INFORMATION FOR NEW BUSINESS [FYI]

FYI-206  Rev. 07/2021  Page 1

FYI-206

FOR YOUR INFORMATION

Tax Information/Policy Office  P.O. Box 630  Santa Fe, New Mexico 87504-0630

GROSS RECEIPTS TAX

AND MARKETPLACE SALES

This publication describes the imposition of the gross receipts tax upon marketplace providers

whether online or otherwise, and individuals and businesses outside or inside the state who use

a marketplace to sell or license property or services that are subject to gross receipts tax. It

describes the threshold for determining whether an out-of-state seller is “engaging in business” in

New Mexico and therefore whether its receipts are subject to gross receipts tax. Registration and

filing requirements for both marketplace providers and marketplace sellers are explained, and

guidance for sellers claiming the deduction for receipts from sales facilitated by a marketplace

provider is provided.

CONTENTS

Determining if a seller is subject to gross receipts tax ....................page 2

Who are marketplace providers? ....................................................page 2

Who are marketplace sellers? ........................................................page 3

Filing New Mexico gross receipts tax .............................................page 3

Exemptions and deductions ...................................................page 4

Supporting documentation .....................................................page 4

Taxpayer information ......................................................................page 6

For further assistance .....................................................................page 7

This information is as accurate as possible at the time of publication. Subsequent legislation, regulations,

new state rulings and court decisions may affect its accuracy. For the latest information, please check the

Taxation and Revenue Department’s web site at www.tax.newmexico.gov.

New Mexico

Taxation and Revenue Department

New Mexico Taxation and Revenue Department

FYI-206  Rev. 07/2021  Page 2

Determining if a seller is subject to gross receipts tax

In New Mexico, a tax is imposed on the total gross receipts of an individual or business engaging

in business in the state. The gross receipts tax is imposed on the seller, though the seller may,

and frequently does, pass the tax on to the buyer. Engaging in business means carrying on or

causing to be carried on any activity with the purpose of direct or indirect benefit (Section 7-9-3.3

NMSA 1978).

Gross receipts are the total amount of money or the value of other consideration received from

selling property in New Mexico, from leasing or licensing property employed in New Mexico, from

granting a right to use a franchise employed in New Mexico, from selling services performed

outside New Mexico, the product of which is initially used in New Mexico, or from performing

services in New Mexico. Gross receipts also include receipts sourced to this state and collected

by a marketplace provider for sales that it facilitates for a marketplace seller, regardless of

whether the marketplace seller is itself engaging in business in the state. (Section 7-9-3.5, NMSA

1978).

For an individual or business that lacks physical presence in this state, including a marketplace

provider or marketplace seller, engaging in business means having at least $100,000 of taxable

gross receipts in the previous calendar year from sales, leases, and licenses of tangible personal

property, sales of licenses, and sales of services or licenses for use of real property, sourced to

New Mexico (Section 7-9-3.3 NMSA 1978). Taxable gross receipts are only those gross receipts

that are not otherwise exempt or deductible. Therefore, anyone without physical presence in the

state who had $100,000 or more of receipts that were not exempt or deductible in the previous

calendar year is engaging in business in the state, and its receipts from sales sourced to the state

are subject to gross receipts tax.

Determination of the $100,000 threshold is based on the previous calendar year, regardless of

the taxable gross receipts in the current calendar year. Marketplace providers should recognize

that their gross receipts include all receipts collected for the sales, leases and licenses facilitated

for the marketplace seller that are sourced to this state, even if the payment received from the

buyer is eventually paid or transferred to the marketplace seller. Gross receipts of a marketplace

provider include the fees charged by the Marketplace provider to the Marketplace seller.

Please note that Section 7-9-7.1 NMSA 1978 provides that the Department is barred from taking

gross receipts tax collection actions for tax periods prior to July 1, 2019 against a person engaging

in business if that person lacked physical presence in the state and did not report taxable gross

receipts prior to July 1, 2019.

Who are marketplace providers?

Marketplace providers are individuals or businesses that facilitate the sale, lease, or license of

tangible personal property, or services or licenses for use of real property, on behalf of

marketplace sellers, or on their own behalf. (Section 7-9-3(J) NMSA 1978). There are two

requirements to be deemed a marketplace provider. First, the individual or business lists or

advertises the transaction by any means, whether electronically through a website or through

catalogs, television, radio, or physical means. Second, the individual or business facilitates the

transaction “either directly or indirectly, through agreements with third parties collecting payment

from the customer and transmitting that payment to the seller, regardless of whether the

marketplace provider receives compensation or other consideration in exchange for the

marketplace provider’s services.” (Section 7-9-3(J) NMSA 1978).

New Mexico Taxation and Revenue Department

FYI-206  Rev. 07/2021  Page 3

All marketplace providers that determine they have met the threshold of $100,000 in taxable gross

receipts in the previous calendar year are engaging in business in New Mexico and will need to

Who are marketplace sellers?

Marketplace sellers are individuals or businesses that use marketplaces to sell to buyers. A

marketplace seller sells, leases, or licenses tangible personal property or services or licenses the

use of real property through a marketplace provider. The marketplace seller selling through the

marketplace has gross receipts, even if the marketplace provider also has the same gross

receipts from the sale and is paying gross receipts tax on those receipts. A deduction, however,

is available for marketplace sellers that sell through marketplaces when the provider pays the

gross receipts tax. More information about this marketplace seller deduction is provided later in

this publication.

If an individual engages in business in New Mexico, either by the meeting the economic threshold

of $100,000 of taxable gross receipts in the previous calendar year, or by being physically located

in New Mexico, the seller must register, report and pay New Mexico gross receipts tax. This

includes not only a marketplace seller, but a marketplace provider that collects money on behalf

of marketplace sellers in excess of $100,000 taxable gross receipts in the prior calendar year. If

a marketplace provider does not pay tax on the transaction, but the marketplace seller is engaged

in business in New Mexico, the sale is still taxable and the marketplace seller will need to report

and remit the tax on the sale.

Sellers using marketplaces to list and allow the use of real property in New Mexico should be

aware that in addition to New Mexico gross receipts tax, their sales may be subject to other tax

programs administered by municipalities such as lodgers’ tax. Lodgers’ tax is not a state tax and

is not administered by the Taxation and Revenue Department. Sellers should contact the

municipal or county government where the real property is located in order to learn whether this

tax may apply.

Filing New Mexico gross receipts tax

Gross receipts tax is reported on the TRD-41413, Gross Receipts Tax Return. Taxpayers report

their total gross receipts and any deductions that may be applicable on this return. Marketplace

sellers that take the deduction for receipts from sales facilitated by a marketplace provider will

report the receipts they deduct on the return. The gross receipts tax rate used for out-of-state

taxpayers is currently 5.125%. Within the state, the tax rate varies based on location. More

information can be found at http://www.tax.newmexico.gov/governments/gross-receipts-location-

code-and-tax-rate-map/. The CRS-1 may be submitted electronically through the Department

online filing system Taxpayer Access Point found at: https://tap.state.nm.us/tap.

Note: Effective July 1, 2021 New Mexico has moved to destination-based sourcing. This means

that the gross receipts tax rate on the sale of property will be based on the location where the

property is received by the buyer. Previously, New Mexico used origin-based sourcing, meaning

that out-of-state marketplace sellers and providers were required to pay the 5.125% out-of-state

tax rate. Determination of the correct gross receipts tax rate for services, and more information

on determining the correct tax rate once destination-based sourcing becomes effective, can be

found in FYI-200, Your Business Location and The Appropriate Tax Rate.

New Mexico Taxation and Revenue Department

FYI-206  Rev. 07/2021  Page 4

Gross Receipts Tax Exemptions and Deductions

The Department provides numerous publications on the subject of New Mexico gross receipts

tax. First among these is FYI-105 Gross Receipts & Compensating Taxes – An Overview, which

provides a comprehensive summary of the tax program, how the tax rate is determined, as well

as a list of exemptions and deductions that may be applicable to some taxpayers. It is available

on the Department’s website: http://tax.newmexico.gov/forms-publications.aspx.

Exemptions and deductions that may apply to marketplace sellers include:

• Exemption: Isolated and occasional sale - Exempted from gross receipts tax are the

receipts from the isolated or occasional sale of or leasing of property or a service by a

person who is neither regularly engaged nor holding themself out as engaged in the

business of selling or leasing the same or similar property or service (Section 7-9-28

NMSA 1978). Criteria for determining an isolated and occasional sale is found in

Regulation 3.2.116.8 NMAC. A marketplace seller who has questions about whether a

sale may qualify for this exemption may email the Tax Information and Policy Office at

policy.office@state.nm.us.

• Deduction: Marketplace seller - A marketplace seller may deduct receipts for sales, leases

and licenses of tangible personal property, sales of licenses and sales of services or

licenses for use of real property that are facilitated by a marketplace provider; provided

that the marketplace seller obtains documentation from the marketplace provider

indicating that the marketplace provider is registered with the department and has remitted

or will remit the taxes due on the gross receipts from those transactions. (Section 7-9-117

NMSA 1978). This deduction can also be taken against governmental gross receipts tax

for governmental entities that sell through a marketplace provider.

Marketplace sellers required to file a gross receipts tax return may take the deduction on

the same return in which they report their receipts, the Form TRD-41413, Gross Receipts

Tax Return. If all receipts of the marketplace seller are deductible, the result will be that

no tax is owed by the seller, though the reporting is still required. Note: It is still important

for the marketplace seller to file a timely return when required or late filing penalty will be

assessed.

Supporting Documentation

The marketplace seller or marketplace provider responsible for reporting and paying the gross

receipts tax should retain documentation to establish that a deduction or exemption applies to a

sale in the case of a subsequent audit.

In order to support the deduction for receipts for sales facilitated by a marketplace provider, the

marketplace seller must obtain documentation from the marketplace provider indicating that the

provider is registered with the Department and has remitted, or will remit, the taxes due on the

gross receipts from the transactions being deducted. Marketplace sellers are responsible for

providing accurate information to marketplace providers to facilitate the collection by the

marketplace providers of the correct amount of tax. (Section 7-9-5(C) NMSA 1978). Both the

marketplace provider and the marketplace seller should retain records of all sales facilitated by

any marketplace provider sufficient to show that the correct amount of gross receipts tax was

collected.

New Mexico Taxation and Revenue Department

FYI-206  Rev. 07/2021  Page 5

Buyers who make purchases from marketplaces who need to issue a nontaxable transaction

certificate (NTTC) will execute the certificate to the marketplace provider who would normally be

paying the gross receipts tax and passing it onto the buyer.

Bulletin B200.32 Alternative Evidence for Deductions and FYI-204 Nontaxable Transaction

Certificates (NTTCs) provides useful information on the topic of supporting documentation and

what is accepted by the Department. These publications can be located on the Department’s

website in the “Publications” folder: http://www.tax.newmexico.gov/forms-publications.aspx.

FYI-206  Rev. 07/2021  Page 6

TAXPAYER INFORMATION

The Department offers a variety of taxpayer information. Some information is free and other

information must be purchased.

General Information. FYIs and Bulletins present general information with a minimum of technical

language. All FYIs and Bulletins are free and available through all local tax offices, the Tax Information

and Policy Office, and on the Internet. The Taxation and Revenue Department’s Internet address is:

http://www.tax.newmexico.gov

Regulations. The Department establishes regulations to interpret and exemplify the various tax acts it

administers. The Taxation and Revenue Department regulation book is available from the New Mexico

Compilation Commission on a prepaid basis. The New Mexico Compilation Commission also has a

compact disk of all statutes and regulations. Specific regulations are also available at the State Records

Center and Archives or on its web page at http://www.srca.nm.gov/

Order regulation books directly from:

New Mexico Compilation Commission

https://www.nmcompcomm.us/

Rulings. Rulings signed by the Secretary are written statements that apply to one or a small number

of taxpayers. A taxpayer may request a ruling (at no charge) to clarify its tax liability or responsibility

under specific circumstances. The request for a ruling must be in writing, include accurate taxpayer

identification and the details about the taxpayer’s situation, and be addressed to the Secretary of the

Taxation and Revenue Department at P.O. Box 630, Santa Fe, NM 87504-0630. The taxpayer’s

representative, such as an accountant or attorney, may request a ruling on behalf of the taxpayer but

must disclose the name of the taxpayer. While the Department is not required to issue a ruling when

requested to do so, every request is carefully considered.

The Department will not issue a ruling to a taxpayer who is undergoing an audit, who has an

outstanding assessment, or who is involved in a protest or litigation with the Department over the

subject matter of the request. The Secretary may modify or withdraw any previously issued ruling and

is required to withdraw or modify any ruling when subsequent legislation, regulations, final court

decisions or other rulings invalidate a ruling or portions of a ruling. Taxation and Revenue Department

rulings are compiled and available on the Department’s web page free of charge at

http://www.tax.newmexico.gov/all-nm-taxes/rulings/.

Public Decisions & Orders. All public decisions and orders issued since July 1994 are compiled

and available on the Department’s web page free of charge at http://www.tax.newmexico.gov/all-

nm-taxes/tax-decisions-orders/.

New Mexico Taxation and Revenue Department

FYI-206  Rev. 07/2021  Page 7

FOR FURTHER ASSISTANCE

Tax District Field Offices and the Department’s

call center can provide full service and general

information about the Department's taxes,

taxpayer access point, programs, classes, and

forms. Information specific to your filing situation,

payment plans and delinquent accounts.

TAX DISTRICT FIELD OFFICES

ALBUQUERQUE

10500 Copper Pointe Avenue NE

Albuquerque, NM 87123

SANTA FE

Manuel Lujan Sr. Bldg.

1200 S. St. Francis Dr.

Santa Fe, NM 87504

FARMINGTON

3501 E. Main St., Suite N

Farmington, NM 87499

LAS CRUCES

2540 S. El Paseo Bldg. #2

Las Cruces, NM 88004

ROSWELL

400 Pennsylvania Ave., Suite 200

Roswell, NM 8820

For forms and instructions visit the Department’s

web site at http://www.tax.newmexico.gov

Call Center Number:

1-866-285-2996

If faxing something to a tax district field

office, please fax to:

Call Center Fax Number:

1-505-841-6327

If mailing information to a tax district field

office, please mail to:

Taxation and Revenue Department

P.O. Box 8485

Albuquerque, NM 87198-8485

For additional contact information please visit the

Department’s website at

http://www.tax.newmexico.gov/contact-us.aspx

This information is as accurate as possible as of the date specified on the publication. Subsequent legislation, new state

regulations and case law may affect its accuracy. For the latest information please check the Taxation and Revenue

Department’s web site at www.tax.newmexico.gov.

This publication provides general information. It does not constitute a regulation, ruling, or decision issued by the

Secretary of the New Mexico Taxation and Revenue Department. The Department is legally bound only by a regulation

or a ruling [7-1-60, New Mexico Statutes Annotated, 1978]. In the event of a conflict between FYI and statute, regulation,

case law or policy, the information in FYIs is overridden by statutes, regulations and case law. Taxpayers and preparers

are responsible for being aware of New Mexico tax laws and rules. Consult the Department directly if you have

questions or concerns about information provided in this FYI.