Do you need to collect and remit sales tax in New Mexico?
The answer to this question is not as simple as you might think. To start, New Mexico does not actually impose sales taxes; rather, the state levies gross receipts tax, or GRT. Unlike sales tax, GRT is calculated on the total amount of gross revenue for a period rather than on a sale-by-sale basis. Retailers, service providers, and contractors are among the types of businesses required to collect and remit GRT in New Mexico. However, there are exemptions and deductions available for certain businesses, such as those related to textbook sales, nonprofit organizations, and agriculture.
Do you have sales tax nexus in New Mexico?
Nexus is a crucial concept for businesses to understand, as it determines whether they have a tax obligation in a particular state. In New Mexico, businesses can have either a physical nexus or an economic nexus, which impacts their gross receipts tax responsibilities.
Physical sales tax nexus in New Mexico
Physical nexus refers to a business having a tangible presence in the state, such as a physical location, employees, or inventory. Examples of physical presence include:
- Having a storefront
- Offices in the state
- Employing sales representatives in the state
Economic sales tax nexus in New Mexico
Economic nexus relates to a business’s economic activity within the state. In New Mexico, remote businesses have economic nexus when they exceed $100,000 in taxable sales in the previous calendar year. This means that if your business exceeds this sales threshold in the previous year, you will need to register with the state to collect and remit GRT regardless of your current year sales. Remote sellers with economic nexus will collect and remit GRT at a rate based on the location of the buyer, which will vary according to county and municipality tax rates.
Determining nexus for your business can be a complex and daunting task. With many factors to consider, businesses struggle to navigate the intricacies of nexus determination, and even end up paying thousands of dollars to accounting firms to get answers. That’s why we offer nexus determination as an a-la-carte or package deal for businesses at affordable prices. With over 20 years of experience in federal and state tax and accounting laws, we’re a trusted partner for many businesses in need of nexus review services. Contact us now for a consultation!
Are marketplace facilitators required to collect and remit sales tax in New Mexico?
Marketplace facilitators are required to collect and remit GRT on behalf of their third-party sellers if they have economic nexus in New Mexico. The economic nexus threshold for facilitators is the same as for any remote seller: over $100,000 in taxable gross receipts in the previous calendar year. These gross receipts for a marketplace facilitator include any fees they may charge their third-party sellers.
It is important for every business to be aware of which state their marketplace facilitator is registered in, rather than assuming no tax liability and facing potential penalties. For instance, if a marketplace facilitator is not registered with New Mexico and does not pay tax on a transaction, the sale is still taxable and may fall on the seller if they have nexus in the state.
What platforms are marketplace facilitators?
What is a marketplace facilitator?
A marketplace facilitator, sometimes referred to as a Multivendor Marketplace Platform (MMP), is an online platform that allows customers to purchase goods or services from various vendors in one convenient location. These platforms can benefit businesses by increasing product visibility and attracting a larger customer base. Additionally, marketplace facilitators often have the legal responsibility to collect and remit sales tax on behalf of sellers, which can help ease the sales tax burden for businesses.
Filing New Mexico Sales Tax
Follow the steps below to learn how to file your New Mexico gross receipts tax returns.
- Registering for a Business Tax Identification Number
- Visit the New Mexico Taxation and Revenue Department’s Taxpayer Access Point (TAP).
- Click on Apply for a New Mexico Business Tax ID to begin the registration process. Additionally, you can download and mail Form ACD-31015 Business Tax Registration. Note that if you are planning on filing online, (which is highly recommended), the online registration will also create a Taxpayer Access Point (TAP) account for you.
- Complete the required fields on either application, including business details, owner information, and tax type selection.
- Review and submit your application.
- Once approved, you will receive your Business Tax Identification Number. If you mail the paper application, your Business Tax ID will also be mailed to the address you provide.
- How to collect gross receipts tax
- Determine the applicable gross receipts tax rate by customer location. A helpful tool for determining gross receipts tax rates is New Mexico’s Gross Receipts Location Code and Tax Rate Map.
- Add the gross receipts tax to the price of goods or services you sell.
- Keep track of the gross receipts tax collected and any applicable exemptions or deductions. A monthly filing period is assigned to all taxpayers when they register unless they qualify for and request a quarterly or semi-annual filing period.
- Filing gross receipts tax returns
- Either download and fill out Form TRD-41413 Gross Receipts Tax Return, or login in to the Taxpayer Access Point (TAP) to file electronically (recommended). Note that if your average monthly tax liability is equal to or exceeds $1,000, you must file electronically.
- Paper filing – refer to the paper filing instructions for exactly how to file the paper return.
- Online filing – After logging into your TAP account, select Gross Receipts Tax > File Now. Make sure you have selected the correct filing period. Complete all your entries, including gross sales and exemptions.
- Pay the tax due either online or with a payment voucher, check or money order.
- Filing deadlines are the 25th of the month following the end of the reporting period.
- Other important information
- Filing tax returns any time after the due date incurs penalties and interest even if no tax is due.
- Taxpayers are strongly encouraged to maintain tax records for ten years, as the Department is permitted to assess back ten years depending on the situation. The normal assessment period is three years.
- Even if no gross receipts tax was collected, you must still file a zero return to be considered compliant.
When are sales tax returns due in New Mexico?
There are three filing frequencies in New Mexico: monthly, quarterly, and semi-annual. All businesses that register for gross receipts tax are automatically assigned a monthly filing frequency, but if your average monthly tax liability is less than $200, you may request to file quarterly or semi-annually. The reporting periods for each frequency and their corresponding due dates are:
- Monthly – monthly returns are due, you guessed it, every month before or by the 25th day of the following month. For example, January returns are due by February 25th.
- Quarterly – the reporting quarters, also due by the 25th following a quarter-end, are as follows:
- Q1: January – March
- Q2: April – June
- Q3: July – September
- Q4: October – December
- Semi-annual – the reporting periods for semi-annual are January – June and July – December. The due dates are the 25th of July and the 25th of January of the following year.
If the 25th falls on a holiday, Saturday, or Sunday, then returns are due the following business day.