New Mexico Sales Tax Guide
Chapter 3: Getting registered to collect New Mexico sales tax
The first step toward proper management of New Mexico gross receipts tax involves getting registered with the New Mexico Taxation and Revenue Department. We get a lot of questions regarding this and recognize it may be the most difficult hurdle for small businesses to overcome. Registering to collect gross receipts tax in New Mexico means you've acknowledged your legal responsibility to collect and consequently file and remit sales tax to the state.When do I need to register to collect gross receipts tax in New Mexico?
There are two ways to think about this question. The first involves a topic called "nexus". Nexus, in the tax world refers to a company's connection to a state. While this connection is typically that of a physical nature (warehouse in the New Mexico, inventory in New Mexico, etc.), nexus is not limited to a physical presence. There are many nexus triggers we won't delve into here and, more importantly, nexus is often determined by a combination of events rather than a single event.
If it is determined you have nexus in New Mexico, the New Mexico Taxation and Revenue Department has the legal right to require you to collect, file, and pay gross receipts tax.
If you've determined you have nexus in New Mexico, the second question involves a topic we call "materiality". In short, you'll want to ask yourself whether the amount of gross receipts tax you are required to collect and remit to the New Mexico Taxation and Revenue Department is enough to put you at an unacceptable level of penalty and interest risk. As everyone's level of risk tolerance is different, this is a question that can only be answered by you, the business owner.
Prior to selling taxable goods or offering taxable services in New Mexico, a business that has established nexus within the state is required to register for an Tax ID Number.What triggers nexus in New Mexico?
Nexus is a complex topic that, depending on your situation, may require the in-depth knowledge of a qualified tax professional. That being said, there are a few common business events and situations that are known to trigger nexus in New Mexico. The most common include the following:
- Opening an office in New Mexico
- Storing inventory in a warehouse in New Mexico
- Having remote employees located in New Mexico
Businesses may register for an New Mexico Tax ID Number online by visiting the New Mexico Taxation and Revenue Department and following the instructions provided.
It is also possible to get registered for a Tax ID Number by completing and mailing in a Application for Business Tax Identification Number (ACD – 31015), but this approach is not recommended. Form based registration is being phased out in favor of online registration. It’s fast, free, and more reliable than mailing in a completed paper form.What information is required to register for a New Mexico Tax ID Number ?
When applying for a New Mexico Tax ID Number, there are a number of pieces of information that may be required. These include, but are likely not limited to:
- Business name
- Business entity type
- Description of business activities
- Date business activities began or will begin
- Business address and mailing address
- Business contact information
- The North American Industry Classification System (NAICS) code that best matches your business
- Federal Employer Identification Number (FEIN)
- Your name, Social Security Number (SSN), driver license number, personal address, and personal contact information of owner/sole proprietor
- List of business officers, partners, managing members, and/or trustees
- Employment information (date of hire, number of employees, payroll amounts, payroll agent’s PTIN, if applicable)
The cost to register for a New Mexico Tax ID Number is currently $0.Do I need a Federal EIN in order to register in New Mexico?
The New Mexico Taxation and Revenue Department requires businesses requesting a new Tax ID Number to supply a valid Federal EIN number during the initial registration process. You can apply for an EIN number online by visiting the IRS website.Which New Mexico governement agencies do I need to register with in order to get a new Tax ID Number?
We recommend you contact the New Mexico Taxation and Revenue Department to verify which government agencies you will be required to register with. Potential agencies include the following:
- New Mexico Department of Revenue
- New Mexico State Employment Agency
- New Mexico State Department of Labor
- New Mexico Local Tax Jurisdictions
Yes! New Mexico Tax ID Number registration is unique to the state of a business. The New Mexico Taxation and Revenue Department requires all registered businesses to have current business owner name and contact information on file.