Finance New Mexico: Workshop Helps New Businesses Understand Tax Law
By Sandy Nelson
Finance New Mexico
New employers can find it confusing to navigate New Mexico’s system for computing, reporting and paying business taxes. But the state Tax and Revenue Department expects them to figure it out and comply.
To simplify the process, the TRD offers free workshops, including one in Albuquerque Jan. 28 that promises to give new employers an overview of state tax laws, walk them through basic legal requirements for workers’ compensation insurance and workplace safety and show them how to add up what they owe on the sales of products or services.
Taxing gross revenue
New Mexico doesn’t have the traditional sales tax most states do. Rather than assessing the buyer a percentage of his or her purchase price, New Mexico requires the seller of a product or service to collect that add-on fee—the gross receipts tax or GRT—and pay it directly to the state.
The tax applies to the total income a business receives from all applicable sources during an accounting period. In New Mexico, the GRT applies to businesses and individuals who sell property or goods and charge for services. (An explanation of which transactions are and are not exempt or deductible is available at the TRD website.)
Most businesses will add the GRT to the customer’s receipt or invoice, just as businesses in other states add a sales tax. But even if the business doesn’t pass it through to consumers, and even if the buyer lives outside New Mexico, the business is required to pay the tax.
The GRT differs from city to city in New Mexico, as cities, counties and special taxing districts are allowed to add their own “local options” assessments (within limits set by the legislature) to the state’s 5.125 percent to cover the costs of community services, including firefighting, law enforcement and public parks upkeep.
Businesses pay the GRT using the online combined reporting system (CRS) portal, and TRD disburses local portions to each taxing entity.
Lots to learn
Besides getting a crash course in GRT 101, participants in TRD’s workshop will learn the importance of registering with the state so TRD knows the business is charging the appropriate local GRT rate. It’s better to know this ahead of time, because businesses out of compliance can face steep fines.
New employers also learn about the State Unemployment Tax Act, workers’ compensation insurance laws, payroll taxes, workplace safety requirements and the difference between employees and independent contractors. An overview of federal tax requirements, including the need for a federal Employer Identification Number, is part of the workshop curriculum.
The daylong Albuquerque workshop is set for 8:30 a.m. to 3:30 p.m. in the first-floor conference center of the Bank of the West building at 5301 Central Ave. N.E.
Finance New Mexico connects individuals and businesses with skills and funding resources for their business or idea. To learn more, go to www.FinanceNewMexico.org.