New Mexico Register / Volume XXIX, Issue
24 / December 27, 2018
This is an amendment to 3.2.209 NMAC, Sections 9, 11-15, 18, 22, 23 and adding
26, effective 12/27/2018.
3.2.209.9 ITEMS THAT ARE INGREDIENT OR COMPONENT PARTS - OIL FIELDS:
Receipts from the sale of
casing, cement, shoes and float equipment, casing heads and well heads may be
deducted from gross receipts if the other requirements of Section 7-9-51 NMSA
1978 are met and a nontaxable transaction certificate [is issued] or
alternative evidence is provided by a well drilling company performing a
turnkey project, as these items become ingredient or component parts of the
construction project.
[12/5/1969, 3/9/1972,
11/20/1972, 3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986,
11/26/1990, 11/15/1996; 3.2.209.9 NMAC - Rn, 3 NMAC 2.51.9 & A, 5/31/2001;
A, 12/27/2018]
3.2.209.11 SALE OF WATER:
Receipts from selling water to
a construction company may be deducted from gross receipts if the sale is made
to a person engaged in the construction business who delivers a nontaxable
transaction certificate or alternative evidence and if the water becomes
an ingredient or component part of the finished product such as in concrete or
in moistening fill. However, if the water is used as merely a lubricating
agent, such as in well drilling, it is not a component part of the finished
product and [is] the receipts are not deductible.
[12/5/1969, 3/9/1972,
11/20/1972, 3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986,
11/26/1990, 11/15/1996; 3.2.209.11 NMAC - Rn, 3 NMAC 2.51.11, 5/31/2001; A, 12/27/2018]
3.2.209.12 FORMS AND FUEL:
A. Receipts from selling lumber for
forms and fuel for trucks to a person engaged in the construction business may
not be deducted from gross receipts because neither the lumber nor the fuel
actually becomes an ingredient or component part of the finished product.
However, if the form lumber is later used for sheeting in the construction
project, the form lumber may be purchased with a nontaxable transaction certificate
(nttc) or alternative evidence pursuant to Section 7-9-51 NMSA 1978.
B. [If, in the situation described
in Subsection A of Section 3.2.209.12 NMAC, the person engaged in the
construction business delivered an nttc to a supplier for the purchase of
lumber and the buyer converts some to use as forms and if the supplier did not
pay the gross receipts tax on those receipts, the person engaged in the
construction business will be subject to the compensating tax.
C.] The receipts from selling screed pins
used in plastering and forms which must, by reason of design, be left in place
after concrete has been poured over them may be deducted from gross receipts if
the sale is made to a person engaged in the construction business who delivers
[an] a nontaxable transaction certificate (nttc) or
alternative evidence.
[12/5/1969, 3/9/1972,
11/20/1972, 3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986,
11/26/1990, 11/15/1996; 3.2.209.12 NMAC - Rn, 3 NMAC 2.51.12 & A, 5/31/2001;
A, 12/27/2018]
3.2.209.13 WELDING RODS:
Receipts from selling welding
electrodes (welding rods), which melt to provide filler or fused metal, to a
person engaged in the construction business may be deducted from gross receipts
if the buyer delivers a nontaxable transaction certificate (nttc) or
alternative evidence to the seller [If] and the buyer
delivering the nttc [does not use] uses the welding electrodes in
such a way that they become an ingredient or component part of the construction
project [or comply with other requirements of Section 7-9-51 NMSA 1978,
compensating tax will be imposed upon the buyer].
[3/9/1972, 11/20/1972,
3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990,
11/15/1996; 3.2.209.13 NMAC - Rn, 3 NMAC 2.51.13 & A, 5/31/2001; A, 12/27/2018]
3.2.209.14 PAINT AND PAINTING SUPPLIES:
A. The receipts from the sale of paint,
filler, thinner, varnish or similar items to a person engaged in the painting
business who delivers a nontaxable transaction certificate (nttc) or
alternative evidence to the seller may be deducted from the seller's gross
receipts.
B. [If the person engaged in the
painting business does not use the items purchased with the nttcs as required
by Paragraphs (1) and (2) of Subsection B of Section 7-9-51 NMSA 1978, the
compensating tax is due.
C.] Receipts
from the sale of brushes, sandpaper, scrapers, sand for sandblasting, machinery
and similar items used in the painting business to persons engaged in the
painting business may not be deducted from gross receipts because such items do
not become an ingredient or component part of the construction project.
[3/9/1972, 11/20/1972,
3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990,
11/15/1996; 3.2.209.14 NMAC - Rn, 3 NMAC 2.51.14 & A, 5/31/2001; A, 12/27/2018]
3.2.209.15 SPRINKLER SYSTEMS:
Receipts from selling pipes,
joints, nozzles and similar items of tangible personal property which become
ingredient or component parts of a sprinkler system to a person engaged in the
business of selling and installing sprinkler systems may be deducted from gross
receipts if the buyer delivers a nontaxable transaction certificate or
alternative evidence.
[3/9/1972, 11/20/1972,
3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990,
11/15/1996; 3.2.209.15 NMAC - Rn, 3 NMAC 2.51.15, 5/31/2001; A, 12/27/2018]
3.2.209.18 WINDOWS AND DOORS:
A. Receipts from the sale
of screens, screen doors and windows to a person engaged in the construction
business may be deducted from the seller's gross receipts if the buyer delivers
a nontaxable transaction certificate (nttc) or alternative.
B. [If the person
engaged in the construction business does not use the screens, screen doors and
windows purchased with the nttc as required by Paragraphs (1) and (2) of
Subsection B of Section 7-9-51 NMSA 1978, the compensating tax is due.
C.] Receipts from the sale of aluminum
panel, aluminum T bar, aluminum angle, bulk or roll screen stock and jalousie
glass to a person who produces screens, screen doors or windows and sells them
installed in a construction project may be deducted from the seller's gross
receipts pursuant to Section 7-9-51 NMSA 1978 if the buyer delivers an nttc or
alternative evidence.
[ D. If the
person engaged in the construction business does not use the items described in
Subsection C of Section 3.2.209.18 NMAC and purchased with the nttc as required
by Paragraphs (1) and (2) of Subsection B of Section 7-9-51 NMSA 1978, the
compensating tax is due.]
[3/9/1972, 11/20/1972,
3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990,
11/15/1996; 3.2.209.18 NMAC - Rn, 3 NMAC 2.51.18 & A, 5/31/2001; A, 12/27/2018]
3.2.209.22 INGREDIENT AND COMPONENT PARTS OF A CONSTRUCTION PROJECT:
In determining whether tangible
personal property will become an ingredient or component part of a construction
project, the department will use the following criteria, but not exclusively:
A. [Did the tangible
personal property become “fixtures” as defined under Subsection I of Section
3.2.1.11 NMAC.
B.] Was the person performing the work
using the tangible personal property required to be licensed under the
Construction Industries Licensing Act, Sections 60-13-1 to 60-13-59 NMSA 1978.
[C.] B. Did
the work for which the tangible personal property was used require a permit
from one or more of the trade boards established by the Construction Industries
Licensing Act or from a municipal building or mechanical department.
[6/18/1979, 4/7/1982,
5/4/1984, 4/2/1986, 11/26/1990, 11/15/1996; 3.2.209.22 NMAC - Rn, 3 NMAC
2.51.22 & A, 5/31/2001; A, 12/27/2018]
3.2.209.23 CONSTRUCTION
MATERIALS USED IN NONTAXABLE CONSTRUCTION PROJECTS:
A. A seller of [tangible
personal property] construction material may not claim the deduction
from gross receipts provided by Section 7-9-51 NMSA 1978, or accept a
nontaxable transaction certificate (NTTC) in good faith as required by Section
7-9-43 NMSA 1978, when the seller can reasonably determine that the [tangible
personal property] construction material sold will be incorporated
into a construction project which will not be subject to gross receipts tax
upon completion because it is located outside New Mexico.
B. A seller can reasonably
determine that a project is located outside New Mexico when the seller has
documents identifying the location of the project.
C. No construction project
located outside New Mexico will be subject to gross receipts tax upon
completion.
[ D. This
version of 3.2.209.23 NMAC applies retroactively to transactions occurring on
or after March 7, 2000.]
[1/24/1986, 4/2/1986,
11/26/1990, 11/15/1996, 3.2.209.23 NMAC - Rn & A, 3 NMAC 2.51.23,
10/31/2000; A, 12/27/2018]
3.2.209.26 MATERIALS
USED IN GOVERNMENT OR NON-PROFIT PROJECTS:
Receipts from the sale to a
person engaged in the construction business who delivers a nontaxable
transactions certificate or alternative evidence to the seller of construction
materials that are tangible personal property, whether removable or
non-removable, that is or would be classified for depreciation purposes as
three-year property, five-year property, seven-year property or 10-year
property by Section 168 of the Internal Revenue Code of 1986 as that section
may be amended or renumbered, may be deducted if the construction material will
ultimately be deductible pursuant to Section 7-9-54 or 7-9-60 NMSA 1978
provided that the remaining construction services portion of the project is
subject to gross receipts tax.
[3.2.209.26 NMAC - N, 12/27/2018]