What is exempt from N.M. Gross Receipts Tax?
There's not a simple answer. New Mexico law provides over 120 exemptions and deductions! What Is an Exemption? An exempt receipt is not taxable and does not
require reporting. If all receipts of a business or
organization are exempt, it does not register with
the Department unless it wishes to apply for nontaxable transaction certificates, or unless it must
do so for another tax program; for instance, to
withhold and remit withholding tax for employees. I
have represented businesses that were audited even though their sales
were exempt. There can be several reasons for this. An example of one case
is that a real estate sales agent used an incorrect Standard Industry Code
was used on the business's federal income tax return. The message here
is that an audit letter can be avoided if the business registers,
reports and deducts exempt sales. What Is a Deduction? A deduction is a receipt that is not subject to the
tax but is reportable to the Department. Any business with deductible receipts registers with TRD
and maintains proof of deductions taken. Proof
may require a nontaxable transaction certificate (NTTC) or other evidence acceptable to the Secretary. The deduction means that there is no tax on
a transaction, and consequently, no
tax for the business to recover from the customer. The use of
the NTTC system eliminates a layer of tax when
possible. The law does not permit NTTC use in
some cases. If all receipts of a business are 100%
deductible, the law requires the business to file a
“zero” CRS-1 Form. |