New Mexico Administrative Code
Title 3 - TAXATION
Chapter 2 - GROSS RECEIPTS TAXES
Part 206 - DEDUCTION - GROSS RECEIPTS TAX - SALE OF A SERVICE FOR RESALE
Section 3.2.206.8 - RECEIPTS FROM THE NEXT SALE MUST BE TAXABLE
Current through Register Vol. 35, No. 18, September 24, 2024
A. Receipts from selling a service for resale may be deducted by the seller under Section 7-9-48 NMSA 1978 if the buyer has delivered an appropriate nontaxable transaction certificate (nttc) to the seller. If the buyer giving the nttc does not resell the service in a transaction that is taxable, then that person is subject to the compensating tax on the value of the services at the time they were rendered.
B. Example 1: X brings a truck into Y for repair. The trailer hitch has broken off the truck. Since Y does not have a welder, Y takes the truck to Z, who welds the trailer hitch back on to the truck. Y has executed an nttc which it has previously given to Z. Y bills as follows:
|
Bumper welding (performed by Z) |
$ 10.00 |
|
Service Charge |
2.00 |
|
$ 12.00 |
|
|
Tax (at .05) |
.60 |
|
TOTAL |
$ 12.60 |
Under these circumstances Z may deduct the $10.00 gross receipts that it derived from selling a welding service for resale because it received an nttc.
C. Example 2: Y takes its service truck to Z to have Z weld a crane strut. Since Y has issued an nttc to Z, Z deducts its receipts from the performance of this service from its gross receipts. Y must pay compensating tax on the welding service performed by Z.
D. Example 3: M, a seller of concrete beams, hires a carrier to transport the beams to a buyer, C, who is engaged in the construction business. C delivers an nttc to M pursuant to the deduction allowable for the sale of tangible personal property to persons engaged in the construction business. As the sale by M to C is not subject to the gross receipts tax, if M delivers an nttc to the carrier, M will be subject to the compensating tax on the value of the transportation service. It is immaterial that the seller separately states the value of the transportation service in the billing to C, the purchaser of the beam.
E. Example 4: E, a seller of paper, hired a common carrier to transport several reams of paper to the buyer, the United States government. As E is not subject to the gross receipts tax on this transaction, if E delivers an nttc to the carrier E will be subject to the compensating tax on the value of the transportation services. It is immaterial that the seller separately states the value of the transportation services in the billing to the United States government.
