In addition to the PIT and IRS reductions, year after year, many groups have applied for – and received – GRT exemptions. These handouts are constantly distributed to our GRT base and are often unproven and useless when it comes to attracting business. When well-connected businesses and companies no longer have to pay the BRT, the rate must be increased for all others in order to maintain stable revenues. These increases hit low-income municipalities particularly hard, as GRT is one of the most regressive elements of our tax legislation. In Spain, for example, the BRT rate is one of the highest in the state at 8.9%, up from 7.25% just 15 years ago. Due to the shrinking base, we are also more dependent on the volatility of BRT sales from the oil and gas industry. As oil and gas explode and go bankrupt, GRT`s revenues are also increasing, making it difficult to reliably deliver programs and services that benefit all New Mexicans, such as a high-quality public education system. The majority of legislators agree that the GRT rate is too high and that these continuous gifts need to be seriously evaluated. If these tax breaks do not have the desired effect, they should be repealed so that we can broaden the base and lower the rate for all new Mexicans. Currently, New Mexico applies origin-based rules to the supply of TSO transactions, which means that most sales of personal effects and tangible services arrive at the seller`s business location. Under these rules, a seller is required to collect or pay a national and local BRT if a delivery originates from a New Mexico jurisdiction where the seller has a physical or commercial presence.

For non-state sellers who reach the threshold of the state`s economic link, a collection obligation applies to the national GRT (with some exceptions available), but not to the GRT imposed by local courts. New Mexico Gross Income Tax Exemption and Resale Certificates are worth much more than the paper they are written on. If you are audited and unable to validate a tax-exempt transaction, the New Mexico Department of Taxation and Income may hold you liable for tax on uncollected gross income. In some cases, late fees and interest are charged, which can result in large and unexpected bills. Accountability means that tax credits, exemptions and deductions are easy to monitor and assess. Tax cuts are often adopted in the hope that they will change behaviour – for example, by encouraging companies to hire more employees. If the state cannot determine whether these objectives are being achieved, the tax system is not responsible. In general, if you look at it from the perspective of these principles, New Mexico`s tax system needs to be improved. Given the myriad of tax credits, exemptions, and deductions in the state tax code, it would be difficult to argue that he is responsible.

GRT, in particular, is often referred to as Swiss cheese, given the hundreds of exemptions that have been passed – and more are issued each year. Simplicity is achieved when the effort required to collect is minimal and the tax legislation is easy to understand. Every time the state issues a tax exemption, deduction or credit, the system loses simplicity, making administration more difficult. Another upcoming change under H.B.6 will primarily affect businesses that provide services outside of New Mexico to customers in New Mexico, as more such services are subject to GRT. Currently, New Mexico offers a GRT exemption for certain « revenues from the sale of services provided outside of New Mexico whose product is originally used in New Mexico. » From 1 July 2021, the exemption will apply to services provided outside the state, but will no longer apply to most services. Instead, only « research and development services provided outside of New Mexico whose product is originally used in New Mexico » (in certain circumstances) are excluded. In addition, the levying of the countervailing tax is modified so that services supplied outside the State are taxable if those services had been subject to the BRT if they had been provided by a person with a BRT obligation. As a result, many out-of-state service providers selling to customers in New Mexico will have to collect GRT, and some state-owned enterprises may have to incur and pay countervailing taxes if the TSO has not been collected by the service provider. Tax expenditures – A way in which the government indirectly spends money by forgoing revenue collection through tax exemptions, deductions and credits. Tax Estimates – A statement (usually annual) of the cumulative costs of all tax expenditures. Such a report can also determine whether the tax expenditure has had the intended economic effect.

Exemptions (applied to gross income tax) – Goods and services that are not taxed. For example, the state does not levy taxes on food we buy to eat at home because it is exempt from the BRT. Tax deductions (applied to gross income tax) – Expenses that can be deducted from a business` tax return. For example, if a company rents construction equipment, the state does not levy taxes on that rent because the company deducted the cost from its tax return. Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction. Tax legislation that is more favourable to those who have the most money is also legislation that only serves to widen the economic gap that persists along racial and ethnic lines. Due to centuries of racist policies, much more wealth and income is in the hands of those who are white, while Americans of color are much more likely to live in poverty and face barriers to financial success. New Mexico is no different.

Our state and local tax systems favor those who earn the highest income, which means they favor whites over New Mexicans of color. In a state where non-Hispanic whites are not the largest racial group but have the greatest economic capacity to act, it makes no sense that we don`t do more to ensure that New Mexicans of color have every chance of succeeding. There are exceptions to almost all gross income tax rules, and the same goes for shipping and handling costs. Specific questions about shipping to New Mexico and gross income tax should be directed directly to a tax professional who is familiar with New Mexico`s tax laws. In-state and out-of-state sellers who make statewide sales should be prepared to collect and report GRT at new rates based on their customers` location. According to H.B. 6, the New Mexico Taxation and Revenue Department (TRD) needs to develop a tax rate database to help businesses and individuals determine the correct tax rate. Sellers who rely on the database are not responsible if the database somehow provides an incorrect price. The transition to a local equalization tax system mainly affects people who purchase goods, services or licenses from suppliers outside the state. If a seller does not collect GRT outside the state, perhaps because it does not meet the threshold of the New Mexico economic link, the buyer in New Mexico is subject to an increase in the compensation tax equivalent to grT that would have been applied if the seller had been located in New Mexico. It is extremely important to set up a tax collection at the point of sale – it is almost impossible to collect the tax on customers` gross income after making a transaction.

You can register online through the New Mexico TRD to get a seller license in New Mexico. To apply, you must provide the New Mexico TRD with certain information about your business, including but not limited to: Economic Link: A certain level of economic activity in the state. For sales made on or after July 1, 2019, a distance seller must register with the state and then collect and transfer New Mexico gross income tax if the gross income from the sale of taxable tangible goods or services in the state in the current or previous year is at least $100,000. The New Mexico GRT is a single state tax that is similar to the Retail Sales Tax (RST) levied by most other states, but differs from the RST in several ways. While an RST is a transaction tax levied on the sale of tangible personal property and certain listed services, the GRT is levied on the privilege of doing business in New Mexico. The tax base of the GRT is generally broader than an RST and applies to the sale of tangible personal property, as well as all income from services provided in New Mexico, the rental or licensing of real estate in New Mexico, and the granting of a right to use a franchise employed in New Mexico. As we have seen, the issue of justice is of great importance, with our heavy reliance on gross income tax being the main problem, as those at the lower end of the income scale have to spend most of their income on the daily necessities that are taxed (with the exception of food). Our refundable tax credits contribute to fairness, but reductions in income tax rates for people in the higher income brackets have almost flattened the only area of tax legislation that can be progressive. A fairer system would require that a greater share of the tax responsibility be shared among those with the greatest solvency. In addition to the fact that the tax system becomes less fair, each time a tax reduction comes into effect, the tax legislation becomes less easy to understand and implement.

The link between sales tax can remain in place even if a retailer ceases the activities that led them to « do business » in the state. This is called the Trailing Nexus. As of October 2019, New Mexico did not have a policy explicitly set out on the tracking link. Under these new rules, a market supplier is responsible for TSOs on its revenues resulting from the facilitation of sales, leasing and licensing in New Mexico, whether or not the marketplace seller « does business » in New Mexico. While the physical presence in New Mexico still triggers a requirement to collect gross income tax, it is now possible for out-of-state sellers to have a connection to New Mexico. .