N.M. Admin. Code § 3.2.20.25

Current through Register Vol. 35, No. 23, December 10, 2024

Section 3.2.20.25 - IMPLEMENTATION OF GOVERNMENTAL GROSS RECEIPTS TAX FOR CASH BASIS TAXPAYERS AND ACCRUAL BASIS TAXPAYERS

A. Receipts of a cash basis taxpayer received prior to July 1, 1991 from selling tangible personal property or from performing a refuse collection, sewage or recreational, entertainment or athletic service which is to be delivered or performed after June 30, 1991 are not governmental gross receipts. Receipts received after June 30, 1991 by a cash basis taxpayer for tangible personal property sold prior to July 1, 1991 or from performing a refuse collection, sewage or recreational, entertainment or athletic service prior to July 1, 1991 are governmental gross receipts.

B. Example: Village C reports governmental gross receipts tax on a cash basis. The Village sells a water heater and other tangible personal property being removed from a building which is to be demolished. The Village sells the items for $1,000 and receives payment on June 20, 1991 and delivers all but the water heater to the purchaser that same day. The purchaser does not actually pick up the water heater until July 2. Because the Village is a cash basis taxpayer, it does not matter that some of the tangible personal property was delivered after June 30, 1991. The $1,000 receipts are not governmental gross receipts.

C. Receipts of an accrual basis taxpayer received prior to July 1, 1991 from selling tangible personal property or from performing a refuse collection, sewage or recreational, entertainment or athletic service which is to be delivered or performed after June 30, 1991 are governmental gross receipts to the extent of the revenues recognized for accounting purposes after June 30, 1991. Receipts received after June 30, 1991 by an accrual basis taxpayer with respect to revenues recognized for accounting purposes on the taxpayer's accounts prior to July 1, 1991 for selling tangible personal property sold prior to July 1, 1991 or from performing a refuse collection, sewage or recreational, entertainment or athletic service prior July 1, 1991 are not governmental gross receipts.

D. Example: U, a state university, is an accrual basis taxpayer. U runs a series of concerts during the period June through August 1991. U sells season tickets to the concerts. U recognizes the revenue from the season tickets as the concerts are performed. That part of U's receipts from season ticket sales received prior to July 1, 1991 are governmental gross receipts with respect to the receipts related to the concerts to be performed after June 30, 1991. Governmental gross receipts tax is due on the receipts related to the post-June concerts as they are recognized for accounting purposes as revenues on U's books.

E. Accrual basis taxpayers which bill customers for services or tangible personal property already delivered may reduce the amount reported as governmental gross receipts which represents the value of the service or tangible personal property provided prior to July 1, 1991. If the value of such services or tangible personal property is separately determinable, then that amount may be removed from the amount of governmental gross receipts to be otherwise reportable. If the amount is not readily determinable but the billing represents delivery of service or tangible personal property for a period of time, such as a month, then the portion which may be removed from the amount otherwise reportable is the amount of the bill times a fraction, the numerator of which is the number of days in the billing period prior to July 1, 1991 and the denominator of which is the number of days in the billing period.

F. Example: City G operates a water utility. It uses an accrual method of accounting and reporting revenues. It bills monthly but divides its customers among 20 different billing cycles, each of which begins on a different day of the month. In July 1991, some of the bills will be for water delivered almost entirely during the month of June 1991. Other customers will have only a few days of June delivery on their July bills. City A could reduce the amount of reportable governmental gross receipts for a billing cycle which runs from June 10, 1991 through July 9, 1991 by subtracting 70% of the total amount received from the billing.

G. Section 3.2.20.25 NMAC is retroactively applicable to transactions occurring on or after July 1, 1991.

N.M. Admin. Code § 3.2.20.25

6/28/91, 9/17/91, 10/2/92, 11/15/96; 3.2.20.25 NMAC - Rn, 3 NMAC 2.100.25 & A, 4/30/01