Seller’s Permit and Gross Receipts Tax
A New Mexico seller’s permit is required for most businesses, as they are liable to pay gross receipts tax. However, certain nonprofits and educational institutions may claim exemptions by presenting a certificate at the time of purchase. New Mexico does not accept exemption certificates from other states. After obtaining federal 501(c)(3) status, nonprofits are automatically exempt from state income and franchise taxes.
Residency and Income Tax
Military personnel on orders in New Mexico aren’t considered residents due to their presence, but New Mexico residents serving elsewhere maintain their state residency. Income earned in another state by New Mexico residents is taxed if they spend more than 185 days within state borders. Additionally, residents with an income over $5,500 and non-residents with income earned within the state must file a tax return in New Mexico.
Exemptions and Sales Tax Holidays
Goods Exempt from Sales Tax
- Prescription medicine
- Groceries
- Gasoline
Non-taxable services include shipping and installation. During sales tax holidays, exempt purchases may include up to:
- $30 in school supplies
- $100 in clothing
- $500 in computers
- $1,000 in computer equipment
New Mexico is a destination-based sales tax state. It taxes services and treats New Mexico taxes candy and soda as taxable goods.
Acquiring Tax-Exempt and Resale Certificates
Nonprofits are automatically tax-exempt after receiving federal 501(c)(3) status, yet they are generally subject to the gross receipts tax. For resale certificates, a business must:
- Obtain a sales tax permit.
- Print the resale certificate form.
- Present it to suppliers.
Military Personnel and Tax Residency
Military personnel and their spouses can maintain their original residency under the Military Spouses Residency Act, even when stationed elsewhere.
Verifying Tax-Exempt Status
To confirm an organization’s tax-exempt status, one can:
- Call the IRS at 1-877-829-5500 with the organization’s name, address, and EIN.
- Check the latest filed Form 990, which is typically due by May 15th each year. Losing tax-exempt status occurs automatically after failing to file Form 990 for three consecutive years.
Consult the New Mexico revenue department for specific rules and exemptions regarding sales tax and tax-exempt purchasing.