Sales tax is consumption tax charged on purchase of goods and services. In some US states certain items are excluded from the purview of sales tax.
In some states there is gross receipts tax at 5%.The items that come under the gross receipts tax are –
- Sale of goods; and
- Sale of services.
This tax is passed on from retailer to consumers like sales tax. The state doesn’t take objection in this type of action by the retailers. Proceeds from sale of indebtness by an entity and repayment from indebtness will not come under the gross receipts tax structure. There are several other items which are exempted from the purview of this tax structure:-
- Receipts from leasing;
- Receipts from granting authority to use someone’s property and information;
- Selling a public utility to an Indian tribe;
- Receipts from garbage collection and sewage related services;
- Entertainment or athletic services for general public,
- Receipts of water utility,
- Imposition of criminal and civil fines,
- Hotel and Motels engaging in interstate telecommunication facility for guests, etc.
An entity is not liable to file tax returns for paying Gross Receipts and Compensating Tax Act. A person must register oneself with the respective authorities to pay gross receipts tax in the State of New Mexico. In case you require more clarifications it is better to get your case evaluated by a New Mexico Corporate Attorney.