The future of New Mexico’s Small Business Saturday is secure
- Mar 9, 2020 | Gail Cole
To help small businesses compete with their larger counterparts during the holidays, New Mexico offered a one-day sales tax holiday for small businesses in 2018 and 2019. With the recent enactment of House Bill 170, the future of Small Business Saturday is secure: It will be held on the Saturday after Thanksgiving through 2024.
The 2020 Small Business Saturday will run Saturday, November 28, from 12:01 a.m. to midnight. To participate, a seller must carry on a trade or business in New Mexico and:
- Employ no more than 10 employees at any one time during the previous fiscal year
- Maintain its primary place of business in New Mexico (as determined by the New Mexico Taxation and Revenue Department)
During the one-day event, qualifying small businesses should not charge customers tax on qualifying tangible personal property with a sales price of less than $500. HB includes a long list of tangible personal property that’s eligible for the deduction:
- Bedding, bath accessories, and towels
- Books, paper, writing instruments, and art supplies
- Clothing, footwear, and accessories
- Cookware and small home appliances for residential use
- Cosmetics and personal grooming items
- Floral arrangements and indoor plants
- Home electronics
- Musical instruments
- Sporting goods and camping equipment
- Tools used for home improvement, gardening, and auto maintenance and repair
- Toys and games that are physical items clearly intended and designed to be used by children or families in play
- Video games, consoles, and related accessories
- Works of art
Sales tax vs. gross receipts tax
New Mexico levies a gross receipts tax rather than a sales tax, so a more accurate title for the event would be the Small Business Saturday Gross Receipts Tax Holiday.
The two taxes are different, although consumers generally experience them the same (both are typically added to the sales price at checkout). Sales tax is a tax on a retail sale, not the business itself, while gross receipts tax is a tax on the privilege of making certain sales in the state.
During Small Business Saturday, participating retailers should deduct receipts from qualifying retail sales. Receipts for sales made by a business operating under a franchise agreement may not be deducted.
Businesses in New Mexico must report all deductions, including those claimed during Small Business Saturday. The Taxation and Revenue Department will publish instructions on how to claim deductions for Small Business Saturday prior to the event.
Does Small Business Saturday apply to online sellers?
The gross receipts deduction applies only to qualifying companies with their primary place of business in New Mexico. However, qualifying New Mexico–based businesses that make sales online or by phone must abide by the rules of Small Business Saturday.
New Mexico businesses can simplify gross receipts tax compliance year-round by automating it. Learn more.