Regulatory and Industry News Alerts from Armanino

NM Issues Guidance on Gross Receipts Tax on Marketplace Providers, Sellers

by Malcolm Ellerbe
February 24, 2021


The New Mexico Taxation and Revenue Department recently issued guidance addressing the imposition of the gross receipts tax on marketplace providers (this gross receipts tax is generally treated like a sales tax). The publication also addresses the tax obligations of marketplace sellers who use a marketplace to sell property or services subject to gross receipts tax.


Who Is Subject to the Gross Receipts Tax?

In New Mexico, a tax is imposed on the total gross receipts of an individual or business “engaged in business” in the state. For individuals or businesses that lack physical presence, a taxpayer is deemed to be “engaged in business” in the state if they have at least $100,000 of taxable gross receipts in the previous calendar year.

Marketplace providers should recognize that their gross receipts will include any fees charged to marketplace sellers as well as all receipts collected for facilitated sales, leases and licenses. This is true even if the payment received from the buyer is eventually transferred to the marketplace seller.

Marketplace Providers

Marketplace providers are individuals or businesses that facilitate the sale, lease or license of tangible personal property, services or licenses for the use of real property on behalf of marketplace sellers or on their own behalf. All marketplace providers deemed to be engaged in business in New Mexico must register with the department to file and pay gross receipts tax.

Marketplace Sellers

A marketplace seller is an individual or business that sells, leases or licenses tangible personal property or services through a marketplace provider. For purposes of the gross receipts tax, a marketplace seller which sells tangible personal property or services through a marketplace provider has gross receipts.

Filing Requirement & Exemptions

If an individual engages in business in New Mexico, either by meeting the economic threshold of $100,000 in taxable gross receipts in the previous calendar, or by being physically located in New Mexico, the seller must register, report and pay New Mexico gross receipts tax.

The department’s guidance clarifies that marketplace sellers are required to report sales made through a marketplace provider. This is true even though the marketplace provider will likely be required to report the same transaction on its own tax return.

If the marketplace provider remits the tax due on the transaction, then the marketplace seller will be allowed to deduct the gross receipts attributable to the transaction. However, if the marketplace provider does not remit the tax on the transaction, the marketplace seller would be required to report and remit the gross receipts tax due on the taxable sale.

Currently, New Mexico uses origin-based sourcing, meaning that out-of-state tax marketplace sellers and providers are currently required to pay the 5.125% out-of-state tax rate. Effective July 1, 2021, New Mexico will transition to destination-based sourcing. This means that the gross receipts tax rate on the sale of property will be based on the location where the property is received by the buyer.


This guidance from the New Mexico Taxation and Revenue Department highlights the increasing focus of states on the tax treatment of marketplace providers and sellers. It also reveals the tensions involved in allocating responsibility for tax obligations between marketplace sellers and providers. New Mexico’s publication foreshadows a sprawling area of regulation that will continue to evolve as marketplace providers emerge in new industries.

Out-of-state sellers without a physical presence in New Mexico should review their operations to determine whether they have nexus and are impacted by the regulations affecting marketplace providers and marketplace sellers.

If you have any questions about the New Mexico gross receipts tax or need assistance, contact our experts.

February 24, 2021

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