RATE OF SALES TAX:
5.125%
LOCAL & COUNTY MAXIMUM RATES:
4.313%
Table of Contents
What are the taxable goods and services?
The first step in sales tax compliance is determining if the items or services your firm offers are taxable in New Mexico.
Traditional Products and Services
Physical property, such as furniture, household appliances, and automobiles, is subject to sales tax in New Mexico.
Prescription drugs, food, and fuel are all free from sales tax.
New Mexico is unusual in that it mandates a gross receipts tax to be paid on all services.
Digital Products and Services
A digital item or service is anything that is supplied electronically, such as a music downloaded from iTunes or a movie bought from Amazon.
Businesses in New Mexico are required to collect sales tax on the sale of digital products or services.
How to Register for Sales Tax in New Mexico
If you have concluded that you must charge sales tax on part or all of the products and services that your company sells, the next step is to apply for a seller’s licence.
This enables your company to collect sales tax on behalf of the municipal and state governments.
You will need the following information to register:
Personal identifying information (SSN, address, etc.)
Business identity information (EIN, address, and so forth) – Other than single proprietors/individuals with no workers, business owners must get an FEIN number from the IRS.
In New Mexico, Date began conducting business.
Method of accounting (cash/accrual)
The primary kind of company
A Resale Certificate might help you save money.
When acquiring items for resale, your firm does not have to pay sales tax if you obtain a resale certificate, also known as a reseller’s permit.
Sales Tax Collection
After obtaining your seller’s licence and starting your company, you’ll need to figure out how much sales tax to charge various consumers. It is critical for company owners to collect the right rate of sales tax to avoid penalties and the danger of expensive audits.
When computing sales tax, consider the following types of transactions:
Store Sales Shipping Within-State Sales Outside-State Sales
Retail Sales
For conventional company owners who sell products or services on-site, calculating sales tax is simple: all sales are taxed at the rate determined by the store’s location.
Here’s an illustration of how this situation may look:
In Dora, New Mexico, Mary owns and operates a bookshop. Because books are taxed in the state of New Mexico, Mary charges a 7.375% sales tax on all purchases. This includes the 5.125% state sales tax and the 2.250% local sales tax.
Sales inside the state
New Mexico has what is known as a destination-based sales tax regime. This implies that long-distance transactions inside New Mexico are taxed based on the buyer’s address. This regulation applies to sales taxes levied by the state, county, and city.
Consider the following scenario:
Steve operates his own eBay electronics company from his home in Albuquerque, New Mexico. A buyer from Santa Fe, New Mexico discovers Steve’s eBay website and buys a $350 set of headphones. Steve uses the Santa Fe sales tax rate of 8.3125% when computing the sales tax for this item. This takes the total cost of the item to $375.81, including sales tax of $25.81.
Out-of-State Purchases
Businesses in New Mexico must only pay sales tax on out-of-state sales if they have nexus in other states.
Nexus indicates that the company has a physical presence in another state.
Common nexus types include:
A physical place, such as an office, retail shop, or warehouse.
An employee who works from home or as a roaming sales representative.
An affiliate marketer
Dropshipping from a third-party vendor.
A temporary physical site, such as a festival or fair booth.
Submit Your Sales Tax Return
You’re ready to submit your sales tax return now that you’ve obtained your New Mexico seller’s permit and understand how to charge the correct amount of sales tax to all of your customers. You avoid penalties and fines, be sure to meet all filing dates.
How to File a Claim
Businesses in New Mexico are required to file sales tax forms and make sales tax payments online.
How Frequently Should You File?
The frequency with which you must submit is determined by the total amount of sales tax collected by your firm.
Semi-annual filing: If your company collects less than $1,200 in sales tax in a six-month period, you should submit returns on a semi-annual basis.
Quarterly filing: If your company receives less than $200 in sales tax every month, you should submit returns on a quarterly basis.
Monthly filing: If your company receives more than $200 in sales tax every month, you must submit returns on a monthly basis.
Seasonal filing: Businesses that only operate at a given time of year, such as firewood dealers or Christmas tree sales. You must specify the month(s) for which you will file and file for those months on a monthly basis.
Temporary filing: Usually intended for one-time use. A beginning and ending date are necessary. There is a six-month limit.
Deadlines for Filing
The deadline for all New Mexico sales tax returns is the 25th of the month, unless it is a weekend or federal holiday, in which case the deadline is postponed to the following working day. The following are the filing deadlines for this year:
Penalties for Filing Late
New Mexico has a late filing penalty of 2% every month or partial month, with a maximum penalty of 20% of the tax recorded on the tax return until the tax is submitted.
New Mexico additionally imposes a late payment penalty of 2% per month up to 20% of the unpaid tax if the tax has been submitted at the very least.
The state levies any unpaid tax or penalty at a compounding interest rate of 4% per year or 0.33% every month or partial month.