New Mexico Implements Destination Based Sourcing Rules

On July 1, 2021, new rules for the New Mexico gross receipts tax came into effect, switching to destination-based sourcing for both New Mexico in-state and out of state sellers. These rules were originally legislated in 2019 and 2020 and require all sellers in New Mexico to collect the gross receipts tax based on the location where goods or the product of their services are delivered, including all local option taxes. Previously, remote sellers were required to collect only the statewide tax rate on online sales to customers in New Mexico, and New Mexico businesses were required to pay the local rate at their business location.

The newly implemented rules also change the sourcing of most services from origin to destination based, clarifying that most services will now be sourced to the location where the product of the service is delivered. Professional services remain sourced to the service provider’s location if they are performed remotely; professional services performed in person are sourced to the location where the service was provided. (Press Release “New Gross Receipts Tax rules take effect July 1”, June 28, 2021)

Posted on July 15, 2021