New Mexico looking to tax businesses without a physical presence
- Feb 16, 2017 | Gail Cole
Update 5.15.2017: An amended version of House Bill 202 made it to the governor's desk and was vetoed.
Lawmakers in New Mexico are running with an idea proposed by the bipartisan Revenue Stabilization & Tax Policy Committee: taxing sales by certain out-of-state sellers lacking a physical presence in the state. New Mexico is one of several states, including Mississippi and South Carolina, currently exploring the possibility of taxing remote sales.
House Bill 202 clarifies that “the place of business of a person without physical presence in this state is where the property or service being sold is delivered.” In other words, it assumes an out-of-state seller that sells and delivers goods and/or services in New Mexico is engaging in business in New Mexico — and is therefore liable for New Mexico tax.
The measure also allows for the following exception: an out-of-state business is not engaging in business in New Mexico when it (and its affiliates) have less than $100,000 of gross receipts in the state, based on receipts during the prior calendar year.
Last week, the House Business & Industry Committee gave the bill a “DO PASS” recommendation and referred it to the Taxation and Revenue Committee.
As written, the bill has an effective date of July 1, 2017, and it precludes the Taxation and Revenue Department from enforcing collection of gross receipts tax for “a period prior to July 1, 2017 on persons engaging in business if, for those tax periods, those persons: (1) lacked physical presence in the state; and (2) did not report taxable gross receipts.”
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