New Mexico Administrative Code
Title 3 - TAXATION
Chapter 2 - GROSS RECEIPTS TAXES
Part 216 - DEDUCTION - GROSS RECEIPTS TAX - FEED - FERTILIZERS
Section 3.2.216.9 - GOOD FAITH ACCEPTANCE OF BUYER'S STATEMENT
Current through Register Vol. 35, No. 18, September 24, 2024
A. When a seller accepts in good faith a person's written statement that the person is regularly engaged in the business of farming or ranching, the written statement shall be conclusive evidence that the proceeds from the transaction with the person having made this statement are deductible from the seller's gross receipts.
B. Example 1: X owns a water company that furnishes water to Y for use in irrigating Y's cotton crop. Y gives X the proper written statement that Y is regularly engaged in the business of farming. X may deduct the gross receipts received from the sale of the water.
C. Example 2: Z also buys water from X, a water company. Z is not engaged in the business of farming or ranching but nevertheless gives X a written statement in proper form that X is engaged in the business of farming. X accepts the statement in good faith. X may deduct the gross receipts received from the sale of the water but Z is liable for the compensating tax and may be liable for making false statements.
D. Example 3: C buys one hundred gallons of chemicals from E for $15.00. The chemicals are used to delint cotton in C's cotton gin. E maintains that E can deduct the $15.00 from gross receipts since the chemical helps the seed to germinate and therefore must be a fertilizer. E may not take the deduction.
