New Mexico – Nontaxable Transaction Certificates

SALT Report 2597 – The New Mexico Taxation and Revenue Department has updated an FYI publication to reflect recent changes in the law regarding the issuance and use of nontaxable transaction certificates for gross receipts tax purposes.

The Department has added several transaction examples to the FYI publication. The examples addresses the deductions that are allowable and the type of NTTC required for each transaction, as follows:

  • Type 2 NTTC – Sales of fuel that is loaded or used by a common carrier in a locomotive engine when certain investment requirements have been met,
  • Type 11 NTTC – Sales of tangible personal property, other than utilities, to a manufacturer that are consumed in the manufacturing process, and
  • Type 12 NTTC – Sales of utilities to a manufacturer that are consumed in the manufacturing process

To obtain a Type 11 or a Type 12 NTTC business must complete Form RPD-41378, Application for Type 11 or 12 Nontaxable Transaction Certificates. The Department will only accept a paper application for these NTTC’s.
Accepting an NTTC in Good Faith

The publication updated language regarding Type 1, 3, 4, 7, 8, 13, 14 and D NTTC’s. The Department states that they will recognize these NTTCs only if the seller has accepted the NTTC in good faith. Good faith now means that the seller is “reasonably assured” that the buyer providing the NTTC will use the property or service in a nontaxable manner. Previously, the publication stated that the seller must have reasonable confidence that the buyer providing the NTTC will use the property or service in the manner stated on the NTTC.

In addition, an example of good faith acceptance of an NTTC has been revised. Under the revisions, a seller of construction services cannot deduct receipts based on a Type 9 NTTC received from a government entity as documentation of a sale of construction services for resale.

Refunds

The publication states that a taxpayer seeking a refund of gross receipts tax paid on transactions that could have been deducted if an NTTC had been provided must seek the refund within “the statute of limitations period.” Previously, the publication did not provide a time limit. To request a refund, the taxpayer should submit Form RPD-41071, Application for Tax Refund to the Department.

Other Acceptable Certificates

A buyer or lessee who has no gross receipts tax, compensating tax, New Mexico withholding tax or New Mexico corporate income or franchise tax liability and is not required to register with the Department may use special certificates in place of standard NTTCs. These certificates are:

  • Type OSB NTTCs for out-of-state buyers,
  • Multi-jurisdictional Uniform Sales and Use Tax Certificates, and
  • Border State Uniform Sale for Resale Certificates

The publication also addresses when NTTC privileges may be revoked, NTTC’s with special application requirements, NTTC application process, deductions that require the use of NTTC’s, and using an NTTC retroactively.

For Further Information

New Mexico Taxation and Revenue Department – FYI-204, Nontaxable Transaction Certificates