New Mexico Sales Tax Guide
Chapter 4: Collecting and managing New Mexico sales tax
Once you've successfully registered to collect New Mexico gross receipts tax, you'll need to start collecting it on taxable sales. Seems simple enough, right? We'll cover how to get your tax collection set up and offer some suggestions for keeping things organized in preparation for filing returns to the New Mexico Taxation and Revenue DepartmentHow do I collect New Mexico gross receipts tax?
How you collect New Mexico gross receipts tax is influenced by how you are selling your goods. Generally speaking, New Mexico gross receipts tax collection can be automated to make your life much, much more simple. Let's consider some common store situations.
- Marketplace: Marketplaces like Amazon or Etsy offer integrated sales tax rate determination and collection for a small fee. You'll be able to set things up from your seller dashboard and let your marketplace provider do most of the heavy lifting.
- Hosted Store: Hosted store solutions like Shopify or Squarespace offer integrated sales tax rate determination and collection. Just like marketplaces, hosted stores will offer sellers a dashbaord environment where they can manage their New Mexico gross receipts tax collection.
- Mobile Point of Sale: Mobile point of sale (POS) systems like Square rely on GPS to determine sale location. The appropriate tax rate is then determined and applied to the order. Specific tax rules can be set within the system to allow for specific product tax rules.
- Brick and Mortar: Brick and mortar POS solutions like Revel allow users to set a prevailing gross receipts tax rate that applies to the store location. New tax groups can then be created to allow for specific product tax rules.
As mentioned, some store solutions will charge for tax management. Amazon, for example charges a fee of 2.9%, but it automates New Mexico gross receipts tax collection and will save you loads of time. For a small business owner, this is money well spent.What goods are eligible for gross receipts tax exemption in New Mexico?
Some goods are exempt from gross receipts tax in New Mexico regardless of who the buyer is or what the goods will be used for. Examples include most non-prepared food items, everyday clothing items, and medical supplies and drugs.
Other goods depend on New Mexico gross receipts tax rules. We recommend businesses review the laws put forth by the New Mexico Taxation and Revenue Department to understand which goods require sales tax to be collected (and under what conditions).Who is eligible for New Mexico gross receipts tax exemptions?
Under New Mexico law, taxable goods may be eligible for gross receipts tax exemption depending on the type of buyer or the manner in which the goods will be used. A good example of this is a merchant purchasing goods for resale. The New Mexico New Mexico Taxation and Revenue Department holds that such purchases are tax exempt.
Other common examples include government agencies, non-profit organizations, religious groups, and out-of-state buyers (should your business not have nexus in their home state).What should I do if my customer is exempt from gross receipts tax in New Mexico.
Selling to buyers who are tax-exempt is something every business owner eventually encounters. The responsibility here resides on the seller. It is up to you to collect a New Mexico gross receipts tax exemption certificate at the point of sale and to keep it on file. Such certificates must be produced upon request in the event of an audit to justify tax-exempt sales. Failure to produce the tax exemption certificate may result in the outstanding tax being passed on to the seller.What happens if I lose a New Mexico gross receipts tax exemption certificate?
We encourage anyone collecting gross receipts tax in New Mexico to think of tax exemption certificates as worth far more than the paper they are written on. If you are audited and cannot produce an exemption certificate, you may be held responsible for the uncollected gross receipts tax by the New Mexico Taxation and Revenue Department. In some cases late fees and interest will be applied. This can result in very large, unexpected bills.Does New Mexico have a gross receipts tax holiday?
Across the US, there are currently four scenarios in which buyers may participate in a sales tax holiday: back-to-school season, hurricane season, when purchasing ENERGY STAR appliances, or when purchasing firearms.
The New Mexico Taxation and Revenue Department currently supports the following sales tax holiday dates:
- Back-to-school tax holiday: August 7-9
- Disaster preparedness tax holiday: None
- ENERGY STAR appliance tax holiday: None
- 2nd Amendment tax holiday: None