in New Mexico, through access to
company X's digital platform, as that term is defined in Subsection D of
3.2.213.13 NMAC. The product of the
digital advertising service is delivered to the locations of all persons in New
Mexico viewing or accessing the advertising. Under Subparagraph (e) of
Paragraph (5) of Subsection C of
3.1.4.13 NMAC, the reporting
location of the gross receipts and related deductions from this service is the
location of company X as being the location from which the product of the
digital advertising service was transmitted to the purchaser.
(6) If the gross
receipts are from the sale of a license of digital goods, or any other sale of
a license not otherwise specifically addressed in these regulations, the
reporting location of the gross receipts and related deductions is determined
consistent with Paragraph (5) of Subsection C of
3.1.4.13 NMAC.
(7) If the gross receipts are from the lease
of tangible personal property, including vehicles, other transportation
equipment, and other mobile tangible personal property, then the reporting
location for the gross receipts any related deductions is the location of
primary use of the property, as indicated by the address for the property
provided by the lessee that is available to the lessor from the lessor's
records maintained in the ordinary course of business; provided that use of
this address does not constitute bad faith. The primary reporting location
shall not be altered by intermittent use at different locations, such as use of
business property that accompanies employees on business trips and service
calls.
(8) If the gross receipts
are from the sale, lease or license of franchises, then the reporting location
for the gross receipts and any related deductions is where the franchise is
used. The location where the franchise is used may be determined from the
franchise agreement or from other facts and circumstances related to the
exercise of the franchise.
(9) The
reporting location of gross receipts and related deductions from the sale of
services is determined as follows:
(a) If the
gross receipts are from professional services, whether performed in New Mexico
or performed outside the state where the product of the service is initially
used in New Mexico, the reporting location of the gross receipts and related
deductions is the location of the performance of the service. Gross receipts
from a service performed outside the state that are taxable in New Mexico
because the buyer makes initial use of the product of the service in this state
are reported to the state reporting location and taxed at the state
rate.
(b) If the gross receipts are
from construction services and construction-related services, as those terms
are defined under the Gross Receipts and Compensating Tax Act and applicable
regulations, performed for a construction project in New Mexico, the reporting
location of the gross receipts and related deductions is the location of the
construction site.
(c) If the gross
receipts are from the service of selling of real estate located in New Mexico,
the reporting location of the gross receipts and related deductions is the
location of the real estate.
(d) If
the gross receipts are from transportation of persons or property in, into or
from New Mexico, the reporting location of the gross receipts and related
deductions is the location of where the person or property enters the
vehicle.
(e) If the gross receipts
are from services other than those described in Subparagraphs (a) through (d)
of Paragraph (9) of Section C of
3.1.4.13 NMAC, including in-person
services, the reporting location of those gross receipts and related deductions
is the location where the product of the service is delivered. In general, the
location of delivery of the product of the service is determined under rules
consistent with Paragraph (5) of Subsection C of
3.1.4.13 NMAC. The "product of the
service" is determined under applicable provisions of the Gross Receipts and
Compensating Tax Act and related regulations.
(i) Advertising services. An advertising
service involves an agreement with a client to communicate or to place
advertisements before an intended audience, on behalf of the client. The
product of an advertising service is the ad which is capable of being heard or
viewed by the intended audience. The reporting location for gross receipts from
an advertising service is determined under Paragraph (5) of Subsection C of
3.1.4.13 NMAC based on delivery of
the product of the service, which is the location where the ad may be heard or
seen by the intended audience.
(ii)
Services ancillary to advertising. Services ancillary to advertising include
design of the advertisement, creation of data processing or information
technology to capture of customer related information, etc., which the seller
may treat as a separate service under Section D of
3.1.4.13 NMAC and which are
provided to a client. The reporting location of gross receipts from a service
ancillary to advertising under Paragraph (5) of Subsection C of
3.1.4.13 NMAC depends on the
product of the service and where it is delivered, but will generally be the
location of delivery of that product of the service to the client.
(f)
The reporting
location of gross receipts from in-person services is the location of the
performance of the service, which is also the location of the customer or the
customer's property on which the service is performed.
D. MIXED TRANSACTIONS: Where a single transaction gives rise to gross receipts that would have different reporting locations under Paragraphs (4) through (9) of Subsection C of 3.1.4.13 NMAC if they were provided to the customer in the form of separate transactions, the reporting location for those gross receipts shall be determined as follows:
(1) If the billing to the customer does not
break out the charges for the separate items, then the reporting location will
be determined based on how the gross receipts for the transaction would be
treated under the Gross Receipts and Compensating Tax Act and applicable
regulations, and applying Paragraphs (4) through (9) of Subsection C of
3.1.4.13 NMAC.
(2) If the billing to the customer breaks out
the separate charges for the items and one or more items would be treated as
incidental charge or an element of the sales price of other items under the
Gross Receipts and Compensating Tax Act and applicable regulations, then the
reporting location of those incidental receipts will be the reporting location
as determined for the gross receipts from the remaining related item or
items.
(3) If the billing to the
customer breaks out the separate charges for the items and one or more items
would not be treated as an incidental charge or an element of the sales price
of other items under the Gross Receipts and Compensating Tax Act, and if the
reporting location for the gross receipts from two or more such items would be
different under Paragraphs (4) through (9) of Subsection C of
3.1.4.13 NMAC, then the gross
receipts and related deductions reported to each reporting location will be
determined as follows:
(a) the separate gross
receipts for each item will be reported to the separate reporting locations,
based on the separate charges in the bill to the customer; or
(b) all of the gross receipts may be reported
to the single reporting location properly determined for the item or items from
which the majority of the gross receipts result as properly determined under
Subsection C of
3.1.4.13 NMAC.
(4) Example: Taxpayer sells a professional
service along with tangible personal property delivered to the buyer. The
billing to the buyer includes a separate charge of $100 for the service, $100
for the tangible personal property, and $5 for shipping. Assume that under the
Gross Receipts and Compensating Tax Act and applicable regulations, the
taxpayer would be treated as having $100 of gross receipts from the sale of a
service and $105 (the charge for the property and the incidental charge for
shipping) from the sale of tangible personal property. Assume also that the
reporting location of the gross receipts from the sale of the service under
3.1.4.13 NMAC is the location where
the service is performed but the reporting location for the gross receipts from
the sale of the tangible personal property is the location of the delivery to
the customer. The taxpayer may report the gross receipts from the service to
the reporting location as properly determined under Subparagraph (a) of
Paragraph (9) of Subsection C of
3.1.4.13 NMAC and the gross
receipts from the sale of property to the reporting location as properly
determined under Subparagraphs (b) through (d) of Paragraph (5) of Subsection C
of 3.1.4.13 NMAC. Alternatively, the
taxpayer may report all of the gross receipts to the reporting location as
determined for the sale of the property.
E. REPORTING LOCATION FOR COMPENSATING TAX:
(1) Except as provided in
Paragraphs (2) and (3) of Subsection E of
3.1.4.13 NMAC, the value of an item
that is subject to compensating tax under Section
7-9-7 NMSA 1978 is generally
reported to the same reporting location to which gross receipts from the
transaction in which the item was acquired would have been reported under
Subsections C or D of
3.1.4.13 NMAC, had the transaction
been subject to gross receipts tax. In applying Subsections C or D to determine
the reporting location to report the value of items for compensating tax, the
taxpayer should assume that the person providing those items would have had
information on the taxpayer's location at the time of the
transaction.
(2) In the case of an
individual who owes compensating tax for non-business use of items acquired in
a transaction with a person that did not have nexus in New Mexico, the
reporting location for reporting that compensating tax is the individual's
residence or primary place of abode in the state at the time of the
transaction.
(3) In the following
cases, the reporting location for reporting compensating tax on purchases,
other than professional services, is the location of first use in the state:
(a) purchases made by a business that were
not subject to the gross receipts tax solely because they were made outside the
state, where the later use inside New Mexico is subject to the compensating
tax; or
(b) where the taxpayer has
information that can show that first use upon which compensating tax is imposed
occurred at a different time and place than would be determined under
Paragraphs (1) or (2) of Subsection G of
3.1.4.13 NMAC.
(4) Examples:
(a) A business acquires tangible personal
property in a transaction with a person that lacks nexus in New Mexico. The
business uses the property in a manner that would have rendered the transaction
subject to the gross receipts tax, had the person had nexus. The reporting
location for purposes of reporting the compensating tax is the reporting
location to which the gross receipts would have been reported by the person if
the person had had nexus and assuming, for this purpose, that the person would
have had information on the location of the business that acquired the
property.
(b) A business with
offices both inside and outside New Mexico purchases tangible personal property
at its office outside the state and later ships that property to its New Mexico
office for use. The use of the property in New Mexico was such that the
property would have been subject to the gross receipts tax had it been acquired
in New Mexico. The reporting location for purposes of reporting the
compensating tax is the office in New Mexico at which the property is first
used.
(c) A business purchases
tangible personal property for resale from a New Mexico seller and takes
delivery of that property at the seller's place of business in Location X,
using a nontaxable transaction certificate to purchase the property tax-free.
Subsequent to the purchase, the business uses the property, rather than
reselling it, at its own place of business in location Y. The reporting
location for purposes of reporting the compensating tax is location
Y.
(d) A business with offices both
inside and outside New Mexico obtains a license to use digital goods which will
be used at its offices inside and outside the state. In the transaction with
the provider of the license, the provider knows only the purchaser's
out-of-state office and conducts the transaction with that office. The
reporting location for the portion of the value of the license used in New
Mexico is the location of the office in New Mexico.
(e) A business purchases a service from an
out-of-state person who lacks nexus in New Mexico. The product of the service
is initially used in New Mexico. The reporting location of the value of the
service for purpose of compensating tax is the location of the initial use by
the business in New Mexico.
(f) A
nonresident individual with a place of abode in New Mexico purchases tangible
personal property for use in New Mexico from a seller who lacks nexus in New
Mexico. The transaction would not otherwise be exempt or deductible from gross
receipts tax had it occurred in New Mexico. The reporting location of the
compensating tax owed by the individual is that individual's place of
abode.
F. USE OF REASONABLE ESTIMATES:
(1)
Use of reasonable estimates allowed. Where a person subject to the gross
receipts or compensating tax maintains records or has access to other reliable
information that would allow that person to determine or estimate the reporting
location for those gross receipts or the compensating tax under the rules of
Subsections C and D of
3.1.4.13 NMAC, those records or
other information may be used to establish reasonable estimates of the amounts
reported to be reported by reporting location. Provided that the taxpayer's
reporting of gross receipts or compensating tax otherwise complies with
provisions of the Gross Receipts and Compensating Tax Act and applicable
regulations, the department will not assess the taxpayer for additional tax if
the taxpayer uses reasonable estimates, applied consistently and in good faith
to determine the reporting location, so long as there is no obvious distortion.
Obvious distortion shall be presumed whenever the method used to estimate the
reporting location treats similar transactions inconsistently. Any method which
intentionally credits sales to a location with a lower combined tax rate
primarily for the purpose of reducing the taxpayer's total tax liability shall
be presumed to contain obvious distortion.
(2) Use of reasonable estimates required.
Where a person has gross receipts that would generally be sourced under the
rules of Paragraph (5) of Subsection C of
3.1.4.13 NMAC, and where the person
has records or information that would allow a reasonable estimate of the
reporting location of those receipts applying Subparagraphs (a) through (d) of
Paragraph (5) of Section C of
3.1.4.13 NMAC, the taxpayer shall
use a reasonable estimate before applying Subparagraph (e) of Paragraph (5) of
Section C of
3.1.4.13 NMAC.
G. REPORTING LOCATION - RECEIPTS SUBJECT TO THE INTERSTATE TELECOMMUNICATIONS GROSS RECEIPTS TAX: Notwithstanding anything in Section 7-1-14 NMSA 1978, or provisions of 3.1.4.13 NMAC, the reporting location for gross receipts subject to the interstate telecommunications gross receipts tax is the state location and rate. The following telecommunications services are subject to the tax:
(1)
interstate telecommunications services (other than mobile telecommunications
services) that originate or terminate in New Mexico and are charged to a
telephone number or account in New Mexico; and
(2) mobile telecommunications services that
originate in one state and terminate in any location outside it, to a customer
with a place of primary use in New Mexico as defined under Subsection E of
Section 7-9C-2 NMSA 1978.
H. TRANSACTIONS ON TRIBAL TERRITORY: A person selling or delivering goods or performing services on the tribal land of a tribe or pueblo that has entered into a gross receipts tax cooperative agreement with the state of New Mexico pursuant to Section 9-11-12.1 NMSA 1978 is required to report those receipts based on the tribal location of the sale or delivery of the goods or performance of the service.
Disclaimer: These regulations may not be the most recent version. New Mexico may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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