Questions On Gross Receipts Tax Essay
i. Gross Receipts Tax - Generally
The state gross receipts tax is a tax on the privilege of engaging in business in New Mexico. “Engaging in business” means carrying on or causing to be carried on any activity with the purpose of direct or indirect benefit,” with certain exceptions inapplicable to the Company’s facts. The tax is assessed against the gross proceeds of a business.
For purposes of the GRT, a presumption exists that all receipts of a person engaging in business are subject to the GRT, unless the taxpayer can make an affirmative showing that the receipts are not taxable. The taxpayer bears the burden of proving any exemption or deduction.
Gross receipts which are deductible are to be contrasted with gross receipts which are exempt. Exempt gross receipts should not be reported. Deductible gross receipts should be reported on the tax return and then the appropriate deduction should be claimed.
The seller must pay the gross receipts tax and may pass the tax on to the buyer if the seller so desires. Thus, the tax applies whether or not the business is profitable. ii. Situs of Sale
Unlike most states, New Mexico does not impose a sales tax based on the point of delivery of the goods sold. Instead, the business location of the seller generally determines the rate of gross receipts tax.
Gross receipts are taxable only if they are derived from selling property in New Mexico; leasing property employed in New Mexico; performing services outside of…