Tax reform legislation introduced in New Mexico would make important changes to the state’s gross receipts and compensating taxes. The House bill would raise rates as well as authorize new taxes and expand the existing tax base, including taxing remote sellers. Changes to income tax are also included in the bill.
Major Gross Receipts Tax Changes
The bill would increase the compensating tax on services to match the 5 1/8% rate on sales of property. It would also impose compensating tax on licenses or franchises in New Mexico.
Economic nexus provisions are included. Remote sellers and marketplace providers with sales in New Mexico will have tax collection duties if they meet a $100,000 gross receipts threshold. Economic nexus would become effective July 1, 2019.
Sourcing rules would no longer be determined by the Secretary. The bill includes comprehensive sourcing rules for property and services transactions subject to gross receipts and compensating tax.
Municipal and county compensating taxes are authorized.
H.B. 579, Introduced in the New Mexico Legislature on February 13, 2019