New Mexico Taxation and Revenue Department
FYI-206 Rev. 07/2021 Page 2
Determining if a seller is subject to gross receipts tax
In New Mexico, a tax is imposed on the total gross receipts of an individual or business engaging
in business in the state. The gross receipts tax is imposed on the seller, though the seller may,
and frequently does, pass the tax on to the buyer. Engaging in business means carrying on or
causing to be carried on
any activity
with
the purpose
of direct
or indi
rect b
enefit (Section
7-9-3.
3
NMSA 1978).
Gross receipts are the total amount of money or the value of other consideration received from
selling property in New Mexico, from leasing or licensing property employed in New Mexico, from
granting a right to use a franchise employed in New Mexico, from selling services performed
outside New Mexico, the product of which is initially used in New Mexico, or from performing
services in New Mexico. Gross receipts also include receipts sourced to this state and collected
by a marketplace provider for sales that it facilitates for a marketplace seller, regardless of
whether the marketplace seller is itself engaging in business in the state. (Section 7-9-3.5, NMSA
1978).
For an individual or business that lacks physical presence in this state, including a marketplace
provider or marketplace seller, engaging in business means having at least $100,000 of taxable
gross receipts in the previous calendar year from sales, leases, and licenses of tangible personal
property, sales of licenses, and sales of services or licenses for use of real property, sourced to
New Mexico (Section 7-9-3.3 NMSA 1978). Taxable gross receipts are only those gross receipts
that are not otherwise exempt or deductible. Therefore, anyone without physical presence in the
state who had $100,000 or more of receipts that were not exempt or deductible in the previous
calendar year is engaging in business in the state, and its receipts from sales sourced to the state
are subject to gross receipts tax.
Determination of the $100,000 threshold is based on the previous calendar year, regardless of
the taxable gross receipts in the current calendar year. Marketplace providers should recognize
that their gross receipts include all receipts collected for the sales, leases and licenses facilitated
for the marketplace seller that are sourced to this state, even if the payment received from the
buyer is eventually paid or transferred to the marketplace seller. Gross receipts of a marketplace
provider include the fees charged by the Marketplace provider to the Marketplace seller.
Please note that Section 7-9-7.1 NMSA 1978 provides that the Department is barred from taking
gross receipts tax collection actions for tax periods prior to July 1, 2019 against a person engaging
in business if that person lacked physical presence in the state and did not report taxable gross
Who are marketplace providers?
Marketplace providers are individuals or businesses that facilitate the sale, lease, or license of
tangible personal property, or services or licenses for use of real property, on behalf of
marketplace sellers, or on their own behalf. (Section 7-9-3(J) NMSA 1978). There are two
requirements to be deemed a marketplace provider. First, the individual or business lists or
advertises the transaction by any means, whether electronically through a website or through
catalogs, television, radio, or physical means. Second, the individual or business facilitates the
transaction “either directly or indirectly, through agreements with third parties collecting payment
from the customer and transmitting that payment to the seller, regardless of whether the
marketplace provider receives compensation or other consideration in exchange for the
marketplace provider’s services.” (Section 7-9-3(J) NMSA 1978).