N.M. Admin. Code § 3.2.121.9
Current through Register Vol. 35, No. 23, December 10, 2024
Section 3.2.121.9 - WHICH RECEIPTS ARE EXEMPT AND WHICH ARE TAXABLEA. To be exempt under Subsection A of Section 7-9-33 NMSA 1978, receipts are required to be from the sale of product for resale in the ordinary course of business, for consumption out of state or for use as an ingredient or component part of a manufactured product. Receipts from the sale of product for any other purpose are not exempt under Subsection A of Section 7-9-33 NMSA 1978.B. Examples: (1) A producer sells product to a public utility who uses the product in New Mexico to produce electricity. The product does not become an ingredient or component part of the electricity produced. Therefore the producer's receipts from the sale are not exempt from the gross receipts tax under Subsection A of Section 7-9-33 NMSA 1978. Unless some other exemption or deduction applies, the receipts from the sale are subject to gross receipts tax as well as to the emergency school tax.(2) A producer sells product to a broker who, in turn, sells the product to a public utility who uses the product in New Mexico to produce electricity. The product does not become an ingredient or component part of the electricity produced. Because the sale by the producer to the broker is a sale for re-sale in the ordinary course of business, the producer's receipts from the transaction are exempt from gross receipts. The broker's sale of the product to the public utility, however, are not exempt from the gross receipts tax under Subsection A of Section 7-9-33 NMSA 1978. Unless some other exemption or deduction applies, the broker's receipts from the sale to the public utility are subject to gross receipts tax even though the producer was subject to the emergency school tax on the product.(3) A producer sells natural gas to a chemical company which incorporates the gas into chemical fertilizer that it manufactures. The producer's receipts from this sale are exempt under Subsection A of Section 7-9-33 NMSA 1978.(4) A producer sells natural gas to an out-of-state public utility that transports the gas out-of-state for sale to its out-of-state customers for consumption or other use outside New Mexico. The producer's receipts from the sale are exempt from gross receipts under Subsection A of Section 7-9-33 NMSA 1978.(5) A producer sells oil to an in-state refinery that refines the oil into gasoline and other products. The oil is used as an ingredient of manufactured products and, therefore, the producer's receipts from the sale are exempt from gross receipts under Subsection A of Section 7-9-33 NMSA 1978.N.M. Admin. Code § 3.2.121.9
10/31/97; 3.2.121.9 NMAC - Rn, 3 NMAC 2.33.9 & A, 5/15/01