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New Mexico looking to tax businesses without a physical presence

  • Feb 16, 2017 | Gail Cole

 New Mexico considers instituting a tax on remote sales.

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.”

With more and more states considering remote sales tax policies, companies need to be vigilant to stay compliant. Tax automation software simplifies sales and use tax compliance for businesses of all sizes in all states. Learn more.

photo credit: alles-schlumpf via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.