Gross income tax for leasing vehicles is levied at a rate of 5% on vehicle rental income. Receipts are reported on a CRS-1 form. The tax shall be payable no later than the 25th day of the month following the month in which the chargeable event occurs. Vehicle purchases are among the largest current sales in New Mexico, which means they can result in a high sales tax bill. This page covers the most important aspects of the New Mexico sales tax related to the purchase of vehicles. For leased or leased vehicles, see Taxation of leasing and rentals. The tax on gross income from leased vehicles applies to persons doing business and earning income from the short-term rental of vehicles (Article 7-14A-3 of the NMSA, 1978): Under these new rules, a market provider is liable to TSOs on its income from sales facilitation, leasing and licensing in New Mexico, whether or not the market vendor “does business” in New Mexico. New Mexico charges a vehicle rental surcharge on the lease of a vehicle to another person by a person doing business in New Mexico if the lease is subject to gross income tax on the leased vehicles (Section 7-14A-3.1 NMSA 1978). The surcharge is $2.00 for each day each vehicle is rented.
Receipts are reported on a CRS-1 form. The tax shall be payable not later than the twenty-fifth of the month following the month in which the chargeable event occurs. Effective July 1, 2021, New Mexico will transition to a destination-based purchasing system for the sale of tangible personal property and certain services. Under the new regime, gross income (and deductions) from the sale or lease of tangible personal property, certain licences and most services will come from the destination of the goods or services. In other words, the items and services delivered to a customer come from the place of delivery and not from the place of business of the seller. To be considered a marketplace provider, one must list or advertise items for sale, rent or license and collect directly or indirectly payment from the end customer and submit it to the marketplace seller. A GRT seller is entitled to a deduction from GRT if it pays the GRT because the GRT obligation is imposed on the marketplace supplier. On April 4, 2019, New Mexico Governor Michelle Lujan Grisham signed House Bill (H.B.) 6, which provides for significant changes to the state`s corporate and gross income tax (GRT) systems. The amendments to the GRT were primarily made in response to the U.S.
Supreme Court`s decision in South Dakota v. Wayfair, Inc., 138 p. ct. 2080 (2018), in which the Court struck down its decades-old physical presence link rule. This has paved the way for states to enact economic link laws that require non-state companies to levy sales and consumption taxes from state customers, even if the companies do not have a physical presence in the state. Under the . B 6, New Mexico`s economic link threshold for GRT came into effect on July 1, 2019. 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.
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. The New Mexico Department of Taxation and Revenue recently reminded taxpayers of several important changes in the procurement and collection of gross government revenues and the equalization tax (sales and use tax). As of July 1, 2021, laws enacted in 2019 (House Bill 6) and 2020 (House Bill 326) will significantly affect the procurement of sales and purchases from sellers inside and outside the state and will make several other changes to gross revenues and balancing tax legislation, as shown below. Merchants may also charge a documentation fee or “documentation fee” that covers the costs incurred by the merchant in preparing and filing the purchase contract, VAT documents, etc. These fees are separate from the taxes and DMV fees listed above. The average DMV fee in New Mexico for the purchase of a new car is $451, including the title, registration and license plate fees listed above. There will be some exceptions.
Personal or “over-the-counter” retail sales are not affected by this change. The procurement of professional services will continue to be the seller`s establishment. In addition, construction and real estate services come from the location of the construction project or the property sold. Contributors are members of KPMG LLP or affiliated with KPMG LLP. There is a grey area for the purchase of sales of services by sellers outside the state, which should be addressed by the TRD or legislator. As mentioned earlier, some professional services in the state will continue to be provided at the seller`s establishment rather than at the client`s location. But for non-government professional service providers, H.B.6, it is unclear whether their services are provided on a targeted basis or whether they are subject to a single out-of-state tariff. Based on the draft regulation proposed by the TRD, it appears that sellers of non-state professional services whose product is delivered to a customer in New Mexico for first use in the state will only collect or pay the GRT at the state level.
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