TITLE 3 TAXATION
CHAPTER 2 GROSS RECEIPTS TAXES
PART 218 DEDUCTION - GROSS RECEIPTS TAX -
SALES TO CERTAIN ORGANIZATIONS
3.2.218.1 ISSUING AGENCY: Taxation and Revenue Department, Joseph M.
Montoya Building, 1100 South St. Francis Drive, P.O. Box 630, Santa Fe NM
87504-0630.
[11/15/96; 3.2.218.1 NMAC - Rn, 3
NMAC 2.60.1, 6/14/01]
3.2.218.2 SCOPE: This part applies to each person
engaging in business in New Mexico.
[11/15/96; 3.2.218.2 NMAC - Rn, 3
NMAC 2.60.2, 6/14/01]
3.2.218.3 STATUTORY AUTHORITY: Section 9-11-6.2 NMSA 1978.
[11/15/96; 3.2.218.3 NMAC - Rn, 3
NMAC 2.60.3, 6/14/01]
3.2.218.4 DURATION: Permanent.
[11/15/96; 3.2.218.4 NMAC - Rn, 3
NMAC 2.60.4, 6/14/01]
3.2.218.5 EFFECTIVE DATE: November 15, 1996, unless a later date
is cited at the end of a section, in which case the later date is the effective
date.
[11/15/96; 3.2.218.5 NMAC - Rn, 3
NMAC 2.60.5 & A, 6/14/01]
3.2.218.6 OBJECTIVE: The objective of this part is to
interpret, exemplify, implement and enforce the provisions of the Gross
Receipts and Compensating Tax Act.
[11/15/96; 3.2.218.6 NMAC - Rn, 3
NMAC 2.60.6, 6/14/01]
3.2.218.7 DEFINITIONS: [RESERVED]
[11/15/96; 3.2.218.7 NMAC - Rn, 3
NMAC 2.60.7, 6/14/01]
3.2.218.8 SALE TO A 501(c)(3) ORGANIZATION: Receipts from selling tangible personal
property to organizations which demonstrate to the department that they have
been granted an exemption from federal income tax as an organization described
in Section 501(c)(3) of the United States Internal Revenue Code of 1954,
Section 501(c)(3) of the United States Internal Revenue Code of 1986 or Section
101(6) of the United States Internal Revenue Code of 1939 may be deducted from
the seller's gross receipts if the buyer delivers a nontaxable transaction
certificate (nttc) to the seller and if the tangible personal property sold is
employed by the 501(c)(3) organization in its ordinary functions. Receipts from
the sale of tangible personal property to a 501(c)(3) or 101(6) organization
which are employed in the conduct of an unrelated trade or business as defined
in Section 513 of the United States Internal Revenue Code of 1986, as amended
or renumbered, or Section 422(b) of the United States Internal Revenue Code of
1939, may not be deducted pursuant to Section 7-9-60 NMSA 1978. If the 501(c)(3)
organization delivering the nttc employs the property purchased in the conduct
of an unrelated trade or business, 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;
3.2.218.8 NMAC - Rn, 3 NMAC 2.60.8 & A, 6/14/2001]
3.2.218.9 SERVICES,
LEASES, CONSTRUCTION SERVICES:
A. Receipts from services performed for and from leases
entered into with 501(c)(3) organizations are not deductible pursuant to
Section 7-9-60 NMSA 1978.
B. Except as provided in Subsection C, receipts from
selling construction, including construction material to a 501(c)(3)
organization, are receipts derived from performing a service and are not
eligible for the deduction pursuant to Section 7-9-60 NMSA 1978.
C. Receipts from
selling construction material that is tangible personal property, whether
removable on 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, including indirect costs related to the asset basis, by
Section 168 of the Internal Revenue Code of 1986, as that section may be
amended or renumbered, may be deducted from gross receipts when the sale is
made to a 501(c)(3) organization.
[3/16/1979,
6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990, 11/15/1996; 3.2.218.9 NMAC
- Rn, 3 NMAC 2.60.9 & A, 6/14/2001; A, 12/27/2018]
3.2.218.10 CUSTOM SOFTWARE: Because it is a service, receipts
from developing or selling custom software for 501(c)(3) organizations are not
deductible under Section 7-9-60 NMSA 1978.
[4/30/97; 3.2.218.10 NMAC - Rn, 3
NMAC 2.60.10 & A, 6/14/01]
3.2.218.11 SALE
OF MEALS: Meals are tangible personal property. Therefore receipts from selling meals to a
501(c)(3) organization are receipts from selling tangible personal
property. Such receipts may be deducted
from gross receipts under Section 7 9 60 NMSA 1978 if the organization delivers
a properly executed Type 9 non-taxable transaction certificate or alternative
evidence to the seller. Sales of meals
directly to members of a 501(c)(3) organization may not be deducted under
Section 7 9 60 NMSA 1978 even if the meals are served at a function of the
organization. The 501(c)(3) organization
is an entity distinct from its members.
[10/29/1999;
3.2.218.11 NMAC - Rn, 3 NMAC 2.60.11 & A, 6/14/2001, 12/27/2018]
3.2.218.12 LODGING: Receipts derived from the rental of
lodging in hotels, motels, boarding houses or similar facilities to a Section
501(c)(3) organization may not be deducted from gross receipts pursuant to
Section 7-9-60 NMSA 1978 because the rental of such lodging is not the sale of
tangible personal property.
[1/15/00; 3.2.218.12 NMAC - Rn, 3
NMAC 2.60.12 & A, 6/14/01]
3.2.218.13 SALE
OF GASES: Gases, such as natural gas, nitrogen, carbon
dioxide, helium, oxygen, propane, acetylene and nitrous oxide, are tangible
personal property. Therefore receipts
from selling gases to a 501(c)(3) organization may be deducted from gross
receipts under Section 7 9 60 NMSA 1978 if the organization delivers a properly
executed non-taxable transaction certificate or alternative evidence to the
seller.
[3.2.218.13 NMAC -
N, 3/15/2010; A, 12/27/2018]
3.2.218.14 SINGLE
MEMBER LIMITED LIABILITY COMPANY WHOSE SOLE MEMBER IS A 501(c)(3) ORGANIZATION:
A. A single member limited liability company (llc) whose
sole member is a 501(c)(3) organization will be treated like a 501(c)(3)
organization and receive the same treatment for purposes of Section 7-9-60 NMSA
1978 so long as the llc is recognized by the internal revenue service as a
disregarded entity for federal income tax purposes.
B. Receipts from the sale of tangible personal property to
an llc described in Subsection A above when the property is employed in the
conduct of an unrelated trade or business as defined in Section 513 of the
Internal Revenue Code of 1986, as amended or renumbered, are not deductible
pursuant to Subsection A of Section 7-9-60 NMSA 1978. If the llc, or its 501(c)(3) single member,
delivering the non-taxable transaction certificate or alternative evidence
employs the tangible personal property in the conduct of an unrelated trade or
business, the llc, or its 501(c)(3) single member, is liable for the seller’s
gross receipts tax plus penalty and interest pursuant to Section 7-9-43 NMSA
1978.
[3.2.218.14 NMAC -
N, 1/15/2015; A, 12/27/2018]
HISTORY OF
3.2.218 NMAC:
Pre-NMAC History:
BOR 67-2, NM Gross Receipts and
Compensating Tax Regulations, September 1967, filed 9/29/1967.
BOR 69-4, Regulations in Effect
and Pertaining to the New Mexico Gross Receipts and Compensating Tax Act,
12-5-69, filed 12/5/1969.
BOR 72-4, Regulations in Effect
and Pertaining to the New Mexico Gross Receipts and Compensating Tax Act, 3/9/1972,
filed 3/9/1972.
BOR 74-2, Regulations in Effect
and Pertaining to the New Mexico Gross Receipts and Compensating Tax Act,
12/15/73, filed 3/20/1974.
BOR 76-1, Regulations in Effect
and Pertaining to the New Mexico Gross Receipts and Compensating Tax Act, 7/26/1976,
filed 7/26/1976.
R.D.79-1, Gross Receipts and
Compensating Tax Act Regulations, filed 6/18/1979.
R.D. Rule No. 82, Regulations
Pertaining to the Gross Receipts and Compensating Tax Act, Sections 7-9-1 to
7-9-80.1 NMSA 1978, filed 4/7/1982.
R.D. Rule No. 84, Regulations
Pertaining to the Gross Receipts and Compensating Tax Act, Sections 7-9-1 to
7-9-80.1 NMSA 1978, filed 5/4/1984.
TRD Rule No. 9-86, Regulations
Pertaining to the Gross Receipts and Compensating Tax Act, Sections 7-9-1 to
7-9-80.1 NMSA 1978, filed 4/2/1986.
TRD Rule GR-90, Regulations
Pertaining to the Gross Receipts and Compensating Tax Act, Sections 7-9-1 to
7-9-80.1 NMSA 1978, filed 11/26/1990.
History
of Repealed Material: [RESERVED]
NMAC
History:
3 NMAC 2.60, Deduction - Gross
Receipts Tax - Sales to Certain Organizations, filed 11/4/1996.
3.2.218 NMAC, Deduction - Gross
Receipts Tax - Sales to Certain Organizations, filed 6/4/2001.