Effective July 1, 2021, New Mexico changed Gross Receipts Tax (GRT) regulations to “destination sourcing,” which requires most businesses to calculate and report GRT based on where their goods or the product of their services are delivered. Prior to July 1, New Mexico used “origin-based sourcing” in which most GRT was reported at the seller’s place of business.
To help businesses navigate the new rules, the Economic Development Department is hosting a webinar by the New Mexico Taxation and Revenue Department to provide insight and answer questions about how businesses can comply.
Destination-sourced GRT has resulted in some businesses paying a wide range of tax rates, depending on where their goods or services are delivered. Rates differ because they combine individual rates imposed by taxing authorities such as the state, counties, and municipalities. Combined rates in New Mexico range from 5.125 percent to 9.4375 percent.
The new rules have created confusion for some business owners who describe their services as professional. The statute defines professional services as those that either require a license from the state to perform or require a master’s degree or higher. If the service being performed does not require either of these to perform the service, it is not considered a professional service even if the individual has a master’s degree or a license. The distinction is important because professional service sales (as defined) are taxed at the rate where the seller is located, while the sales of non-professional services are taxed at the rate where the service is delivered.
The TRD webinar will address a wide range of topics, including:
- Registration help – common mistakes/errors
- Third Party Access – Taxpayer Information Authorization form
- Contact information – flow of communication with a taxpayer
- Business tax help and filing assistance
- Overview of destination-based sourcing – YouTube video
- Restaurant deduction – how to apply for a refund if the original deduction was not claimed
- Policy determinations – What is a ruling? How do I get a policy determination?
- Cannabis Regulation Act implementation – timeline for the Cannabis Excise Tax
- New businesses, employers, and IRS workshops
The webinar takes place at 10:00 am on October 27. Register here.
For questions about GRT, read the overview here. Questions about destination-based GRT can be emailed to policy.office@state.nm.us.