2021 New Mexico Statutes
Chapter 7 - Taxation
Article 9 - Gross Receipts and Compensating Tax
Section 7-9-46 - Deduction; gross receipts tax; governmental gross receipts; sales to manufacturers.
A. Receipts from selling tangible personal property may be deducted from gross receipts or from governmental gross receipts if the sale is made to a person engaged in the business of manufacturing who delivers a nontaxable transaction certificate to the seller or provides alternative evidence pursuant to Section 7-9-43 NMSA 1978. The buyer must incorporate the tangible personal property as an ingredient or component part of the product that the buyer is in the business of manufacturing.
B. Receipts from selling tangible personal property that is a consumable and used in such a way that it is consumed in the manufacturing process of a product, provided that the tangible personal property is not a tool or equipment used to create the manufactured product, to a person engaged in the business of manufacturing that product and who delivers a nontaxable transaction certificate or provides alternative evidence pursuant to Section 7-9-43 NMSA 1978 to the seller may be deducted from gross receipts or from governmental gross receipts.
C. Regarding the deduction allowed pursuant to Subsection B of this section, a nontaxable transaction certificate is required if the seller is a seller of electricity or fuel and is a party to an agreement with the department pursuant to Section 7-1-21.1 NMSA 1978.
D. The purpose of the deductions provided in this section is to encourage manufacturing businesses to locate in New Mexico and to reduce the tax burden, including reducing pyramiding, on the tangible personal property that is consumed in the manufacturing process and that is purchased by manufacturing businesses in New Mexico.
E. The department shall annually report to the revenue stabilization and tax policy committee the aggregate amount of deductions taken pursuant to this section, the number of taxpayers claiming each of the deductions and any other information that is necessary to determine that the deductions are performing the purposes for which they are enacted.
F. A taxpayer deducting gross receipts pursuant to this section shall report the amount deducted separately for each deduction provided in this section and attribute the amount of the deduction to the appropriate authorization provided in this section in a manner required by the department that facilitates the evaluation by the legislature of the benefit to the state of these deductions.
G. As used in Subsection B of this section, "consumable" means tangible personal property that is incorporated into, destroyed, depleted or transformed in the process of manufacturing a product:
(1) including electricity, fuels, water, manufacturing aids and supplies, chemicals, gases, repair parts, spares and other tangibles used to manufacture a product; but
(2) excluding tangible personal property used in:
(a) the generation of power;
(b) the processing of natural resources, including hydrocarbons; and
(c) the preparation of meals for immediate consumption on- or off-premises.
History: 1953 Comp., § 72-16A-14.1, enacted by Laws 1969, ch. 144, § 36; 1992, ch. 100, § 4; 2012, ch. 5, § 4; 2013, ch. 160, § 9; 2021, ch. 65, § 13; 2021, ch. 66, § 2.
ANNOTATIONS2021 Multiple Amendments. — Laws 2021, ch. 65, § 13, effective July 1, 2021, and Laws 2021, ch. 66, § 2, effective January 1, 2022, enacted different amendments to this section that cannot be reconciled. Laws 2021, ch. 65, § 13, effective July 1, 2021, is set out above. The provisions of Laws 2021, ch. 66, § 2, become effective January 1, 2022. See section that follows.
Laws 2021, ch. 65, § 13 [set out above], effective July 1, 2021, provided that a taxpayer may provide the taxation and revenue department alternative evidence to claim a gross receipts tax deduction in lieu of providing a non-taxable transaction certificate, and provided that a nontaxable transaction certificate is required if the seller is a seller of electricity or fuel and is a party to an agreement with the department pursuant to a certain section of law; in Subsection A, after "certificate to the seller", added "or provides alternative evidence pursuant to Section 7-9-43 NMSA 1978", and after "The buyer", deleted "delivering the nontaxable transaction certificate"; in Subsection B, in the introductory paragraph, after "certificate", added "or provides alternative evidence pursuant to Section 7-9-43 NMSA 1978", and after "deducted", deleted "in the following percentages", and deleted former Paragraphs B(1) through B(5); and added a new Subsection C and redesignated former Subsections C through F as Subsections D through G, respectively.
The 2013 amendment, effective July 1, 2013, provided a definition of "consumable" for purposes of the deduction of receipts from sales to manufacturers; in Subsection B, in the introductory sentence, after "tangible personal property that is", added "a consumable and"; and added Subsection F.
Applicability. — Laws 2013, ch. 160, § 14 provided that Laws 2013, ch. 160, § 9 applies to gross receipts received on or after July 1, 2013.
The 2012 amendment, effective January 1, 2013, provided a deduction for receipts from selling tangible personal property that is consumed in the manufacturing process of a product and added Paragraphs B, C, D and E.
The 1992 amendment, effective July 1, 1992, inserted "governmental gross receipts" in the section heading; inserted "or from governmental gross receipts" in the first sentence; and substituted "that" for "which" in the second sentence.
Entitlement to manufacturing deduction not found. — A biotechnology company whose expertise was in the diagnosis of genetic disorders that could be detected through the appearance of chromosomes, and who produced tangible objects that were provided to its customers, such as a written report of its experts' diagnosis and a laminated karyotype, which consisted of photographs of chromosomes that were numbered and pasted onto a piece of laminated cardboard, did not establish its entitlement to a manufacturing deduction, since the company could not identify any out-of-state purchases that would be subject to the compensating tax of products incorporated into its reports or laminated karyotypes. The department, whose assessment is assumed correct, had identified as subject to the compensating tax such items as microscopes, sinks, and furniture, which undoubtedly were not incorporated into the documents or laminated karyotypes. Vivigen, Inc. v. Minzner, 1994-NMCA-027, 117 N.M. 224, 870 P.2d 1382.
Am. Jur. 2d, A.L.R. and C.J.S. references. — Sales or use tax upon containers or packaging materials purchased by manufacturer or processor for use with goods he distributes, 4 A.L.R.4th 581.
Items or materials exempt from use tax as becoming component part or ingredient of manufactured or processed article, 89 A.L.R.5th 493.
