GROSS RECEIPTS TAX FAQs

 
Q. 
Why do I have to pay gross receipts tax when my business had a loss after subtracting deductions on my federal tax return. 
A. 
Gross receipts are sales. Deductions for business expenses are not relevant the GRT.

Q. 
Is there a difference in the way gross receipts taxes work for a general contractor and a sub?
A. 
Yes. A general contractor's gross receipts are subject to GRT consequently a subcontractor's gross receipts are not taxable -- but they must be reported and then deducted.

Q. 
What about a subcontractor to a subcontractor?
A. 
A sub-subcontractor's gross receipts are taxable because the gross receipts of the first level contractor are not subject to GRT.

Q. 
I am a consultant located in California and have customers in New Mexico. Are my sales to NM customers subject to GRT?
A.
It depends. Until July 1, 2021, if you are an individual or business that lacks physical presence in NM, including a marketplace provider or marketplace seller, engaging in business means having at least $100,000 of taxable gross receipts in the previous calendar year from sales, leases, and licenses of tangible personal property, sales of licenses, and sales of services or licenses for use of real property, sourced to New Mexico. Beginning July 1, 2021 your sales of services will be subject to GRT.

Q.
I sell merchandise on eBay. Do I have to pay GRT?
A.
Maybe. You are a marketplace seller and a marketplace seller may deduct receipts for sales, leases and licenses of tangible personal property, sales of licenses and sales of services or licenses for use of real property that are facilitated by a marketplace provider; provided that the marketplace seller obtains documentation from the marketplace provider indicating that the marketplace provider is registered with the department and has remitted or will remit the taxes due on the gross receipts from those transactions.

Q.
I know I don't have to pay GRT on sales to customers in other states. What type of Nontaxable Transaction Certificate do I need from my customers?
A. 
A buyer in another state can only issue NTTCs only if they are registered with the NM Taxation & Revenue Dept. That means they have a facility or employees in NM.

Q. 
So how do I prove that I am entitled to a deduction for those sales?
A. 
Documents such as billing and shipping records and the Multijurisdiction Uniform Sales and Use Tax Certificate are examples of proof.

Q.
All of my sales are to out-of-state customers. I know they are exempt from GRT. Do I have to report them anyway? 
A.
Yes. If you don't report and deduct them, there's a good chance you will be audited. (Read What is exempt from N.M. Gross Receipts Tax?)

Q.
Is the GRT tax rate I pay based on where my business is or my customer's?
A.
There are 2 answers. Until July 1, 2021, the rate is based on where your business is located. Starting on that date the rate will be based on where you ship to or deliver your product or service.

Q. 
I'm a contractor. Does that make a difference?
A.
Yes. The GRT rate for a contractor is based on the rate where the job takes place.