Sales Tax Registration and Filing in New Mexico

Introduction

Navigating the complexities of sales tax registration and filing in New Mexico is crucial for businesses operating within the state. Unlike many states, New Mexico does not impose a traditional sales tax. Instead, it levies a Gross Receipts Tax (GRT) on businesses for the privilege of doing business in the state. This tax is often passed on to consumers, making it similar in effect to a sales tax. Understanding the registration and filing processes, as well as state-specific rules, is essential for compliance and efficient business operations.

Registration Process

How to Register for Sales Tax in New Mexico

To conduct business in New Mexico, you must register for a Gross Receipts Tax permit. This process can be completed online or by mailing in the necessary forms. Here’s a step-by-step guide:

1. Online Registration: Visit the New Mexico Taxation and Revenue Department's website to register online. This is the most efficient method and provides immediate confirmation.
2. Mail Registration: Alternatively, you can download and complete Form ACD-31015 and mail it to the department. This method may take longer to process.
3. In-Person Registration: Some local tax offices or town halls offer in-person registration. Check with your local government authorities for availability.

Required Information

When registering, you will need the following information:

• Personal identification (SSN, address)
• Business identification (EIN, address)
• Business entity type
• Date business operations began in New Mexico
• Accounting method (cash or accrual)
• Primary business type
• Expected gross receipts to determine filing frequency

Registration is free, but other business registration fees may apply.

Filing Process

How to File Sales Tax in New Mexico

Filing your Gross Receipts Tax in New Mexico involves several steps:

1. Determine Filing Frequency: Your filing frequency (monthly, quarterly, or semiannually) is assigned based on your expected gross receipts. This frequency dictates when your returns are due.
2. Calculate Tax Owed: Use tools like Cove to calculate the exact amount of tax collected. This involves connecting your sales channels (e.g., Amazon, eBay, Shopify) to gather data.
3. File the Return: You can file your return online through the New Mexico Taxation and Revenue Department's portal.
4. Make a Payment: Payments can be made online. Ensure you meet the deadline to avoid penalties.

Filing Deadlines

Returns are generally due on the 25th of the month following the reporting period. If this date falls on a weekend or holiday, the due date is the next business day.

State-Specific Rules

Gross Receipts Tax Overview

• Tax Rate: The statewide Gross Receipts Tax rate is 5.125%, but it can vary from 4.875% to 8.9375% depending on local jurisdictions.
• Economic Nexus: Businesses with over $100,000 in annual gross revenue from sales in New Mexico are required to collect and remit GRT.
• Taxable Items: Most tangible goods and services are taxable, including SaaS and shipping charges. Grocery items are generally exempt.

Destination-Based Tax

As of July 1, 2021, New Mexico is a destination-based tax state, meaning the tax rate is determined by the location where goods or services are delivered.

FAQs

What is the difference between sales tax and Gross Receipts Tax in New Mexico?

New Mexico does not have a traditional sales tax. Instead, it imposes a Gross Receipts Tax on businesses, which is often passed on to consumers, similar to a sales tax.

Do I need to collect tax on shipping charges?

Yes, in New Mexico, shipping charges are generally taxable. You can choose to pass this tax onto your buyer or remit it yourself.

How do I know if I have economic nexus in New Mexico?

You have economic nexus if your business exceeds $100,000 in annual gross revenue from sales in New Mexico. This obligates you to collect and remit GRT.

What happens if I miss a filing deadline?

Missing a filing deadline can result in penalties and interest charges. It’s crucial to file and pay on time to avoid these additional costs.

Can I file my Gross Receipts Tax returns manually?

While manual filing is possible, it is recommended to file online for efficiency and to ensure timely processing.

By understanding these processes and rules, businesses can ensure compliance with New Mexico's tax regulations, thereby avoiding potential penalties and optimizing their operations.