New Mexico – Amnesty Violates State Constitution

SALT Report 1360 – New Mexico’s Attorney General issued an opinion regarding tax amnesty and the Streamlined Sales and Use Tax Agreement.  The Attorney General determined that granting amnesty to a seller under the SSUTA for New Mexico gross receipts taxes owed when the seller was not registered in New Mexico would violate the state’s Constitution.
New Mexico’s constitution  states that amnesty would be considered a subsidy to the seller’s business and violate Article IX § 14, the Anti-Donation Clause,  which states that, “[New Mexico] may not confer something of value to a private entity without receiving something in return” and specifically prohibits lowering or repealing an obligation already owed to the state, including taxes.
Furthermore, Section 402 of the SSUTA provides that, “a member state shall offer amnesty for uncollected or unpaid sales or use tax to a seller who registers to pay or collect and remit sales or use tax on sales made to purchasers in the state in accordance with the terms of the Agreement, provided that the seller was not so registered in the state in the twelve-month period preceding the effective date of the state’s participation in the Agreement.”
The gross receipts tax is an obligation that New Mexico’s constitution prohibits from being excused, either through legislation or agreement. However, if New Mexico becomes a member of the SSUTA, Section 402 would require the state to extinguish certain tax obligations owed to the state by newly registered sellers.
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