N.M. Stat. § 7-9-4 (2026)

tax".
   A. For the privilege of engaging in business, an excise tax equal to the following
percentages of gross receipts is imposed on any person engaging in business in New
Mexico:

       (1)    prior to July 1, 2023, five percent; and

       (2)   beginning July 1, 2023, four and seven-eighths percent, except as
provided in Subsection C of this section.

   B. The tax imposed by this section shall be referred to as the "gross receipts tax".

    C. If, for any single fiscal year occurring after fiscal year 2025 and prior to fiscal year
2030, gross receipts tax revenues are less than ninety-five percent of the gross receipts
tax revenues for the previous fiscal year, as determined by the secretary of finance and
administration, the rate of the gross receipts tax shall be five and one-eighth percent
beginning on the July 1 following the determination made by the secretary of finance
and administration.

   D. On or before February 1 of each year, until the rate of the gross receipts tax is
adjusted to five and one-eighth percent pursuant to Subsection C of this section, the
secretary of finance and administration shall make a determination for the purposes of
Subsection C of this section. If the rate of tax is adjusted pursuant to that subsection,
the secretary shall certify to the secretary of taxation and revenue that the rate of the
gross receipts tax shall be five and one-eighth percent, effective on the following July 1.

    E. As used in this section, "gross receipts tax revenues" means the net receipts
attributable to the gross receipts tax and distributed to the general fund.

History: 1953 Comp., § 72-16A-4, enacted by Laws 1966, ch. 47, § 4; 1969, ch. 144, §
2; 1978, ch. 151, § 2; 1981, ch. 37, § 9; 1983, ch. 213, § 15; 1986, ch. 20, § 63; 1990
(1st S.S.), ch. 1, § 2; 2010 (2nd S.S.), ch. 7, § 9; 2022, ch. 47, § 12.

                                      ANNOTATIONS

Cross references. — For exemptions from the gross receipts tax, see 7-9-12 NMSA
1978.
For deductions from the gross receipts tax, see 7-9-45 NMSA 1978.

The 2022 amendment, effective July 1, 2022, reduced the rates of the gross receipts
tax, provided for an increase in the gross receipts tax if gross receipts tax revenues
decrease, and defined "gross receipts tax revenues"; in Subsection A, after "tax equal
to", deleted "five and one-eighth percent" and added "the following percentages", and
added Paragraphs A(1) and A(2); and added Subsections C through E.

Temporary provisions. — Laws 2020 (1st S.S.), ch. 4, § 4, effective June 29, 2020,
provided:

A. Notwithstanding Sections 7-1-67 and 7-1-69 NMSA 1978, no interest shall accrue
and no penalty shall be assessed to a taxpayer for:

(1) tax liabilities pursuant to the Income Tax Act or the Corporate Income and
Franchise Tax Act for failure to pay the tax that became due April 15, 2020 through July
15, 2020; provided that the failure to pay the tax was made without intent to evade or
defeat the tax; and provided further that payment for the unpaid payments is made in
full on or before April 15, 2021;

(2) tax liabilities pursuant to the Withholding Tax Act for failure to pay the tax that
became due March 25, 2020 through July 25, 2020; provided that the failure to pay the
tax was made without intent to evade or defeat the tax; and provided further that
payment for the unpaid taxes is made in full on or before April 25, 2021;

(3) gross receipts tax, local option gross receipts tax or compensating tax liabilities for
failure to pay any of those taxes that became due March 25, 2020 through July 25,
2020; provided that the failure to pay the tax was made without intent to evade or defeat
the tax; and provided further that payment for the unpaid taxes is made in full on or
before April 25, 2021; and

(4) tax liabilities assessed between September 3, 2019 and January 3, 2020 as the
result of a managed audit performed in accordance with a managed audit agreement
pursuant to Section 7-1-11.1 NMSA 1978; provided that payment for those liabilities is
made pursuant to terms of the managed audit agreement on or before December 31,
2020.

B. Notwithstanding Sections 7-38-49 and 7-38-50 NMSA 1978, no interest shall accrue
and no penalty shall be assessed to a property owner for unpaid property taxes that
became due April 10, 2020 pursuant to Section 7-38-38 NMSA 1978; provided that:

(1) the unpaid property taxes did not become delinquent because of an intent to
defraud by the property owner;

(2) payment for the unpaid property taxes is made in full on or before May 10, 2021;
and
(3) the subject property does not have property taxes that became delinquent pursuant
to Section 7-38-46 NMSA 1978 prior to May 10, 2020.

The 2010 (2nd S.S.) amendment, effective July 1, 2010, in Subsection A, after "excise
tax equal to five", added "and one-eighth".

The 1990 amendment, effective July 1, 1990, substituted "five percent" for "four and
three-fourths percent" in Subsection A.

                          I.     GENERAL CONSIDERATION.

Reasonable tax classifications not unconstitutional. — It is for the legislature to
adopt classifications for the imposition of excise taxes as it may deem proper and any
reasonable classification cannot be held to deny equal protection or due process.
Edmunds v. Bureau of Revenue, 1958-NMSC-112, 64 N.M. 454, 330 P.2d 131.

Legislature's method of imposing gross receipts and compensating tax
reasonable. — The legislature's selection of the vendor for imposition of the school tax
(gross receipts tax since repealed) and of the purchaser for imposition of the former
compensating tax was reasonable in view of the impossibility of subjecting a
nonresident vendor - one who was out of the territorial jurisdiction of the legislature - to
the school tax. Edmunds v. Bureau of Revenue, 1958-NMSC-112, 64 N.M. 454, 330
P.2d 131.

Legislative failure to protect resident-vendor not unconstitutional. — The failure of
the legislature to protect resident-vendor against the unfair competition of importations
into New Mexico, without the payment of a sales tax, of chemical reagents did not
offend the constitutions of either the United States or of New Mexico so as to invalidate
the school tax against him. Edmunds v. Bureau of Revenue, 1958-NMSC-112, 64 N.M.
454, 330 P.2d 131 (decided under former law).

Standard of review on appeal. — Department's gross receipts tax assessment can
only be reversed by the court of appeals if arbitrary or capricious, or there is an abuse of
discretion, such that the assessment is not supported by substantial evidence or it is
otherwise not in accordance with law. ITT Educ. Serv. v. Taxation & Revenue Dep't,
1998-NMCA-078, 125 N.M. 244, 959 P.2d 969.

Department not precluded from assessing taxes where taxpayers failed to
establish the elements of collateral estoppel, corporation by estoppel, or judicial
estoppel. — Where taxpayers appealed a 2018 assessment of taxes for the 2011 tax
year, arising from the operation of an automotive technician business, and where
defendant argued that the taxation and revenue department (Department) was
precluded on estoppel grounds from personally assessing unpaid 2011 gross receipts
tax against taxpayers, the Department was not precluded from assessing unpaid gross
receipts tax against taxpayers personally, because taxpayers failed to establish the
elements of collateral estoppel, failed to demonstrate that corporation by estoppel
applied to the facts of the case, and failed to establish any evidence that warranted
applying judicial estoppel. Vigil v. N.M. Tax'n and Revenue Dep't, 2022-NMCA-032.

The evidence supports the department's personal assessment against taxpayer
for business's tax liability. — Where taxpayer appealed a 2018 assessment of taxes
for the 2011 tax year, arising from the operation of an automotive technician business,
and where defendant argued that taxpayer was not personally liable for gross receipts
taxes owed by the business, contending that he did not participate in the operations of
the business, the hearing officer did not err in determining that taxpayer held himself out
as a corporation, and was therefore personally liable for the business's tax debt,
because taxpayer contributed money to the business, was an initial director and
incorporator, remained a director and incorporator until 2011, when the business filed
articles of incorporation for the second time, signed financing statements and purchased
and registered vehicles for the business, taxpayer's credit was used by the business,
and taxpayer made payments for property and equipment and guaranteed loans.
Taxpayer's course of conduct in relation to the business reasonably demonstrated that
he assumed to act as a corporation, and § 53-18-9 NMSA 1978, provides that all
persons who assume to act as a corporation without authority to do so are jointly and
severally liable for all debts and liabilities incurred or arising as a result thereof. Vigil v.
N.M. Tax'n and Revenue Dep't, 2022-NMCA-032.

                                  II.     APPLICABILITY.

Only a person engaging in business may be liable for gross receipts tax. — Under
the plain language of this section, the taxation and revenue department may only
impose gross receipts tax upon persons who were engaging in business when the tax
liability was incurred. New Mexico Depo v. N.M. Tax’n & Revenue Dep’t, 2021-NMCA-
011.

Department lacked authority to impose tax liability against taxpayer who was not
engaged in business at the time the tax liability was incurred. — Where in 2009,
taxpayer established a business that provided court reporting services, registered with
the taxation and revenue department (department), was assigned a Combined
Reporting System (CRS) number for tax reporting purposes, and operated the business
as a sole proprietorship from 2009 to 2012, at which time taxpayer converted the
business to a limited liability company (LLC), and where taxpayer failed to update the
business’s registration with the department and continued to operate under the original
CRS number assigned to the sole proprietorship, and where the department’s
computerized auditing system detected a mismatch between the information taxpayer
reported to the IRS and the information taxpayer reported to the department, resulting in
the department updating the computerized records to reflect that taxpayer’s business
was operating as an LLC, but failing to issue taxpayer a new CRS number, and where,
in 2017, the department issued a notice of assessment of taxes and demand for
payment for gross receipts tax from taxpayer as the sole proprietor of the business for
the 2012 tax year, and where the hearing officer denied taxpayer’s protest finding that
the sole proprietorship was obligated for the assessment because at the time the tax
liability was incurred, the CRS number on file with the department was assigned to
taxpayer, as the sole proprietor of the business, rather than as an LLC, the hearing
officer erred in denying taxpayer’s protest because to the extent the hearing officer’s
decision imposed liability against taxpayer for failing to register with the department, it is
not in accordance with this section, which permits only the person engaging in business
to be taxed, and the overwhelming evidence demonstrated that the business was
operating as an LLC during the taxable period. Moreover, neither the registration
statute, NMSA 1978 § 7-1-12, nor the department’s regulations permit the department
to impose liability against a taxpayer based solely on its failure to update its
registrations. New Mexico Depo v. N.M. Tax'n & Revenue Dep't, 2021-NMCA-011.

Legal incidence of gross receipts tax on seller. — The statutory language of 7-9-3F
NMSA 1978 and this section places the legal incidence of the gross receipts tax on the
seller. 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).

Incidence of tax on contractors selling services to United States. — The legal
incidence of the gross receipts tax was on contractors as sellers of services to the
United States, not on the federal government. 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).

Tax valid since contractors not agents of United States. — Since contracts did not
authorize contractors to act as agents of the United States in purchasing supplies and
materials, application of the gross receipts tax to the contractual transactions for
materials and supplies was not unconstitutional. 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).

Tax valid even though increases government's contract costs. — That the gross
receipts tax may increase cost on a contract to the government does not invalidate the
tax on the grounds that a state may not directly tax the federal government since its
legal incidence falls elsewhere. 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).

Agency exemption. — Money received by the taxpayer, a property management
company, from the property owner as reimbursement for on-site employee expenses
was not taxable as gross receipts, because the taxpayer was an agent for the property
owner for the purpose of employing and paying the on-site employees employed at the
owners property. Carlsberg Mgt. Co. v. State Taxation & Revenue Dep't, 1993-NMCA-
121, 116 N.M. 247, 861 P.2d 288, but see 7-9-3.5 NMSA 1978, which now excludes
from tax receipts received solely on behalf of another in a disclosed agency capacity.

If bank can pass tax on, it is not real taxpayer. — Since services of maintaining and
processing other banks' accounts were not reasonably necessary or incidental to
business or functions of national banking association, New Mexico was not prevented
by federal law from levying gross receipts tax on association's receipts collected for said
services and association could pass tax on to banks for which it performed services and
was therefore not the real taxpayer. First Nat'l Bank v. Commissioner of Revenue, 1969-
NMCA-090, 80 N.M. 699, 460 P.2d 64, cert. denied, 80 N.M. 707, 460 P.2d 72, appeal
dismissed, 397 U.S. 661, 90 S. Ct. 1407, 25 L. Ed. 2d 643 (1970).

Gross receipts tax may be constitutionally imposed on contractor doing work on
Indian reservation in the state if there is no imposition on the sovereignty of the United
States or infringement of the Indian tribe's right to self-government. Tiffany Constr. Co.
v. Bureau of Revenue, 1981-NMSC-057, 96 N.M. 296, 629 P.2d 1225.

Gross receipts tax upon non-Indians working on reservations valid. — When the
gross receipts tax levied upon non-Indians working on state reservations is
nondiscriminatory and does not preclude a possible similar tax by a tribe on activities
conducted on its reservation, the Indian right to self-government is not impaired and the
tax is valid. Mescalero Apache Tribe v. O'Cheskey, 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; 459 U.S. 1025, 103 S. Ct. 393, 74 L. Ed. 2d 522
(1982).

If tax ultimately falls on tribal organization. — If the economic burden of the gross
receipts tax ultimately falls on a tribal organization, even though the legal incidence of
the tax falls on the non-Indian contractor with whom the organization contracted to build
an Indian school, the imposition of the tax impermissibly impedes the clearly expressed
federal interest in promoting the quality and quantity of educational opportunities for
Indians by depleting the funds available for the construction of Indian schools. Ramah
Navajo Sch. Bd., Inc. v. Bureau of Revenue, 458 U.S. 832, 102 S. Ct. 3394, 73 L. Ed.
2d 1174 (1982).

Federal regulatory scheme and policy. — The comprehensive federal regulatory
scheme and the express federal policy of encouraging tribal self-sufficiency in the area
of education preclude the imposition of the state gross receipts tax on the construction
of school facilities on tribal lands pursuant to a contract between a tribal organization
and a non-Indian contracting firm. Ramah Navajo Sch. Bd., Inc. v. Bureau of Revenue,
458 U.S. 832, 102 S. Ct. 3394, 73 L. Ed. 2d 1174 (1982).

Sale of cigarettes to non-Indians on Indian reservation. — Non-Indian did not have
a valid agency relationship with an Indian, so as to bar the imposition of gross receipts
taxes on the sale of cigarettes to non-Indians on an Indian reservation, since the Indian
made no financial contribution to the commencement or operation of the business and
all decision-making was in the hands of the taxpayer. Bien Mur Indian Mkt. Ctr., Inc. v.
Taxation & Revenue Dep't, 1988-NMCA-104, 108 N.M. 355, 772 P.2d 885, rev’d on
other grounds, 108 N.M. 228, 770 P.2d 873 (1989).

Federal preemption for services rendered Indians. — District court properly ordered
state tax agency to refund gross receipts taxes paid by a private contractor on services
performed on an Indian reservation for a corporation owned by an Indian tribe, in light of
the fact that the Indian trader statutes, 25 U.S.C. §§ 261-264 preempted the agency's
authority to impose such a tax since the federal trader statutes included services under
the scope of "trade". Laguna Indus., Inc. v. N.M. Taxation & Revenue Dep't, 1992-
NMCA-109, 114 N.M. 644, 845 P.2d 167, aff'd sum nom. N.M. Taxation & Revenue
Dep't v. Laguna Indus., Inc., 1993-NMSC-025, 115 N.M. 553, 855 P.2d 127.

Receipts from horse races not exempt. — The legislature, in enacting the Gross
Receipts 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.

Construction work incidental to "severing" not subject to receipts tax. — The
exemption provided by 7-9-35 NMSA 1978 applied since "severing" was taking place as
the development work was performed and none of taxpayer's work was preliminary to or
preparatory for "severing"; therefore, receipts from development work, which includes
construction, were exempted from the gross receipts tax and taxable under the service
tax (resources excise tax) when such construction work was incidental to the "severing."
Patten v. Bureau of Revenue, 1974-NMCA-051, 86 N.M. 355, 524 P.2d 527.

Pawnbroker's receipts from sales of pawned chattel were not exempt or deductible
from gross receipts tax as the recoupment of principal, interest, and handling charges
attendant to the initial loan transaction. Wing Pawn Shop v. Taxation & Revenue Dep't,
1991-NMCA-024, 111 N.M. 735, 809 P.2d 649 (decided on facts existing prior to
enactment of Pawnbrokers Act, 56-12-1 NMSA 1978 et seq.)

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).

Nationwide school operating location in state. — Nationwide technical-vocational
school operating a location in New Mexico is subject to the gross receipts tax; the
taxable base includes tuition receipts from students in New Mexico for curriculum
development, financial aid services, and job placement services. ITT Educ. Serv. v.
Taxation & Revenue Dep't, 1998-NMCA-078, 125 N.M. 244, 959 P.2d 969.

Fees of management service company. — Fees paid to a hospital management
services company as reimbursement for salaries and expenses of management
personnel provided by the company were subject to the gross receipts tax. Brim
Healthcare, Inc. v. State Taxation & Revenue Dep't, 1995-NMCA-055, 119 N.M. 818,
896 P.2d 498 (decided under prior law).
                                III.   OUT-OF-STATE.

A substantial nexus was created through activities of a sister corporation. —
Where taxpayer had no physical presence in New Mexico other than through stores in
New Mexico owned by a sister corporation; and the sister corporation promoted
taxpayer through sales of gift cards that were redeemable at taxpayer and that
displayed taxpayer’s web address, shared customer’s email addresses with taxpayer,
sold memberships in a shared loyalty program that gave customers a discount on
purchases from taxpayer, accepted returns from taxpayer’s customers in exchange for
store credit which policy taxpayer advertised to its customers, and used the parent
corporation’s trademark which taxpayer also used, the sister corporation’s activities in
New Mexico on behalf of taxpayer were significantly associated with taxpayer’s ability to
establish and maintain a market for its sales in New Mexico and were sufficient to
create a substantial nexus between taxpayer and New Mexico which permitted New
Mexico to impose the gross receipts tax on taxpayer’s sales to customers in New
Mexico without offending the federal Commerce Clause. N.M. Taxation & Revenue
Dep’t v. Barnesandnoble.com, L.L.C., 2013-NMSC-023, aff’g 2012-NMCA-063, 283
P.3d 298.

Use of a trademark to establish a market in New Mexico creates a substantial
nexus. — Where taxpayer was engaged in the business of selling books online;
taxpayer did not own or lease property in New Mexico and did not have retail stores or
sales agents or employees in New Mexico; taxpayer’s parent corporation had three
bookstores in New Mexico that used the parent corporation’s trademark; taxpayer used
the trademark on its website; and the stores sold gift cards that could be redeemed at
the stores or through the taxpayer’s website and loyalty program memberships that
entitled customers to discounts at the stores or through taxpayer’s website, taxpayer’s
use of shared marketing, name recognition and trademarks established a market for
taxpayer in New Mexico which created a substantial nexus between taxpayer and New
Mexico sufficient to support the imposition of the gross receipts tax on taxpayer. N.M.
Taxation & Revenue Dep’t v. Barnesandnoble.com, LLC, 2012-NMCA-063, 283 P.3d
298, cert. granted, 2012-NMCERT-006.

Destination principle. — The destination principle, which taxes the sale or use of
goods that cross state lines at their destination, applies to determine whether an
interstate transaction is a taxable sale under the New Mexico gross receipts tax laws.
Dell Catalog Sales, L.P. v. Taxation and Revenue Dept., 2009-NMCA-001, 145 N.M.
419, 199 P.3d 863, cert. denied, 2008-NMCERT-007, cert. denied, 129 S. Ct. 1616, 173
L.Ed.2d 1030.

Where the taxpayer sold computers by mail, telephone and internet orders from
its facilities in Texas to New Mexico customers; the taxpayer did not own or lease
property in New Mexico; the taxpayer did not have retail stores, sales agents or
employees in New Mexico; title to the computers transferred from the taxpayer to the
customer upon shipment from the taxpayer’s facility in Texas; and the taxpayer retained
the risk of loss until delivery; and the computers were shipped by common carrier
selected by the taxpayer, the taxpayer’s activities constituted taxable sales in New
Mexico because the actual consumption and use of the computers occurred in New
Mexico. Dell Catalog Sales, L.P. v. Taxation and Revenue Dept., 2009-NMCA-001, 145
N.M. 419, 199 P.3d 863, cert. denied, 2008-NMCERT-007, cert. denied, 129 S. Ct.
1616, 173 L.Ed.2d 1030.

Substantial nexus. — Where the taxpayer sold computers by mail, telephone, and
internet orders from its facilities in Texas to New Mexico customers; the taxpayer did not
own or lease property in New Mexico; the taxpayer did not have retail stores, sales
agents or employees in New Mexico; the taxpayer contracted with a third party to
provide in-home service repairs on the computers in New Mexico; and the non-sales
activities of the third party in New Mexico were an important factor in establishing and
maintaining a market for the taxpayer’s computers, the taxpayer had a substantial
nexus with New Mexico and the imposition of gross receipts tax on the taxpayer did not
violate the Commerce Clause. Dell Catalog Sales, L.P. v. Taxation and Revenue Dept.,
2009-NMCA-001, 145 N.M. 419, 199 P.3d 863, cert. denied, 2008-NMCERT-007, cert.
denied, 129 S. Ct. 1616, 173 L.Ed.2d 1030.

Mere contracts are not commerce at all, neither intrastate nor interstate. Baskin-
Robbins Ice Cream Co. v. Revenue Div., 1979-NMCA-098, 93 N.M. 301, 599 P.2d
1098.

Tax on items in interstate commerce to be fair and nondiscriminatory. — To be
sustained against a claim that a state-imposed tax runs afoul of the commerce clause of
the federal constitution, a tax upon items connected with interstate commerce must: (1)
be applied to an activity with a substantial nexus with the taxing state; (2) be fairly
apportioned; (3) not discriminate against interstate commerce; and (4) be fairly related
to the services provided by the state. Pittsburgh & Midway Coal Mining Co. v. Revenue
Div., 1983-NMCA-019, 99 N.M. 545, 660 P.2d 1027, appeal dismissed, 464 U.S. 923,
104 S. Ct. 323, 78 L. Ed. 2d 296 (1983).

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-NMSC-068, 85 N.M. 388, 512
P.2d 961.

Tax on gross receipts from sales in other states unconstitutional. — Tax levied on
the gross receipts from the sales of tangible personal property in another state is an
impermissible burden on commerce. Evco v. Jones, 409 U.S. 91, 93 S. Ct. 349, 34 L.
Ed. 2d 325 (1972).

Place services rendered. — To determine whether receipts from services are subject
to gross receipts tax, the focus must be on what services the customers are contracting
for and where those services are taking place. Simply because activity necessary to
complete the services takes place out-of-state does not mean that the services provided
are immune from New Mexico's gross receipts tax. Rauscher, Pierce, Refsnes, Inc. v.
Taxation & Revenue Dep't, 2000-NMCA-065, 129 N.M. 404, 9 P.3d 648, aff’d 2002-
NMSC-013, 132 N.M. 226, 46 P.3d 687.

Tax incurred at point of retail sale. — Where utilities retail their electrical energy
through interstate lines only to consumers in Arizona, for that reason they incur no
liability to New Mexico for its gross receipts tax, which is incurred at the point of retail
sale. Arizona v. New Mexico, 425 U.S. 794, 96 S. Ct. 1845, 48 L. Ed. 2d 376 (1976).

Discrimination between broadcast and outdoor advertising held rational. — When
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.

Since broadcasters generally engage in interstate transmission of their
messages, and even if broadcasts by smaller stations might not always cross interstate
lines, yet the potential exists for radio and television waves to deliver transitory,
interstate communications, for this reason, national advertising by local broadcasting
stations has long been held exempt from state taxation. 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.

While billboard advertising takes place only in state. — Taxpayer's service of
posting messages for national companies on billboards located in New Mexico was
being taxed for displaying an activity taking place only in this state and not for
advertising; thus it was intrastate in character, and the gross receipts tax imposed on it
did not constitute an undue burden on interstate commerce in violation of the federal
constitution. 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.

If multiple taxation shown, tax would likely be unconstitutional. — The activities of
taxpayer, situated and performing services (posting billboards) in New Mexico, were not
within the taxing authority of any other state, and therefore no multiple taxation was
possible; the instant tax could be declared invalid upon a showing by the taxpayer that
multiple taxation would be likely to result and would be likely to unduly burden interstate
commerce, but neither showing was made, and therefore, no basis was demonstrated
upon which a claim of potential multiple taxation as to this taxpayer could be found.
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.
Traffic between states absent in franchise agreement. — If none of the "activities" of
the franchise agreement are serviced by mail, telephone correspondence or by any
employees of taxpayer, no intercourse or traffic between this state and another is found.
Baskin-Robbins Ice Cream Co. v. Revenue Div., 1979-NMCA-098, 93 N.M. 301, 599
P.2d 1098.

Tax constitutional on coal sales to out-of-state buyers. — The imposition of gross
receipt taxes on proceeds from the sales of coal to out-of-state buyers does not
impermissibly interfere with the commerce clause of the federal constitution. Pittsburgh
& Midway Coal Mining Co. v. Revenue Div., 1983-NMCA-019, 99 N.M. 545, 660 P.2d
1027, appeal dismissed, 464 U.S. 923, 104 S. Ct. 323, 78 L. Ed. 2d 296.

Tax applicable to foreign franchisor. — Because franchisor has no payroll, real
property, personnel or offices located in this state, but it does furnish signs which must
be leased or purchased by its dealers, its sales of tangible property and its granting of
exclusive franchises constitute engaging in intrastate business in this state, and the
franchise fees received therefrom are subject to the gross receipts tax. AAMCO
Transmissions v. Taxation & Revenue Dep't, 1979-NMCA-092, 93 N.M. 389, 600 P.2d
841, cert. denied, 93 N.M. 205, 598 P.2d 1165 (superceded by statute, Sonic Indus.,
Inc. v. State, 2000-NMCA-087, 129 N.M. 657, 11 P.3d 1219).

Tax applicable to franchise fees. — The imposition of gross receipts tax on franchise
fees received from this state's dealers does not violate the due process clause or
commerce clause and is proper since the franchisor is in the business of selling
franchises, developing and marketing parts, receiving its primary source of income from
the sale of franchises, collecting a percentage of franchisee's gross receipts as a lease
payment for use of the trademark and trade name and where its leased trademarks and
trade names and their businesses are protected by the laws of this state; thus,
franchisor is engaged in business in this state. AAMCO Transmissions v. Taxation &
Revenue Dep't, 1979-NMCA-092, 93 N.M. 389, 600 P.2d 841, cert. denied, 93 N.M.
205, 598 P.2d 1165 (superceded by statute, Sonic Indus., Inc. v. State, 2000-NMCA-
087, 129 N.M. 657, 11 P.3d 1219).

Foreign corporation's opinions sent to foreign clients not taxable. — Opinions by
an Oklahoma corporation concerning subsurface geological formations of the earth's
crust beneath New Mexico delivered to clients in Oklahoma and other states were not in
intrastate commerce in New Mexico and the income from such opinions was not taxable
in New Mexico. Seismograph Serv. Corp. v. Bureau of Revenue, 1956-NMSC-028, 61
N.M. 16, 293 P.2d 977.

Law reviews. — For comment, "Taxation of National Banks: A Novel Approach in the
New Mexico Courts," see 10 Nat. Resources J. 615 (1970).

For article, "The Deductibility for Federal Income Tax Purposes of the New Mexico
Gross Receipts Tax Paid on the Purchase of a Newly Constructed Home," see 13
N.M.L. Rev. 625 (1983).
7-9-4.1. Repealed.
                                      ANNOTATIONS

Repeals. — Laws 1990, ch. 41, § 10 repealed 7-9-4.1 NMSA 1978, as enacted by Laws
1986, ch. 20, § 67, relating to a credit to be deducted from the gross receipts tax,
effective July 1, 1990. For provisions of former section, see the 1989 NMSA 1978 on
NMOneSource.com.