New Mexico – Using Multijurisdictional Exemption Certificates in Place of NTTC’s

SALT Report 1656 – The New Mexico Taxation and Revenue Department ruled that a valve and fitting company was not liable for New Mexico gross receipts tax on certain transactions for which it obtained multijurisdictional sales and use tax certificates (MTC) as a substitute for nontaxable transaction certificates (NTTC).

The Department ruled that an MTC certificate issued by another state or the multistate tax commission can be accepted as a valid NTTC if the seller providing the MTC certificate is “not required to be registered in New Mexico for gross receipts tax.”  SInce the Taxpayer timely possessed MTC certificates for all claimed sales, the Department honored the MTC certificates and allowed the Taxpayer’s deductions.

However, the Taxpayer was found liable on other transactions because they did not provide an NTTC to the Department in a timely manner.   NMSA 1978, Section 7-9-43 states that,  “If the seller or lessor is not in possession of the required nontaxable transaction certificates within sixty days from the date that the notice requiring possession of these nontaxable transaction certificates is given to the seller or lessor by the department, deductions claimed by the seller or lessor…shall be disallowed.”

In this case, the Taxpayer was unable to obtain the required NTTC’s from his customer by the 60 day deadline and requested a 60-day second chance as provided under NMSA 1978, §7-9-43.  Although the Taxpayer made a genuine effort to obtain the NTTC from his customer, the Department ultimately disallowed the deductions for these sales as the NTTC was submitted well after the second chance grace period.

Since the Taxpayer was under audit, the Department recalculated the percentage of error in the audit sample to reflect the allowable deductions, and used those new figures to determine the Taxpayer’s outstanding gross receipts tax liability.

For Further Information:

New Mexico Taxation and Revenue Department – Albuquerque Valve & Fitting Co, No 12-17