New Mexico Enacts Economic and Marketplace Nexus Legislation

Effective Date: July 1, 2019

Threshold: $100,000

Measurement Date: Previous calendar year

Includable Transactions: Taxable sales (excluding sales on marketplace if provider collects and remits)

When You Need to Register Once You Exceed the Threshold: Next transaction (state doesn’t specify)

New Mexico has enacted legislation with economic nexus and marketplace nexus provisions, effective July 1, 2019. As of that effective date, remote sellers and marketplace providers are required to collect and remit New Mexico gross receipts tax if they have, in the previous calendar year, total taxable gross receipts from sales, leases and licenses of tangible personal property, sales of licenses and sales of services and licenses for use of real property sourced to New Mexico of at least $100,000.

Per the legislation, “marketplace provider” means a person who facilitates the sale, lease or license of tangible personal property or services or licenses for use of real property on a marketplace seller’s behalf, or on the marketplace provider’s own behalf, by:

  • listing or advertising the sale, lease or license, by any means, whether physical or electronic, including by catalog, internet website or television or radio broadcast; and
  • either directly or indirectly, through agreements or arrangements 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.

The definition of “gross receipts” includes receipts collected by a marketplace provider engaging in business in New Mexico from sales, leases and licenses of tangible personal property, sales of licenses and sales of services or licenses for use of real property that are sourced to New Mexico and are facilitated by the marketplace provider on behalf of marketplace sellers, regardless of whether the marketplace sellers are engaging in business in New Mexico.

A marketplace provider engaging in business in New Mexico is not liable for amounts of gross receipts tax collected incorrectly due to the marketplace provider reasonably relying on erroneous information provided by a seller.

A marketplace seller can deduct receipts for transactions 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 Taxation and Revenue Department and has remitted or will remit the taxes due on the gross receipts from those transactions. This appears to indicate that when determining taxable gross receipts for the threshold test that sales on which the marketplace provider has responsibility for collection can be excluded.

Although not a member of the Streamlined Sales Tax Agreement, the bill includes provisions authorizing the Secretary to provide information, upon which taxpayers may rely, as to the taxability of gross receipts from particular transactions, including taxability matrices, and is further authorized to establish standards for the certification of certified service providers that offer software-based systems to enable taxpayers to properly determine the taxability of gross receipts from particular transactions.  Certified Service Providers means a Certified Service Provider as provided under the Streamlined Sales Tax Act. (H.B. 6, Laws 2019)

Posted on April 22, 2019