N.M. Stat. § 7-9-2 (2026)

The purpose of the Gross Receipts and Compensating Tax Act is to provide revenue
for public purposes by levying a tax on the privilege of engaging in certain activities
within New Mexico and to protect New Mexico businessmen from the unfair competition
that would otherwise result from the importation into the state of property without
payment of a similar tax.

History: 1953 Comp., § 72-16A-2, enacted by Laws 1966, ch. 47, § 2.

                                     ANNOTATIONS

Gross receipts tax is a tax upon seller. Mescalero Apache Tribe v. O'Cheskey, 439 F.
Supp. 1063 (D.N.M. 1977), aff'd, 625 F.2d 967 (10th Cir. 1980), cert. denied, 450 U.S.
959, 101 S. Ct. 1417, 67 L. Ed. 2d 383 (1981), reh’g denied, 455 U.S. 929, 102 S. Ct.
1296, 71 L. Ed. 2d 474 (1982).

Tax is measured on gross rather than net proceeds. This act taxes the privilege of
conducting business in New Mexico, whether profitable or not. United States v. New
Mexico, 624 F.2d 111 (10th Cir. 1980), aff'd, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed.
2d 580 (1982).

Gross receipts and income taxes inapplicable to Indian activities within
reservation. — New Mexico may not tax income and gross receipts of Indians residing
on a reservation when the income and gross receipts involved are derived solely from
activities within the reservation. Hunt v. O'Cheskey, 1973-NMCA-026, 85 N.M. 381, 512
P.2d 954, cert. quashed, 85 N.M. 388, 512 P.2d 961.

Gross Receipts and Compensating Tax Act is general and contains no obvious
legislative intent to repeal the special "in lieu of " provision of Section 60-1-15 NMSA
1978 concerning horse racing licenses. Santa Fe Downs, Inc. v. Bureau of Revenue,
1973-NMCA-064, 85 N.M. 115, 509 P.2d 882.
Gross receipts tax and compensating tax not double taxation. — Since the gross
receipts tax and compensating tax were not imposed upon a single transaction, as
appellant contended, but upon different taxable incidents; namely, (1) the use of
property in this state, such use being leasing or renting it to others (compensating or
use tax) and (2) the receipts derived from the payment of rental by those to whom the
property was leased (gross receipts or sales tax), then imposition of both taxes did not
constitute double taxation on an identical transaction and was not prohibited. Rust
Tractor Co. v. Bureau of Revenue, 1970-NMCA-107, 82 N.M. 82, 475 P.2d 779, cert.
denied, 82 N.M. 81, 475 P.2d 778.

Exemption from gross receipts tax also exemption from compensating tax. — The
legislature intended to make the gross receipts tax and compensating tax correlate: an
exemption from the gross receipts tax must also be treated as an exemption from the
compensating tax. Western Elec. Co. v. N.M. Bureau of Revenue, 1976-NMCA-047, 90
N.M. 164, 561 P.2d 26.

Receipts from horse races not exempt. — The legislature, in enacting the Gross
Receipts and Compensating Tax Act, did not intend to exempt receipts from horse
races. There is neither ambiguity nor doubt that the language used in the Gross
Receipts Tax Act applies to the receipts of a horse owner paid to him for a winning
purse and the receipts of a horse trainer paid to him as his percentage of a winning
purse. Till v. Jones, 1972-NMCA-046, 83 N.M. 743, 497 P.2d 745, cert. denied, 83 N.M.
740, 497 P.2d 742. See Section 7-9-40 NMSA 1978, which now exempts receipts from
horse race purses.

Deductions strictly construed against taxpayer. — The avowed purpose of the
Gross Receipts and Compensating Tax Act is to provide revenue, and any deductions
must receive strict construction in favor of the taxing authority. Reed v. Jones, 1970-
NMCA-050, 81 N.M. 481, 468 P.2d 882.

Burden on taxpayer to establish deduction. — The burden is on the taxpayer to
establish clearly his right to the deduction, and the intention to authorize the deduction
claimed by the taxpayer must be clearly and unambiguously expressed in the statute.
Reed v. Jones, 1970-NMCA-050, 81 N.M. 481, 468 P.2d 882.

Implied rational basis. — Because regulations exempted broadcasting advertisement
displayers in New Mexico from the tax imposed upon taxpayer (operator of a billboard
service), there was discrimination in the treatment of these different media forms, but
the burden was upon the taxpayer to negative every conceivable basis which might
support the discriminatory classification, because of the implied rational basis
underlying every tax statute, i.e., that the state has the right, power and duty to raise the
necessary funds for its public purposes, and it was held that there was a rational basis
for the state to discriminate between the broadcast industry and the outdoor advertising
industry in the taxation of displays of national messages. Markham Adver. Co. v.
Bureau of Revenue, 1975-NMCA-071, 88 N.M. 176, 538 P.2d 1198, cert. denied, 88
N.M. 318, 540 P.2d 248.
Law reviews. — For article, "New Mexico's Effort at Rational Taxation of Hard-Minerals
Extraction," see 10 Nat. Resources J. 415 (1970).