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Deduction lifts gross receipts tax burden for businesses

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New Mexico’s gross receipts tax might make many business owners grumble, but the tax code contains provisions to help entrepreneurs compete with out-of-state rivals who aren’t subject to the tax.
Taxpayers that sell services to out-of-state buyers when the product of the service is initially used outside the state and the product is delivered to the buyer outside New Mexico may be eligible for a deduction.
For transactions to be deductible, certain guidelines must be met.
Out of state buyer: An out-of-state buyer has no offices or places of business in New Mexico. If the buyer is an individual, he is not a resident of New Mexico.
Product of the service: For an architect, the product of the service is the building plan she prepares. For a writer, it is the manuscript. The product of a service may be intangible, such as when a psychiatrist treats a patient, but it’s described as the benefit received by the buyer from the performance of the service.
Delivery outside New Mexico: An out-of-state buyer receives the product of a service where he or his agent or employee accepts the product. An investment adviser, for example, delivers the product of her service when she telephones her client outside of New Mexico or e-mails advice to her out-of-state client at an out-of-state location.