Sales/Use:
New Mexico: New Guidance & Rules Explain Destination-Based Sourcing Under Gross Receipts Tax

FYI 200: Your Business Location and the Appropriate Tax Rate – Determining the Reporting Location for Gross Receipts Tax, N.M. Tax. & Rev. Dept. (rev. 7/21); Adopted N.M. Regs. Sections 3.2.1, 3.2.6, 3.2.10, 3.2.13, 3.2.100, 3.2.203, N.M. Tax. & Rev. Dept. (7/7/21). The New Mexico Taxation and Revenue Department (Department) has posted detailed guidance and adopted administrative regulations for those businesses that must convert to destination-based sourcing for reporting their New Mexico gross receipts taxes for filing periods starting on and after July 1, 2021, including certain marketplace providers and sellers. Under such destination-based sourcing rules, impacted businesses pay the tax rate in effect in the jurisdiction where their goods and most services are delivered rather than based upon the location of their respective businesses. The guidance explains the new rules and provides some examples on how and when they might apply to a business’s circumstances. According to the guidance, provided that a taxpayer’s reporting of gross receipts tax otherwise complies with applicable provisions under state law, the Department “will not assess the taxpayer for additional tax if the taxpayer uses reasonable estimates, applied consistently and in good faith to determine the reporting location, so long as there is no obvious distortion.” Please contact us with any questions.