New mexico gross receipts tax8/4/2023 ![]() If you would like more information about how this change may apply to your business, contact us. While there is no requirement for sellers to collect the New Mexico gross receipts tax or compensating tax from the customer, the seller must provide a general statement that the New Mexico gross receipts tax is included in the price of the good or service, if the tax is not separately stated on the customer invoice. New Mexico also updated the requirements related to how sellers state the gross receipts tax on their invoices. New Mexico has an economic nexus threshold of $100,000 in sales made during the previous calendar year. Nexus can be established with New Mexico through physical presence or economic nexus. As of July 1, 2021, taxpayers must pay state and local rates for most goods and certain services based on the customer’s New Mexico location. ![]() The change impacts both in-state and out-of-state sellers. Under the change, if an out-of-state seller ships a taxable item to a customer in New Mexico, the compensating tax, including New Mexico state and local taxes, would be sourced to the customer’s location. For example, in-person services, including medical services, physical therapy, home health care, and services provided by barbers and cosmetologists, will now be sourced to the location of the service.Ĭhanges to the sourcing of the state’s compensating tax mirror those made to the gross receipts tax. Most goods and certain services subject to New Mexico gross receipts or compensating tax will now be sourced to the location where the product or service is provided. As a consequence the IRS will expect you to file a Schedule C, Profit or Loss from Business, with your Federal Individual Income Tax Return.New Mexico recently changed the reporting location for its gross receipts tax and compensating tax to destination-based sourcing for most goods and certain services. Important: A business that employs the services of an independent contractor will usually be required to send you a Form 1099-NEC and file a copy with the IRS as well. A discrepancy will cause the TRD to audit the business's gross receipts and propose a tax plus a penalty and interest. The TRD then compares gross receipts (aka sales) on the federal income tax return and 1099s to gross receipts reported to the state. ![]() That's because the department receives information from the IRS about anyone living in New Mexico who files Schedule C or receives a 1099-NEC. Those businesses that do not report their gross receipts to the TRD are almost certain to be audited. (TRD), report your gross receipts and pay Gross Receipts Tax. If you live in New Mexico and receive income from your services (unless you receive a Form W-2) you are required to register your business with the N.M. Gross Receipts Tax even though those organizations do not have to pay tax on the merchandise they purchase. ![]() Note: Gross receipts from the sale of services to non-profit organizations and government entities are subject to N.M. This is different from sales tax in most other states that apply only to the sale of tangible property. This includes income from self-employment and independent contractor income. The New Mexico Taxation and Revenue Department is redesigning its Combined Reporting System (CRS) to create separate returns for withholding, gross receipts. Businesses in New Mexico receiving income from services provided to buyers located within New Mexico are subject to N.M. ![]()
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