N.M. Code R. § 3.2.1.15

Current through Register Vol. 35, No. 7, April 9, 2024

Section 3.2.1.15 - GROSS RECEIPTS; TANGIBLE PERSONAL PROPERTY

A.Lease purchase agreement as a sale: The receipts from a two party "lease-purchase" or "paid-out lease" agreement for tangible personal property will be treated as receipts from the sale of tangible personal property under the Gross Receipts and Compensating Tax Act if the lessee-buyer treats the property as an asset and depreciates the property pursuant to generally accepted accounting practices.

B.Consignment sales: Receipts of both a consignor and a consignee from the sale of tangible personal property handled on consignment are subject to the gross receipts tax.

C.Delivery expenses:

(1) Receipts from charges by a seller of tangible personal property for delivery costs, including postage and transportation charges, paid by the seller and passed on to the buyer, are an element of the sales price of the property.

(2)Example: X sells tangible personal property in the state of New Mexico and transports property to buyers located in New Mexico in its own equipment from its factory and warehouse. In some instances the contracts of sale which X has with its buyers stipulate that title passes on completion of manufacturing; in other cases there is no stipulation regarding passage of title. On its billing to buyers, X separately states amounts categorized as "warehouse charges" and "delivery charges". These separately stated charges are elements of the sale price of the property.

D.Freight charges:

(1) Transportation costs that are paid by the seller to the carrier are an element of the sales price of the property.

(2) Transportation costs that are paid to the carrier by the buyer are not an element of the sales price of the property. If the buyer transports the property with the buyer's own equipment, the cost of the transportation does not increase the value of the property.

(3) If the seller transports the property with its own equipment, and the cost of the transportation is already included in the price of the property, it is considered as an element of the sales price of the property. If extra separate charges are made, receipts from such charges are gross receipts.

E.Refundable deposits: Amounts received in the form of refundable deposits on bottles, cartons, cases and the like are to be included in gross receipts of the seller or lessor and are subject to the gross receipts tax.

F.Buyer's financing costs: In a situation where:

(1) a lending institution lends money directly to a buyer of tangible personal property;

(2) the buyer executes a promissory or installment note together with a security agreement or a retail financing agreement directly to the lending institution;

(3) neither the note nor the agreement is endorsed or guaranteed in any manner by the seller of the property; and

(4) the lending institution as agent for the buyer, pays the seller by crediting the account of the seller with an amount equal to the loan against the property, with no amount added or later rebated, the receipts of the seller from the sale of the property include any down payment and the amount credited to the account of the seller unless that amount is less than the fair market value of the property sold, in which case the fair market value would be the measure of the seller's gross receipts.

G.Sale of items subject to the state Cigarette Tax Act: The gross receipts from sales of cigarettes include the total amount of money or the value of other consideration received even though this amount includes the excise tax levied by the Cigarette Tax Act.

H.Florist receipts: Receipts of a New Mexico florist are gross receipts when the florist:

(1) receives an order and payment for flowers under an agreement that the flowers are to be delivered at another location by another florist; and

(2) uses long distance communication to authorize the other florist to make delivery; and

(3) pays the other florist for the flowers.

I.Sale of food and beverage at horse racetracks: Receipts from the sale of food and beverage either by a concessionaire or the owner of a New Mexico horse racetrack, including the track at the state fair grounds, are subject to the gross receipts tax. If a concessionaire pays a racetrack owner a consideration for operating a food and beverage concession, the racetrack owner's receipts are subject to the gross receipts tax.

J.Packaged software:

(1) The transaction constitutes a sale of tangible personal property or a digital good, as defined by 3.2.1.7 NMAC when a person sells a packaged software where:

(a) no extraordinary services are performed in order to furnish the packaged software; and

(b) the buyer pays a fixed amount for the packaged software and the license to use the software; and

(c) the buyer is allowed to resell the license to use the software with the packaged software itself.

(2) Sale of such property for resale is subject to the deduction provided in Section 7-9-47 NMSA 1978.

(3) This version of Subsection J of Section 3.2.1.15 NMAC is retroactively applicable to transactions occurring on or after July 1, 1991.

K.Sale of postage stamps:

(1) Receipts in excess of the face value of the postage stamps from reselling un-canceled postage stamps issued by the United States postal service or any foreign government are gross receipts. Receipts in excess of the face value of the postage from imprinting, mechanically or by other means, the amount of postage on documents to be mailed are gross receipts.

(2) Receipts from selling canceled postage stamps issued by the United States postal service or any foreign government are gross receipts.

L.Refined metals: The receipts of a person who sells refined metals in New Mexico are gross receipts subject to the gross receipts tax regardless of whether the seller is a severer or processor as defined in the Resources Excise Tax Act or the Severance Tax Act.

N.M. Code R. § 3.2.1.15

12/5/69, 3/9/72, 11/20/72, 3/20/74, 7/26/76, 3/16/79, 6/18/79, 4/7/82, 5/4/84, 4/2/86, 11/26/90, 9/17/91, 10/28/94; 3 NMAC 2.1.15.10, 11/15/96; 4/30/97, 10/31/97, 3.2.1.15 NMAC - Rn & A, 3 NMAC 2.1.15, 10/31/2000, Amended by New Mexico Register, Volume XXXII, Issue 13, July 7, 2021, eff. 7/7/2021, Adopted by New Mexico Register, Volume XXXII, Issue 19, October 13, 2021, eff. 10/13/2021