Questions On Gross Receipts Tax

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b. New Mexico

i. Gross Receipts Tax - Generally
The state gross receipts tax is a tax on the privilege of engaging in business in New Mexico. “Engaging in business” means carrying on or causing to be carried on any activity with the purpose of direct or indirect benefit,” with certain exceptions inapplicable to the Company’s facts. The tax is assessed against the gross proceeds of a business.
For purposes of the GRT, a presumption exists that all receipts of a person engaging in business are subject to the GRT, unless the taxpayer can make an affirmative showing that the receipts are not taxable. The taxpayer bears the burden of proving any exemption or deduction.
Gross receipts which are deductible are to be contrasted with gross
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The court stated that the “[a]doption of the destination principle does not require us to construe the gross receipts tax to include principles of transfer of title, transfer of possession, or risk of loss, which are concepts that were not included in the language employed by our legislature. Therefore, we hold that the destination principle applies to determine whether an interstate transaction is a taxable sale under our gross receipts tax laws.” While the court does not hold the principles of transfer of title, transfer of possession, or risk of loss as dispositive, they are certainly important in analyzing the situs of the sale. iii. Transactions in the Stream of Interstate Commerce
A deduction is allowed from the gross receipts tax for receipts from transactions in interstate commerce if the imposition of the tax would be unlawful under the Constitution. Presumably, to the extent that taxation of receipts derived from transactions in foreign commerce would violate the Constitution, one may conclude that New Mexico could not impose its gross receipts tax.
The deduction for receipts derived from transactions in interstate commerce has been a part of the gross receipts tax for many years. Contemporary commerce clause doctrine has held that there is no bar to the imposition of a state 's tax on income or receipts from a transaction merely because a transaction is in interstate commerce, as long as certain requirements are met.
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