N.M. Stat. § 7-9-3.5 (2026)

A. As used in the Gross Receipts and Compensating Tax Act:

         (1)    "gross receipts" means the total amount of money or the value of other
consideration received from selling property in New Mexico, from leasing or licensing
property employed in New Mexico, from granting a right to use a franchise employed in
New Mexico, from selling services performed outside New Mexico, the product of which
is initially used in New Mexico, or from performing services in New Mexico. In an
exchange in which the money or other consideration received does not represent the
value of the property or service exchanged, "gross receipts" means the reasonable
value of the property or service exchanged;
      (2)      "gross receipts" includes:

        (a) any receipts from sales of tangible personal property handled on
consignment;

           (b) the total commissions or fees derived from the business of buying, selling
or promoting the purchase, sale or lease, as an agent or broker on a commission or fee
basis, of any property, service, stock, bond or security;

          (c) amounts paid by members of any cooperative association or similar
organization for sales or leases of personal property or performance of services by such
organization;

         (d) amounts received from transmitting messages or conversations by
persons providing telephone or telegraph services;

           (e) amounts received by a New Mexico florist from the sale of flowers, plants
or other products that are customarily sold by florists where the sale is made pursuant
to orders placed with the New Mexico florist that are filled and delivered outside New
Mexico by an out-of-state florist;

           (f) the receipts of a home service provider from providing mobile
telecommunications services to customers whose place of primary use is in New
Mexico if: 1) the mobile telecommunications services originate and terminate in the
same state, regardless of where the services originate, terminate or pass through; and
2) the charges for mobile telecommunications services are billed by or for a customer's
home service provider and are deemed provided by the home service provider. For the
purposes of this section, "home service provider", "mobile telecommunications
services", "customer" and "place of primary use" have the meanings given in the federal
Mobile Telecommunications Sourcing Act; and

          (g) receipts collected by a marketplace provider engaging in business in the
state from sales, leases and licenses of tangible personal property, sales of licenses
and sales of services or licenses for use of real property that are sourced to this state
and are facilitated by the marketplace provider on behalf of marketplace sellers,
regardless of whether the marketplace sellers are engaging in business in the state; and

      (3)      "gross receipts" excludes:

            (a) cash discounts allowed and taken;

          (b) New Mexico gross receipts tax, governmental gross receipts tax, leased
vehicle gross receipts tax, and cannabis excise tax payable on transactions for the
reporting period;
           (c) taxes imposed pursuant to the provisions of any local option gross
receipts tax that is payable on transactions for the reporting period;

           (d) any gross receipts or sales taxes imposed by an Indian nation, tribe or
pueblo; provided that the tax is approved, if approval is required by federal law or
regulation, by the secretary of the interior of the United States; and provided further that
the gross receipts or sales tax imposed by the Indian nation, tribe or pueblo provides a
reciprocal exclusion for gross receipts, sales or gross receipts-based excise taxes
imposed by the state or its political subdivisions;

          (e) any type of time-price differential;

          (f) amounts received solely on behalf of another in a disclosed agency
capacity; and

           (g) amounts received by a New Mexico florist from the sale of flowers, plants
or other products that are customarily sold by florists where the sale is made pursuant
to orders placed with an out-of-state florist for filling and delivery in New Mexico by a
New Mexico florist.

        B.     When the sale of property or service is made under any type of charge,
conditional or time-sales contract or the leasing of property is made under a leasing
contract, the seller or lessor may elect to treat all receipts, excluding any type of time-
price differential, under such contracts as gross receipts as and when the payments are
actually received. If the seller or lessor transfers the seller's or lessor's interest in any
such contract to a third person, the seller or lessor shall pay the gross receipts tax upon
the full sale or leasing contract amount, excluding any type of time-price differential.

History: 1978 Comp., § 7-9-3.5, enacted by Laws 2003, ch. 272, § 3; 2006, ch. 39, § 2;
2007, ch. 339, § 2; 2019, ch. 270, § 26; 2023, ch. 85, § 10.

                                      ANNOTATIONS

Cross references. — For the federal Mobile Telecommunications Sourcing Act, see 4
U.S.C.S. § 116 et seq.

Compiler’s notes. — Laws 2003, ch. 272, § 3 originally enacted this section as 7-9-3.1
NMSA 1978. The section was renumbered by the compiler as 7-9-3.5 NMSA 1978.

The 2023 amendment, effective July 1, 2023, excluded cannabis excise taxes from the
definition of "gross receipts"; and in Subsection A, Subparagraph A(3)(b), after "leased
vehicle gross receipts tax", added "and cannabis excise tax".

The 2019 amendment, effective July 1, 2019, revised the definition of "gross receipts"
as used in the Gross Receipts and Compensating Tax Act; and in Subsection A, added
Subparagraph A(2)(g).
The 2007 amendment, effective June 15, 2007, defined "gross receipts" to mean
receipts from granting a right to use a franchise employed in New Mexico.

The 2006 amendment, effective July 1, 2006, provided in Paragraph (1) of Subsection
A that gross receipts includes consideration received from licensing property employed
in New Mexico.

Entities may take medical services tax deduction on behalf of health care
practitioner employees. — Where taxpayer, a medical staffing company that had
commercial contracts with the department of veterans affairs and the Indian health
service, claimed a gross receipts tax deduction for the provision of medical services on
behalf of its nurse employees, and where the department of taxation and revenue
claimed that the deduction was limited to individual health care practitioners, the
administrative hearing officer did not err in concluding that taxpayer satisfied the basic
criteria for the deduction, because the regulation implementing NMSA 1978, § 7-9-93
permits an employer entity to take the deduction on behalf of an employee, provided
that the entity is not otherwise excluded and the remaining requirements under the
statute are satisfied, and in this case, the parties stipulated that taxpayer is not an
excluded health care facility under the regulation, and the stipulated facts establish that
all the conditions of § 7-9-93 were met. Robison v. N.M. Tax'n & Revenue Dep't, 2023-
NMCA-065.

                                  I.     IN GENERAL.

"Gross receipts" means the total amount of money or the value of other considerations
received from selling property or from performing services. N.M. Enters., Inc. v. Bureau
of Revenue, 1974-NMCA-125, 86 N.M. 799, 528 P.2d 212.

Selling property in New Mexico. — The gross receipts tax only applies when the
selling of property takes place within the borders of New Mexico. Kmart Corp. v.
Taxation & Revenue Dep't., 2006-NMSC-006, 139 N.M. 172, 131 P.3d 22.

Royalties received from trademark licenses granted as part of a franchise are
subject to gross receipts tax. — Where petitioner entered into a number of franchise
agreements with New Mexico businesses which contained a provision to grant to
franchisees a limited license to use specific trademarks, and where the New Mexico
taxation and revenue department (department) determined that the royalty fees for the
limited trademark licenses were subject to gross receipts tax, the district court did not
err in granting the department’s motion for summary judgment, because the definition of
“gross receipts” includes the total amount of money or the value of other consideration
received from granting a right to use a franchise employed in New Mexico, and the
trademark licensing provision at issue was central to the overall franchise and should be
treated as part of the franchise for purposes of gross receipts, regardless of whether it
was separately stated and itemized in the franchise agreement. A&W Rests. v. N.M.
Taxation & Revenue Dep’t, 2018-NMCA-069, cert. denied.
Salaries and overhead of federal contractors not tax immune. — As long as federal
contractors are separate entities solely responsible for their own employees and internal
management, salaries and overhead of those contractors are not obligations of the
government, for purposes of tax immunity. 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).

Collection agencies gross receipts. — A collection agency does not include the
creditor's portion of the proceeds, nor the taxes it collects on behalf of the creditor, in
calculating its commission proceeds, i.e., its gross receipts. Rather, a collection agency
pays gross receipts tax only on the commission portion of the debt. The total tax
imposed on the debt and charged to the debtor is simply the sum of the creditor's tax
and the agency's tax. Martinez v. Albuquerque Collection Servs., Inc., 867 F. Supp.
1495 (D.N.M. 1994).

Temporary staffing agencies' gross receipts. — Temporary employee company was
not excluded from paying tax on its gross receipts from clients to which it provided
temporary staffing services; the receipts were taxable as reimbursements of payroll-
related expenditure. MPC Ltd. v. N.M. Taxation & Revenue Dep't, 2003-NMCA-021, 133
N.M. 217, 62 P.3d 308.

                                 II.    OUT-OF-STATE.

Only activities within state taxable. — The validity of the application of the gross
receipts tax to general and administrative expense reimbursements depended on
whether the tax was laid upon gross receipts derived from the contractors' activities
within the borders of the state. United States v. New Mexico, 581 F.2d 803 (10th Cir.
1978), aff'd, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed. 2d 580 (1982).

Work performed outside the state. — If when they received reimbursements for
general and administrative expenses contractors were being reimbursed for work
(whether called "services" or by any other name) performed outside the state, New
Mexico taxing authorities lack authority to tax those transactions. United States v. New
Mexico, 581 F.2d 803 (10th Cir. 1978), aff'd, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed.
2d 580 (1982).

Out-of-state activities incidental to a service performed in New Mexico are subject
to gross receipts tax. — Where taxpayer, an employment agency based in Houston,
Texas with no physical office in New Mexico, entered into a professional service
agreement with chevron, under which it would identify, recruit, screen, and hire
individuals as contract workers for chevron and provide payroll services for certain
members of a group who worked for chevron in New Mexico, and under which chevron
would reimburse taxpayer for the members' compensation and pay taxpayer a markup
fee, and where the New Mexico taxation and revenue department (department) selected
taxpayer for an audit and assessed taxpayer for approximately $350,000 of unpaid
gross receipts tax plus interest and penalties, and where an administrative hearing
determined that the markup fee was exempt from gross receipts tax because it was
received for services performed out of state, the administrative hearing officer erred in
determining that the markup fee was exempt from gross receipts tax, because activities
incidental to a service performed in New Mexico are subject to gross receipts tax, and
although the payroll services in this case were performed out of state, the consumption
of those services was by the taxpayer's employees working in New Mexico. Taxpayer's
out-of-state activities were incidental to the services the taxpayer performed in New
Mexico and were therefore subject to gross receipts tax. Tallbridge Corp. v. N.M. Tax'n
and Revenue Dep't, 2024-NMCA-044.

Taxpayer was not a disclosed agent entitled to an exemption of gross receipts
tax. — Where taxpayer, an employment agency based in Houston, Texas with no
physical office in New Mexico, entered into a professional service agreement with
chevron, under which it would identify, recruit, screen, and hire individuals as contract
workers for chevron and provide payroll services for certain members of a group who
worked for chevron in New Mexico, and under which chevron would reimburse taxpayer
for the members' compensation and pay taxpayer a markup fee, and where the New
Mexico taxation and revenue department (department) selected taxpayer for an audit
and assessed taxpayer for approximately $350,000 of unpaid gross receipts tax plus
interest and penalties, and where an administrative hearing officer determined that
taxpayer failed to establish it was a disclosed agent under 7-9-3.5(A)(3)(f) NMSA 1978
and thus not exempt from paying gross receipts tax on the reimbursement it received
from chevron, and where taxpayer argued on appeal that uncontroverted facts establish
it was an agent of chevron, the hearing officer did not err in determining that taxpayer
failed to establish they were a disclosed agent entitled to an exemption of gross receipts
tax, because even if taxpayer was chevron's agent, it failed to affirmatively disclose the
agency relationship to the group members. The plain meaning of disclosure" as used in