N.M. Admin. Code § 3.2.5.8

Current through Register Vol. 35, No. 20, October 22, 2024

Section 3.2.5.8 - PERSONS NOT REQUIRED TO REGISTER WITH THE DEPARTMENT

A. A person engaging in business must register with the department to report gross receipts unless that person is clearly engaged solely in an activity the receipts from which are exempt as provided in Sections 7-9-13 through 7-9-42 NMSA 1978 or other law. Even though a person's receipts may be entirely deductible under provisions of the Gross Receipts and Compensating Tax Act, the person must register, report those receipts, and claim the applicable deduction or deductions.

B. The following examples illustrate the application of Section 7-9-5 NMSA 1978:

(1) Example 1: A is engaged in the business of farming. A's sole activity is raising cotton which is then sold through a broker to a cotton mill. Because this sale activity is specifically exempted in Section 7-9-18 NMSA 1978, A does not have to register under the Gross Receipts and Compensating Tax Act or file a return.

(2) Example 2: B is a farmer. B raises cotton that is sold through a broker to a mill. B also owns a retail grocery store. B contends that there is no need to register with the taxation and revenue department since B is engaged in a specifically exempted activity. B must register with the department since B is also engaged in selling groceries, an activity that is not specifically exempt from the Gross Receipts and Compensating Tax Act. However, B does not have to report the receipts derived from the sale of cotton, because these receipts are specifically exempt.

(3) Example 3: V Company employs five persons and is engaged solely in the business of buying wool from farmers and selling it to yarn factories. Because V's receipts are exempt from taxation under Section 7-9-18 NMSA 1978, it is not required to register for gross receipts taxation with the department. However, V is required to register and file the necessary returns under the Withholding Tax Act, Sections 7-3-1 through 7-3-12 NMSA 1978, and comply with any other tax laws that pertain to its business.

N.M. Admin. Code § 3.2.5.8

9/29/67, 12/5/69, 3/9/72, 11/20/72, 3/20/74, 7/26/76, 6/18/79, 4/7/82, 5/4/84, 4/2/86, 11/26/90 11/15/96, 4/30/99; 3.2.5.8 NMAC - Rn & A, 3 NMAC 2.5.8, 4/30/01