Current through Register Vol. 35, No. 18, September 24, 2024
A.
Leasing of property employed in New
Mexico:
(1) Receipts derived from the
rental or leasing of property employed in New Mexico are subject to the gross
receipts tax.
(2)
Example
1: A is in the business of leasing heavy equipment used in
construction projects. The receipts from the leasing of such equipment employed
in New Mexico prior to January 1, 2013, are subject to the gross receipts tax.
See Section
7-9-52.1
NMSA 1978 for deductibility of receipts from such leases on or after January 1,
2013.
(3)
Example
2: Y, a New York corporation, leases four block-making machines to X
who uses the machines in X's block making business in New Mexico. The rental
contract is signed in Nebraska. The receipts which Y receives from the rental
of the equipment employed in New Mexico are taxable.
(4)
Example 3: P corporation
leases photocopying machines to Q, a state agency. The receipts of P
corporation from leasing these machines to the state agency are subject to the
gross receipts tax.
B.
Additional charges:
(1) Receipts
derived from additional charges made in conjunction with the rental or leasing
of property employed in New Mexico are subject to the gross receipts
tax.
(2)
Example
1: C owns and operates a business which leases gas cylinders. There is
a clause in the lease whereby the lessee will be liable for an additional
charge if the gas cylinders are kept past a specific date provided in the lease
contract. Receipts from these penalties or demurrage charges for keeping the
gas cylinders past the specified date provided are receipts from leasing
property employed in New Mexico and are subject to the gross receipts
tax.
(3)
Example
2: D is in the business of leasing concrete forms which are employed
in New Mexico. The terms of the lease agreement require that the property
leased be returned to the lessor in the condition in which it was leased. Any
receipts from charges for repairing and cleaning concrete forms returned to the
lessor in a damaged condition, for any material used in repair of such forms,
or from charges for the purchase price of forms which are not returned to the
lessor, are receipts from leasing property employed in New Mexico and are
subject to the gross receipts tax.
C.
Lease of license - franchise
agreement: Receipts derived from the lease of a license, such as a
liquor license, or from a franchise agreement, are subject to the gross
receipts tax.
D.
Multistate
use of leased equipment:
(1) Where
property is rented or leased for employment both within and outside New Mexico
the renter or lessor will be subject to the gross receipts tax on that portion
of the receipts which is derived from the renting or leasing of property
employed in New Mexico.
(2) In
order to determine the portion of the receipts which are subject to the gross
receipts tax, the total receipts from the lease are to be multiplied by
whichever of the following fractions more accurately reflects the receipts from
the period of employment of the leased item inside New Mexico:
(a) the numerator is the total miles traveled
by the leased items in New Mexico and the denominator is the total miles
traveled by the leased items during the lease period; or
(b) the numerator is the total time the
leased items were employed in New Mexico and the denominator is the total time
of the lease period.
(3)
The department will allow a person engaged in the business of leasing property
employed both within and without New Mexico to use other methods of
apportioning the receipts of such leasing activities upon showing that the
other methods more accurately reflect the portion of employment of leased items
within New Mexico.
(4)
Example: B owns and operates a business located in Santa Fe,
New Mexico, which rents or leases vehicles, airplanes, and mobile equipment.
The items leased are employed both within and without New Mexico. B is subject
to the gross receipts tax on that portion of the receipts which is from
employment of the vehicles, airplanes, and mobile equipment within New
Mexico.
E.
Leasing
of property employed outside New Mexico:
(1) Receipts derived from the rental or
leasing of property employed outside New Mexico are not subject to the gross
receipts tax.
(2)
Example: L, a resident of Hobbs, New Mexico, owns a sawmill in
Wyoming which is leased to S for three thousand dollars ($3,000) per year.
These receipts are not derived from selling property in New Mexico, leasing
property employed in New Mexico, performing services outside of New Mexico the
product of which is initially used in New Mexico, or performing services in New
Mexico. These receipts are not includable in L's gross receipts.
F.
Use of vehicles in New
Mexico:
(1) Receipts from the rental or
leasing of vehicles, airplanes, or mobile equipment which are employed both
within and outside New Mexico are subject to the gross receipts tax on that
portion of the receipts which are from employment of the vehicles, airplanes,
or mobile equipment within New Mexico.
(2) In order to determine the portion of
receipts described in the above paragraph which are subject to the gross
receipts tax, the total receipts from the lease are to be multiplied by
whichever of the following fractions more accurately reflects the receipts from
the period of employment of the leased item inside New Mexico:
(a) the numerator is the total miles traveled
by the leased items in New Mexico and the denominator is the total miles
traveled by the leased items during the period of lease; or
(b) the numerator is the total time the
leased items were physically present in New Mexico and the denominator is the
total time of the lease period.
(3) The department will allow a person
engaged in leasing the above described items to use other methods of
apportionment upon a showing that the other methods will more accurately
reflect the period of employment of the leased item within New
Mexico.
G.
Safe
harbor lease - purchaser/lessor: A purchaser/lessor who enters into a
qualified "safe harbor lease" transaction as defined in Section 168 of the
Internal Revenue Code will be subject to the gross receipts tax on the receipts
if the property being leased is located in New Mexico.
H.
Leasing computers: Receipts
from renting or leasing the use of computers or related equipment in New
Mexico, on either a part-time or a full-time basis, are subject to the gross
receipts tax.