New Mexico – Property Acquired Outside New Mexico

SALT Report 1658 – The New Mexico Taxation and Revenue Department recently amended the gross receipts and compensating tax regulations regarding nexus and purchases of tangible personal property.
Regulation 3.2.10.8 provides that property acquired either inside or outside of New Mexico from a person located outside of New Mexico, which would have been subject to the gross receipts tax had it been purchased from a person that has nexus with New Mexico, is subject to compensating tax if the property is used in New Mexico.
For compensating tax purposes the regulation considers transactions subject to the gross receipts tax if:
  • The transaction would have been within New Mexico’s taxing jurisdiction,
  • The receipts from the transaction would have been defined as gross receipts,
  • The receipts would not have been deductible or exempt, and
  • Taxation by New Mexico would not be pre-empted by federal law
Regulation 3.2.10.19 provides that tangible personal property, such as contract forms and promotional and administrative materials, provided to New Mexico dealers by out-of-state companies for a fee is considered property acquired as a result of a transaction with a person located outside New Mexico that would have been subject to the gross receipts tax had the transaction occurred in or was acquired from a person that has nexus with New Mexico.
The value of the tangible personal property is subject to compensating tax to be paid by the dealer when the property is stored, used or consumed in New Mexico.
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