Is Your Business Compliant with Gross Receipts Tax?

We have discovered that one of the issues facing small business owners in New Mexico is compliance with the state’s Gross Receipts and Compensating Tax Act. (NMSA 1978 §§7-9-1 et seq.) New Mexico is one of the few states that imposes what is essentially a sales tax (called “GRT” or “NMGRT”) not only on goods, but also on services. If you are engaged in any type of business activity in New Mexico that involves the sale of goods or services, you must register with the New Mexico Taxation and Revenue Department, obtain a Taxpayer Identification Number, and designate a reporting schedule that might be semi-annually, quarterly, or, most frequently, monthly. The non-monthly reporting options are generally available only to those whose receipts are small or sporadic.

Once you are registered with the Taxation and Revenue Department, you are required to submit CRS-1 reports of your gross receipts and any claimed deductions in accordance with the reporting option you have chosen or that has been designated for you. Failure to file timely will result in penalty and interest charges being added to your gross receipts taxes (GRT) due. Failure to file CRS-1 reports, whether because of lack of understanding or negligence, is likely to result in a large and unexpected tax bill for your business when the non-filings are discovered by the Department.

FAQs on Gross Receipts Tax

The question most frequently asked by business owners or providers of services in New Mexico is whether receipts from the sale of their product is subject to GRT. If the sale is to an in-state person, the answer is generally yes. However, even though a sale meets this test, some sales may be deductible from receipts subject to GRT. For instance, if the purchaser presents the seller with a nontaxable transaction certificate, or NTTC. This is a certificate available to purchasers of products that will be included in a final product upon which the ultimate seller will pay GRT.

And as with many rules, there are exceptions to the general rule stated above. Some sales, specified in statute, are “EXEMPT” (in contrast to “DEDUCTIBLE”) from GRT. An example is receipts from occasional sales — “yard” sales and some others. If your income is only from exempt sales, you are not even required to register or obtain a tax ID number from the Taxation and Revenue Department. On the other hand, even if all your sales are subject to a “deduction”, you are required to register. And you are required to file CRS-1 reports on the required date, even if you had no gross receipts at all for a reporting period.

This brief description of New Mexico’s laws and regulations regarding Gross Receipts taxes is far from comprehensive, but it is intended to alert the reader to some of the issues to be aware of and pitfalls to avoid.

Law 4 Small Business, P.C. (L4SB) A little law now can save a lot later.


  1. Why do realtors expect the seller of a property pay their NMGRT? As I understand it, GRT is an INCOME TAX on monies received. Therefore, it is the tax responsibility of the REALTOR, not the SELLER. Pls ckariy

    1. Hi, Sandra.

      Great question! The New Mexico Gross Receipts and Compensating Tax Act (NMSA 1978, §§7-9-1 to 115) imposes the gross receipts tax on any person who receives money for selling a product or selling a service in New Mexico.**1** Clearly, what is called the “legal incidence” of this tax is on the person who receives compensation for the goods or services sold.**2** Then why does the seller charge the purchaser for this tax?

      The simple answer is that the seller adds its tax to the sale price because it can. There are few situations in which the purchaser is in a position to refuse to pay the tax added on to the invoice for the goods or service being purchased. If you refuse to pay the added tax in most situations, the merchant will probably tell you that you will have to shop elsewhere. Of course, the state does not care whether the seller collects the tax from the purchaser or not so long as the seller pays the tax on his or her reported gross receipts from sales subject to the tax.

      As it relates to your real estate broker’s invoice for the real estate commission, it presents a scenario that is distinguishable (as a practical matter) from a transaction at a big box retail establishment. Real estate commissions are often flexible and subject to some negotiation. Because of heavy competition in the real estate brokerage and sales business, the sellers of these services are often willing to adjust their rates. In this type of environment, the person contracting for brokerage services may be in a position to bargain for a reduced rate, whether that may be reflected as a lower commission rate or the deletion of the tax. From the payer’s perspective, it doesn’t matter. From the broker’s perspective, tax in the proper amount must be remitted to the taxing authority on gross receipts from the sale, no matter is negotiated.

      The Gross Receipts and Compensating Tax Act contains numerous provisions for specific deductions and exemptions from the gross receipts tax. Further, it provides that local taxing authorities may add a local portion to the basic tax rate, thereby making the rate in most localities different.

      Thank you and good luck to you. Lewis.


      A. For the privilege of engaging in business, an excise tax equal to five and one-eight percent of gross receipts is imposed on any person engaging in business in New Mexico.
      B. The tax imposed by this section shall be referred to as the “gross receipts tax”.


      The gross receipts tax is imposed on persons engaging in business in New Mexico. Such persons are solely liable for payment of the tax; they are not “collectors” on behalf of the state.

  2. Can you help me this this dilemma? We had a company from CO purchase items from our NM store. As a courtesy we delivered it to CO, but did not charge delivery/shipping charges. We taxed them NM GRT and they are disbuting it. I had let them know NM is a origin-based sales tax state, however they are not getting it. Their reply was: Your statement is true if the sale is within the state of NM. However, when you have an interstate commerce transaction (a transaction that crosses state boundaries), NM, like all other states use delivery or ship-to for sourcing of sales/gross receipts taxes.

    1. You are correct in thinking New Mexico gross receipts tax is due, however it is due from YOU, the seller. If the buyer refuses to pay the tax, you can either add it into the price next time or simply refuse to sell to him inn the future. Lewis Terr

  3. Got a Major one going on . NM. Just cleaned out our bank accounts for Gross Receipts that I don’t owe. Lived in NM but none of my income was made in NM. Always paid NM. State Income tax . Get paid through 1099’s from my Employeer’s Who have all written letters proving none of the money was made in New Mexico . I work out of State why do i owe them ??? Really at a loss Here

    1. Hi, Paul.

      I’m sorry for the delay in responding to you. Our system doesn’t always let me know when a comment comes in. So, I’m clearing out the questions now. Again, apologies for the delay.

      It’s hard to say what NMTRD is thinking. They receive information from the IRS relating to income, and they have the right to audit. It’s possible they tried to audit you, didn’t get a response, and then obtained some sort of default judgement against you or the company. You really need to have a tax attorney look into this, and figure out if you’re owed a refund. We do have such a tax attorney on staff, and can help you if you’re interested.

      Contact us, and we can see if we can help you. Thank you.


  4. My question is if your business is located in NM and you sell to an out of state customer an item sourced from New York and delivered to the out of state customer (California) are you subject to NM GRT?

  5. We are a subcontractor out of state but subcontract to another business (home office out of state) to provide services in NM who also has lower tier subcontractors who provide services in NM. my question is – if the lowest tier subcontractor charges NMGRT on their entire invoice, then the next tier subcontractor charges NMGRT on their entire invoice (including the lower tier subs NMGRT) is that allowed? wouldn’t that be paying tax on top of tax?

    1. Hello Kelli,

      Thank you for that question. As a general rule, New Mexico taxes receipts from the sale of services provided within the State of New Mexico or outside the State of New Mexico if the product of this services is first used or received inside the State of New Mexico. Gross Receipts tax is imposed on the provider of services, but they’re allowed to pass that tax on to the recipient of those services in much the same way a sales tax is passed on to a buyer of goods. While this system is difficult for anyone to wrap their head around, it sounds like, in your case, you have at least two layers of subcontractors subject to New Mexico Gross Receipts Tax. What that typically looks like is exactly what you’re describing: the lowest-level subcontractor charges the next-level subcontractor for the lowest-level subcontractor’s services and their gross receipts tax obligation. The next-level subcontractor integrates what they paid the lowest-level subcontractor into the cost of services they then charge the higher-level subcontractor (or general contractor, customer, etc.) and, if that next-level subcontractor is themselves subject to gross receipts tax, they include that cost in what they bill up the chain.

      Unfortunately, I can’t offer much more clarity than that without knowing more of the specifics of your situation. If you haven’t already, I definitely recommend consulting with a tax attorney or CPA versed in New Mexico’s gross receipts tax system to make sure nobody is paying gross receipts tax that they don’t really owe. It happens more often than you’d think!

      Thank you again, and good luck!

      All the best,

      Ian Alden

  6. Good morning Mister Terr,

    I just started my business selling Art on a market here in Santa Fe. I started in April/ May 2018 and I just found out that I was supposed to file last December. I obtained a CRS number and I also understand I will have to file before the end of June this year. I never got any paperwork sent to me. Where do I get the right paperwork and who do I send it to?
    Thanks for your help,
    Miss Nauta

  7. Hello, Can you charge gross receipt taxes for a copay? I was told by my accountant to charge my customers the gross receipt tax, but I had a customer say we could not. They said they asked their insurance and were told we could not charge them gross receipt taxes for a copay.

    1. Hello Rose,

      Thank you for that question. Please understand that the New Mexico Gross Receipts Tax laws are very “all over the place” and difficult for most people to understand in their entirety. Even as a tax attorney, I find that I have to really go back and analyze it for each question I get — and the same was true of your question. It is my understanding that copays


      paid to medical practitioners are subject to Gross Receipts Tax, whereas payments to medical practitioners by insurance companies are not. This is provided in one of our statutes, NMSA 1978 § 7-9-93. In the 2019 legislative session, our state legislature tried to amend that section in House Bill 345 to make copays deductible from Gross Receipts Taxes, but their proposed revisions never made it through the legislature and were not signed into law. That being the case, copays are still subject to Gross Receipts Tax. Whether you choose to pass that tax onto patients/customers through a surcharge is up to you.

      I hope this helps, and thank you again for the question!

      All the best,

      Ian Alden

  8. Hello! I recently started providing social media marketing services to a customer in Texas. I have no customers located in the state of New Mexico, but I work from home in Albuquerque. Are these services subject to NMGRT? And would I be required to register or obtain a tax ID number from the Taxation and Revenue Department and submit CRS-1 reports? Thank you so much!

    1. Hi, Lucinda —

      Thank you for that question. The answer may be a bit more complicated. I can give you some general guiding lines in this response, but you may want to consider a 30-minute phone consultation with a tax attorney (more on that here).

      First, if you are a New Mexico tax resident operating a business through which you provide services, it’s usually prudent to register with the Taxation and Revenue Department and obtain a CRS account. It’s also necessary when you have gross receipts to report, as may be the case here.

      When providing services to out-of-state buyers, the initial receipt/use of which is made out-of-state, receipts from the sale of those services are largely “Gross Receipts” and so must be reported in CRS returns. They are also typically deductible under § 7-9-57 NMSA 1978. When dealing with deductions, you must report both the receipts and the deduction, with the deduction reducing (and potentially eliminating) the Gross Receipts Taxes owed.

      When claiming that deduction, it’s very important to keep good records and documentation to show that the sales were, in fact, made to out-of-state buyers.

      I hope this information helped. If you’d like to get some advice more specific to your situation, I recommend speaking with a tax attorney or a qualified accountant or CPA who can go over your situation with you in more detail. Thanks again!

      All the best,

      Ian M. Alden

  9. Hello, my son owes back gross receipt taxes due to an incompetant CPA, is there anything like an offer in compromise for helping him with these, the amount is around 38,000 which he dies not have, even a monthly payment on this amount is like 800.00.

    1. Hi, Karen —

      I am a tax attorney here with Law 4 Small Business. Unfortunately, New Mexico’s constitution prevents the Taxation and Revenue Department from compromising or negotiating down a valid tax debt or the interest accrued thereon. Reliance on the bad advice of a CPA may give your son the right to seek a waiver of the penalties, which can themselves be quite sizable. You may also want to ensure that the Gross Receipts Tax assessment is accurate — often, NMTRD will make an assessment based on inaccurate figures that can lead to dramatically higher tax debts.

      Your best bet would be to seek the assistance of a qualified tax accountant to ensure the debt is valid and accurate. They may also be able to intervene and seek a reduction with the Taxation and Revenue Department on your behalf — or you could reach out to a tax attorney to do that for you.

      I hope this helps. Please feel free to reach out to this office with any questions or if you’d like to discuss representation.

      All the best,

      Ian M. Alden

  10. Are NASA research grants to a New Mexico company by which theoretical results are reported back to Washington, DC, and not used initially (if ever) in New Mexico subject to NMGRT?

    1. Hello —

      Thank you for reaching out. As a general rule, services provided in the State of New Mexico to out-of-state buyers are deductible under § 7-9-57 NMSA 1978 if the initial product of those services is received and used outside the State of New Mexico. This revenue would still need to be reported in the Gross Receipts Tax returns, but the deduction would offset the taxability of these gross receipts.

      Keep in mind that this is a very surface-level analysis of your situation based on the single sentence you gave me. If you’d like more clarity or certainty on this issue, you might want to speak with a tax accountant, CPA, or tax attorney (we offer a flat-rate tax attorney consultation on our website here). Research and Development activities, in particular, have a large number of nuanced rules around them that may impact taxability.

      I hope that helps!

      All the best,

      Ian M. Alden, Esq.

  11. Hello. I need clarification regarding GRT and real estate transactions. I sold my vacation home in NM in 2022. My settlement sheet showed GRT being added to the real estate commission paid my broker and deducted from my net proceeds. Is this correct procedure? Why would I owe GRT on commissions paid to my broker on this transaction? I realize I have a NM state income tax obligation butI feel my broker pulled a fast one on me with the GRT.

    1. Hi, Steve.

      Unfortunately, this is not your brokers fault, and this is standard practice I’m afraid.

      NMGRT is a “pass-through tax” for all sorts of products and services, which means the one benefiting from the product or service pays the tax. Broker commissions are a service in New Mexico subject to NMGRT, and the one benefiting is the seller who pays the commissions, and must also therefore pay the NMGRT.

      Very annoying. I know.

      NMGRT is a ridiculous taxation system, and honestly, all governmental officials capable of doing something about this should be embarrassed with themselves. Aside from being very complicated and confusing, it’s just not “standard” and therefore requires New Mexico businesses to take on additional burdens associated with collections. For example, many software packages don’t have the ability to handle NMGRT, and a business therefore has to manually account for NMGRT or do something else non-standard, which opens up the possibility of doing things wrong or taking on additional expenses associated with dealing with it.

      I’m not “anti-tax,” I’m just “anti-doing-things-stupidly-just-because.”


  12. Larry,

    I have a next step question on the real estate GRT. After it’s paid by the seller and collected by titlr and the commission is split and the GRT on the commission is given to the brokerages, it’s then split amoing the brokers in the transaction. Is the GRT paid again on the splits of commission on top of the GRT that is being collected from the seller? i.e. the Associate Broker pays GRT on their commission from their commission again after its paid in full by the brokerage.

    1. Hi Wayne, and thank you for your question —

      Unfortunately, the wording of your question was some mix of confusing and disconcerting. Gross Receipts Tax isn’t a fee to be passed around or split up between parties; it’s an obligation one party owes to the State of New Mexico (and their locality). It’s entirely possible that NMGRT can crop up multiple times in a series of related transactions; for example, the seller of a house in the ordinary course of business (e.g., flipping houses) might owe NMGRT on the sale proceeds, while a realtor, broker, inspector, or other service providers involved in the sale process might separately owe NMGRT on their receipts when paid by the buyer, seller, or other relevant party.

      In your case, I’d strongly recommend you consult with a qualified CPA or tax attorney to go over your situation and make sure (a) that you’re keeping up with your Gross Receipts Tax obligations and (b) that you’re not inadvertently inserting yourself into what should be a simple payment by the Seller to the State of NM for their own NMGRT obligations, since that could create terrible additional liability for you. We do offer flat-rate 30-minute consultations with a tax attorney here: Talk with an attorney

      All the best,

      Ian M. Alden, Esq.

  13. I had 2 businesses when I retired and moved back to New Mexico.

    One was supplying a terminal to retail stores to sell prepaid cellular and gift cards. The store did not pay me anything for this service. I received a commission on sales from the out of state supplier. 95% percent of my business was out of state, only 3 stores were even located in New Mexico.

    Secondly I secret shopped / mystery shopped for 3 out of state companies that had me go to the store (NM and Texas) and evaluate their product and customer service.

    Do I have to pay GRT on these businesses?

    1. Thank you for reaching out with your question. Keep in mind that you haven’t provided nearly enough information for me to definitively say whether you owe taxes or not, but based on what you did provide, it sounds like you would have a New Mexico Gross Receipts Tax obligation with respect to at least some of your income. Particularly, any sales of products or services within the State of New Mexico to New Mexico customers would likely trigger an NMGRT obligation. Your other services may either trigger the tax or at least a reporting obligation. I’d recommend you chat with a qualified CPA or tax attorney to go over your situation in more detail. We do offer flat-rate 30-minute consultations with a tax attorney here: Talk with an attorney

      All the best,

      Ian M. Alden, Esq.

  14. Hi,

    I am a real estate broker, and my husband owns a painting business. We flipped two homes in 2019 and 2020, and now NM Taxation and Revenue states that we owe GRT for selling those two properties.

    1. Hello there, and thank you for reaching out. Generally, the sale of a primary residence doesn’t fit the definition of “Gross Receipts” and the seller of a primary residence isn’t considered to be engaging in business such that a Gross Receipts Tax would apply. The issue I’m seeing here is that you’re engaged in a business activity (flipping houses) and the receipts are from the sale of real property — which meets the definition of Gross Receipts such that a Gross Receipts tax may apply in this case. There may be an exemption or deduction that could apply, but the presumption is that Gross Receipts Tax would apply on the transaction. I’d recommend you chat with a good tax attorney or CPA to go over the situation in more depth and figure out the best course of action. We do offer flat-rate, 30-minute attorney consultations here: Talk with an attorney

      All the best,

      Ian M. Alden, Esq.

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