New Mexico Administrative Code
Title 3 - TAXATION
Chapter 2 - GROSS RECEIPTS TAXES
Part 212 - IMPOSITION AND RATE OF GOVERNMENTAL GROSS RECEIPTS TAX
Section 3.2.212.9 - SALE OF SERVICE TO A GOVERNMENTAL AGENCY

A. Receipts from the sale of a service to a governmental agency are not deductible pursuant to Section 7-9-54 NMSA 1978. Only the receipts from selling tangible personal property to a governmental agency are deductible.

B. Example 1: The city contracts with E, an employment agency, to provide substitutes for vacationing city secretarial employees each summer. E deducts the receipts from the city in computing its gross receipts tax liability. This is a sale of services to a political subdivision of the state of New Mexico and not a sale of tangible personal property. The deduction cannot be allowed.

C. Example 2: B is an attorney who performs legal services in New Mexico for various Indian tribes and Indian pueblos. B is not an enrolled member of any Indian nation, tribe or pueblo. B's receipts from these services are not deductible under Section 7-9-54 NMSA 1978. A deduction from gross receipts under Section 7-9-54 NMSA 1978 is allowed only for receipts from the sale of tangible personal property to the governing bodies of Indian tribes or Indian pueblos for use on Indian reservations or pueblo grants. (If the services are performed on the tribe's territory, however, they may be exempt under Subsection D of Section 3.2.4.9 NMAC).