1 CRS-1 New Business Workshop 07/08/2011

2 “Taxes are the price we pay for civilization.” Justice Oliver Wendell Holmes, Jr.

Buying an existing business? Be sure they are in good standing with the State

Register with NM Taxation & Revenue by applying for a CRS Business Tax ID

TO REPRESENT CLIENT ON BUSINESS PERTAINING TO TAXES NOTIFY TAXATION AND REVENUE DEPT OF AUTHORIZED REPRESENTATIVE

How do I cancel my business? Where do I Report Changes?

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CRS-1 Filer’s Kit Contents  Front cover – Announcements  Due Dates  Department Office Locations/Contacts  GRT Rate Schedule  CRS-1 Form Written Instructions  CRS-1 Report Forms  Other Forms & Information

Filing Period Requirements  You may choose your filing status as long as you do not report an AVERAGE of $ or more in total tax per month. This will require you to file MONTHLY.  If you owe $25,000 or more, you must make arrangements to file and pay by EFT.

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Business Location Determines Tax Rate  If you are in the construction business, your tax rate is determined by the location of each construction project.  If you are located in a municipality within a county, your tax rate is that of the municipality.  If you are a craftsperson who sells at craft fairs where you rent a booth, that is your location for that period of time. You must use the corresponding tax rate.  Service businesses use their base tax rate from their home or physical location.

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Cr sCr s- 1 for m Gross Receipts Tax Compensating Tax Withholding Tax

16 Gross Receipts Tax  Ten states have some variation of Gross Receipts Tax.  In most cases leads to “tax pyramiding” (value added tax).  Low rates, typically less than 1%.  In New Mexico used as a replacement for sales tax.

Gross Receipts Tax  Unlike sales tax – “seller is responsible to file reports & pay over taxes”  Tax for the privilege of doing business  Apply to sale or lease of property and services  Prevalent practice – pass the tax to the customer

Taxable, Exempt, and Deductible Most transactions in NM are taxable unless specified by an act of legislature to be deductible or exempt. What is the difference between exemptions & deductions?

Exemption Frees the seller of the requirement to report receipts from the exempted type of activity.

Transactions involving Non-Taxable Transaction Certificates (NTTCs Non-Taxable Transaction Certificates (NTTCs) Requires the seller to report the receipts, but allows them to deduct the receipts before calculating tax liability. The Department requires taxpayers to retain substantiation in their records when claiming a deduction from gross receipts. Deduction

21 Non-Taxable Transaction Certificates (NTTC)

22 NMSA 1978 Statute Nontaxable Transaction Certificate and Other Evidence Required to Entitle Persons to Deductions.

23 Issued by the Buyer/Lessee to the Seller/Lessor For the purchase or lease of material and/or services for resale Buyer/Lessee does not pay Gross Receipts Tax on purchase Creates deduction for Seller/Lessor Can be generated online, and printed if necessary

Get online and get out of line! The Taxation and Revenue Department has developed NTTC-NET, a paperless system on the web, to expedite the processing of Nontaxable Transaction Certificates (NTTCs). Taxpayers can apply for, execute and request additional NTTCs by logging on to NTTC- NET through The Taxation and Revenue Department has developed NTTC-NET, a paperless system on the web, to expedite the processing of Nontaxable Transaction Certificates (NTTCs). Taxpayers can apply for, execute and request additional NTTCs by logging on to NTTC- NET through ACTIVE SINCE JULY 1, 2005 NTTC-NET

Types of NTTCs  Type 2 – Purchase of tangibles for resale  Type 5 – Purchase of services for resale  Type 6 – For construction contractor’s materials and services  Type 9 – For tangibles purchased by not-for-profit (501c3) and governmental agencies  Type 10 – Available to persons that hold an interest in a qualified generating facility  Type 15 – For tangibles purchased by qualified federal contractors  Type 16 – For qualified Film Production companies materials and services  OSB are not available online - Contact the District office

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OSB NTTC’S  Type OSB NTTCs are issued to registered New Mexico sellers / lessors to execute to Out-of-State Buyers who are not registered with the department.  Will resell tangible personal property outside of New Mexico.

28 New Mexico sellers may accept the Multijurisdiction Uniform Sales and Use Tax Certificate (MTC) from out-of-state buyers not required to register in New Mexico as documentation for three types of deductions: 1. Receipts from sales of tangible personal property or licenses for resale (Section ); 2. Receipts from sales of tangible personal property to manufacturers who will incorporate the property as an ingredient or component part of the product the manufacturer is in the business of making (Section ); and 3. Receipts from services performed directly upon tangible personal property a manufacturer is in the business of making, or upon ingredient or component parts of that product (Section ).

29 MTCs are issued by the multistate tax commission or a state, other than New Mexico, that is a member of that organization. The certificates may be obtained through the commission’s web site at:

30 New Mexico sellers may accept the Border State Certificate (BSC) from out-of-state buyers from Arizona, California, Oklahoma, Texas, Utah and the United States of Mexico if the buyers are not required to register with this Department and who: 1. Wish to buy goods for resale or incorporation as ingredients or components of a manufactured product, or 2. Wish to buy a manufacturing service that will be performed on a manufactured product or ingredient or component part thereof, and 3. Will transport the tangible personal property across state or national boundaries.

31 For further information regarding BSC’s, please contact the Border States Caucus. The web site for the Border States Caucus is: ww.borderstatescaucus.org

Compensating Tax  Called “use tax” – “buyer pays”  Protect New Mexico businesses from unfair competition  5% of the value of service  5.125% of the value of property  Apply to out-of-state business purchase (supplies & equipment for business use)  Apply to property or service acquired using a NTTC and later used by buyer

Withholding Tax Every employer who withholds a portion of an employee’s wages for payment of federal income tax must withhold New Mexico income tax.

Personal Income Tax & Gross Receipts tax “ two distinct tax programs ”

To make personal income tax estimated payments use a PIT-ES

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The CRS-1 LONG FORM is used for businesses that have more than 3 locations or require more than three lines to file. Taxpayers using the special M and F code deduction require two lines per location.

If Tax is included in Gross Receipts you will need to back out Gross Receipts Tax before entering amount on Column D HOW TO “BACK OUT” GROSS RECEIPTS TAX To “BACK OUT” tax from total receipts at the end of the report period, simply DIVIDE total receipts including the tax for the report period, by 100 PLUS the applicable gross receipts tax rate (i.e., if your business is in Albuquerque the tax rate is 7.00% and your gross receipts including tax are $2, then divide by %). The result is your gross receipts without tax or $1, ( to be entered in Column D of CRS-1 form). Example STEP 1: GROSS RECEIPTS (Including Tax) $2,000.00Divided By TAX RATE (Plus 100) % Equals EQUALS GROSS RECIPTS WITHOUT TAX $1, Column “D” STEP 2: GROSS RECEIPTS WITHOUT TAX$ Multiply By TAX RATE 7.00%Equals TAX DUE$ Column “H” Alb/Bernalillo Taxpayer Owner Taxpayer

39 New E-Filing Changes  August, 2010 – All filers with tax payments due over $20,000 were required to file monthly returns online  January, 2011 – All filers with tax payments due over $10,000 were required to file monthly returns online  Beginning July, 2011 – All monthly filers will be required to file online regardless of amount due  See Publication FYI-108, Electronic Filing Mandate

40 ELECTRONIC FILING Access to: NM WebFile NTTC-Net Taxpayer Access Point (TAP)

41 CRS Filing PIT-Net Tri-Agency Filing –Informational reports for Department of Workforce Solutions, Workers’ Compensation Administration Taxpayer Access Point (TAP) –Business Registration –Account Access Update of Selected Account Information –Payments Assessment, Return or Estimated

42 Other Tax Programs  Cigarette Excise Tax  Tobacco Products Tax  Enhanced 911 (E911) Surcharge  Telecommunication Relay Services Surcharge (TRS)  Liquor Excise Tax  Local Liquor Tax  Fiduciary Tax  Coal/Uranium Conservation Tax  Severance Tax  Resource Excise Tax  Oil and Gas Withholding  Private Railroad Car Tax  Water Conservation Fee  Fuels  Commercial Vehicle

43 HI! I’m from Taxation & Revenue… and I’m here to help!

44 Assistance from Taxation & Revenue District Office Customer Service Units (Walk- ins) District Office Taxpayer Assistance Units (Revenue Agents) Call Center Bureau Auditors On-Call CPA Hotline Fraud Hotline

45 Contact Numbers ABQ District Office – (505) ABQ Taxpayer Assist. – (505) Santa Fe District – (505) Roswell District – (575) Las Cruces District – (575) Call Center Bureau – (866) (505) CPA Hotline – (505) Fraud Hotline – (866)