N.M. Stat. § 7-9-43 (2026)

required to entitle persons to deductions.
    A. Except as provided in Subsection B of this section, a person may establish
entitlement to a deduction from gross receipts allowed pursuant to the Gross Receipts
and Compensating Tax Act by obtaining in good faith a properly executed nontaxable
transaction certificate from the purchaser. Nontaxable transaction certificates shall
contain the information and be in a form prescribed by the department. The department
by rule may deem to be nontaxable transaction certificates documents issued by other
states or the multistate tax commission to taxpayers not required to be registered in
New Mexico. Only buyers or lessees who have a registration number or have applied
for a registration number and have not been refused one under Subsection C of Section
7-1-12 NMSA 1978 shall execute nontaxable transaction certificates issued by the
department. If the seller or lessor has been given an identification number for tax
purposes by the department, the seller or lessor shall disclose that identification number
to the buyer or lessee prior to or upon acceptance of a nontaxable transaction
certificate.

    B. Except as provided in Subsection C of this section, a person who does not
comply with Subsection A of this section may establish entitlement to a deduction from
gross receipts by presenting alternative evidence that demonstrates the facts necessary
to support entitlement to the deduction, but the burden of proof is on that person.
Alternative evidence includes:

       (1)      invoices or contracts that identify the nature of the transaction;

       (2)      documentation as to the purchaser's use or disposition of the property or
service;

       (3)    a statement from the purchaser indicating that the purchaser sold or
intends to resell the property or service purchased from the seller, either by itself or in
combination with other property or services, in the ordinary course of business. The
statement from the purchaser shall include:

             (a) the seller's name;

             (b) the date of the invoice or date of the transaction;

             (c) the invoice number or a copy of the invoice;

             (d) a copy of the purchase order, if available;

             (e) the amount of purchase; and

             (f) a description of the property or service purchased or leased; or

       (4)    any other evidence that demonstrates the facts necessary to establish
entitlement to the deduction.

   C. Subsection B of this section does not apply to sellers of electricity or fuels that
are parties to an agreement with the department pursuant to Section 7-1-21.1 NMSA
1978 regarding the deduction pursuant to Subsection B of Section 7-9-46 NMSA 1978.

   D. When a person accepts in good faith a properly executed nontaxable transaction
certificate from the purchaser, the properly executed nontaxable transaction certificate
shall be conclusive evidence that the proceeds from the transaction are deductible from
the person's gross receipts.
    E. To exercise the privilege of executing appropriate nontaxable transaction
certificates, a buyer or lessee shall apply to the department for permission to execute
nontaxable transaction certificates, except with respect to documents issued by other
states or the multistate tax commission that the department has deemed to be
nontaxable transaction certificates.

    F. If a person has accepted in good faith a properly executed nontaxable
transaction certificate, but the purchaser has not employed the property or service
purchased in the nontaxable manner or has provided materially false or inaccurate
information on the nontaxable transaction certificate, the purchaser shall be liable for an
amount equal to any tax, penalty and interest that the seller would have been required
to pay if the seller had not complied with Subsection A of this section.

    G. Any person who knowingly or willfully provides false or inaccurate information on
a nontaxable transaction certificate, to obtain a nontaxable transaction certificate or as
alternative evidence provided in support of a claim for a deduction, may be subject to
prosecution under Sections 7-1-72 and 7-1-73 NMSA 1978.

History: 1953 Comp., § 72-16A-13, enacted by Laws 1966, ch. 47, § 13; 1969, ch. 144,
§ 33; 1973, ch. 219, § 1; 1983, ch. 220, § 7; 1990, ch. 41, § 6; 1991, ch. 9, § 29; 1992,
ch. 39, § 3; 1993, ch. 31, § 9; 1994, ch. 94, § 1; 1994, ch. 98, § 1; 1997, ch. 72, § 1;
1998, ch. 89, § 3; 2001, ch. 332, § 1; 2003, ch. 330, § 1; 2005, ch. 12, § 1; 2011, ch.
148, § 1; 2018, ch. 56, § 1; 2025, ch. 130, § 68.

                                     ANNOTATIONS

The 2025 amendment, effective July 1, 2025, clarified that a taxpayer does not receive
the safe harbor of a non-taxable transaction certificate if the non-taxable transaction
certificate is obtained in bad faith; in Subsection A, after "Gross Receipts and
Compensting Tax Act by obtaining" added "in good faith".

The 2018 amendment, effective March 2, 2018, provided for alternative evidence other
than a nontaxable transaction certificate to entitle persons to a deduction from gross
receipts tax, which may include invoices or contracts that identify the nature of the
transaction, documentation as to the purchaser’s use or disposition of the property or
service, a statement from the purchaser indicating that the purchaser sold or intends to
resell the property or service purchased from the seller, either by itself or in combination
with other property or services, in the ordinary course of business, or other evidence
that demonstrates the facts necessary to establish entitlement to the deduction; in
Subsection A, deleted "All nontaxable transaction certificates of the appropriate series
executed by buyers or lessees should be in the possession of the seller or lessor for
nontaxable transactions at the time the return is due for receipts from the transaction. If
the seller or lessor is not in possession of the required nontaxable transaction
certificates within sixty days from the date that the notice requiring possession of these
nontaxable transaction certificates is given the seller or lessor by the department,
deductions claimed by the seller or lessor that require delivery of these nontaxable
transaction certificates shall be disallowed except as provided in Subsection E of this
section. The" and added "Except as provided in Subsection B of this section, a person
may establish entitlement to a deduction from gross receipts allowed pursuant to the
Gross Receipts and Compensating Tax Act by obtaining a properly executed
nontaxable transaction certificate from the purchaser"; added new Subsections B and C;
added new subsection designation "D"; in Subsection D, after "When", deleted "the
seller or lessor" and added "a person", after "accepts", added "in good faith", after "a",
added "properly executed", after the first occurrence of "nontaxable transaction
certificate", deleted "within the required time and in good faith that the buyer or lessee
will employ the property or service transferred in a nontaxable manner" and added "from
the purchaser", and after "deductible from the", deleted "seller’s or lessor’s" and added
"person’s"; deleted former Subsections B and C and redesignated former Subsection D
as Subsection E; in Subsection E, after "nontaxable transaction certificates.", deleted
the remainder of the subsection; and deleted former Subsection E and added
Subsections F and G.

The 2011 amendment, effective April 7, 2011, added Subsection E to permit the
secretary to accept evidence other than a nontaxable transaction certificate to support a
deduction from gross receipts for the sale of tangible personal property or licenses.

The 2005 amendment, effective March 15, 2005, deleted Subsection D, eliminating the
requirement that a new series of nontaxable transaction certificates be issued for
twelve-year periods. Former Subsection E is now Subsection D.

The 2003 amendment, effective June 20, 2003, in Subsection D substituted "January
1, 2005" for "January 1, 1992" three times, substituted "December 31, 2004" for
"December 31, 1991" following "transactions after" at the end of the first sentence,
substituted "2005" for "1992" following "calendar year" at the end of the second
sentence, and inserted "except the nontaxable transaction certificates issued by the
department for the period January 1, 1992 to December 31, 2001 may be executed by
buyers or lessees for transactions occurring prior to December 31, 2004" following "that
twelve-year period" at the end of the third sentence; in Subsection E, inserted "or to
have a non-filed period" following "delinquent taxpayer" near the beginning of the
second sentence, inserted "has filed returns for all non-filed periods and" following "until
the person" near the middle of the second sentence, inserted "or to have a non-filed
period" following "delinquent taxpayer" near the middle of the third sentence, inserted
"has filed returns for all non-filed periods and" following "until the person" near the end
of the third sentence, deleted "annually" following "report to the department" near the
middle of the fifth sentence, and deleted "annually" following "report to the department"
near the middle of the sixth sentence.

The 2001 amendment, effective July 1, 2001, in Subsection D, converted the former
"ten-year period" to a "twelve-year period" throughout the subsection.

The 1991 amendment, effective June 14, 1991, in the section heading, deleted
"farmers' and ranchers' statements" following "certificates" and added "Fee - Renewal"
at the end; added "Subject to the provisions of Subsection D of this section" at the
beginning of Subsection A; and added Subsection D.

Execution of certificate. — This section makes clear that only the buyer, who has or
had applied for a registration number, may execute a nontaxable transaction certificate.
House of Carpets, Inc., v. Bureau of Revenue, 1973-NMCA-034, 84 N.M. 747, 507 P.2d
1078.

Liability for payment of tax. — Where a nontaxable transaction certificate has been
properly delivered to a seller of service for resale, only the reseller of the service is
liable for payment of the gross receipts tax. House of Carpets, Inc., v. Bureau of
Revenue, 1973-NMCA-034, 84 N.M. 747, 507 P.2d 1078.

Taxable transaction not transformed by "nontaxable transaction certificate". —
Issuance of a "nontaxable transaction certificate" does not operate to transform an
otherwise taxable transaction into a nontaxable transaction. Gas Co. v. O'Cheskey,
1980-NMCA-085, 94 N.M. 630, 614 P.2d 547.

Commissioner (now department) has authority to issue regulations interpreting
and exemplifying statutes concerning the possession of nontaxable transaction
certificates and he also has such authority as may be fairly implied from the statutory
authorization. Rainbo Baking Co. v. Commissioner of Revenue, 1972-NMCA-139, 84
N.M. 303, 502 P.2d 406.

Words "properly executed" are used in this section in the sense of completing - filling
out and signing - the nontaxable transaction certificates. Leaco Rural Tel. Coop., Inc. v.
Bureau of Revenue, 1974-NMCA-076, 86 N.M. 629, 526 P.2d 426.

Taxpayer not liable if certificates incorrectly issued. — Although receipts from
transactions involving telephone service to schools, churches, police departments, fire
departments and the like were not properly deductible in the first instance because the
transactions were not sales of tangible personal property, nevertheless, when the
telephone company accepted the nontaxable transaction certificates in compliance with
this section, the deductions authorized thereby applied and protected the company from
tax liability on receipts from those transactions, regardless of the propriety or
impropriety of the certificates' issuance. Leaco Rural Tel. Coop., Inc. v. Bureau of
Revenue, 1974-NMCA-076, 86 N.M. 629, 526 P.2d 426.

Taxpayer did not accept nontaxable transaction certificate in good faith and
therefore was not entitled to safe harbor protection. — Where taxpayer, a private
prison corporation, accepted a nontaxable transaction certificate (NTTC) executed by
Torrance county (county) for taxpayer's housing of federal prisoners at the Torrance
county detention center and then filed for a tax refund for gross receipts tax paid
between 2010 and 2012, and where the administrative hearing officer for the New
Mexico taxation and revenue department concluded that taxpayer, as the seller, did not
in good faith accept the NTTC, executed by the county as the buyer, and therefore
taxpayer was not entitled to the deduction from gross receipts it received for housing
federal prisoners, the administrative hearing officer did not err in its decision, because
the tax deduction under 7-9-47 NMSA 1978, was predicated on the county reselling a
license to use the detention center to the U.S. marshall's service in the ordinary course
of the county's business, and there was no evidence that the county was reselling
licenses in the ordinary course of its business, and taxpayer was fully aware when it
accepted the NTTC that there was no resale of services because the marshall's service
was paying taxpayer directly. Taxpayer was therefore not entitled to safe harbor
protection from the payment of gross receipts tax. CCA of Tennessee v. NM Tax'n &
Revenue Dep't, 2024-NMSC-013, rev'g A-1-CA-37548, mem. op. (N.M. Ct. App. Jan.
21, 2021) (nonprecedential).

Reliance on certificates improper following change in law. — This section protects
a taxpayer when the purchaser who provided the nontaxable transaction certificates
(NTTC) has failed to live up to the promise that the actual transaction was nontaxable.
However, it does not protect taxpayers from changes in the law that render formerly
nontaxable transactions taxable. Indeed, a taxpayer has an affirmative duty to keep
informed about changes in the tax law affecting liability and cannot escape tax liability
for transactions based on NTTCs issued before a change in the law rendered the
NTTCs invalid for those transactions. Arco Materials, Inc. v. State Taxation & Revenue
Dep't, 1994-NMCA-062, 118 N.M. 12, 878 P.2d 330, rev'd on other grounds sub nom.
Blaze Constr. Co. v. Taxation & Revenue Dep't, 1994-NMSC-110, 118 N.M. 647, 884
P.2d 803, cert. denied, 514 U.S. 1016, 115 S. Ct. 1359, 131 L. Ed. 2d 216 (1995).

Certificate inapplicable to in-state ambulance receipts. — A nontaxable transaction
certificate accepted by a taxpayer who will make initial use of the product or service
outside of this state does not apply to receipts from the taxpayer's in-state ambulance
service. McKinley Ambulance Serv. v. Bureau of Revenue, 1979-NMCA-026, 92 N.M.
599, 592 P.2d 515.