A few U.S. states don’t have what we think of as the traditional “sales tax,” and that includes New Mexico. So as a seller with sales tax nexus in New Mexico, how do you handle shipping taxability when sales tax isn’t sales tax? Let’s take a look at how the Land of Enchantment handles shipping taxability.
Is Shipping Taxable in New Mexico?
Rather than a sales tax, the state of New Mexico has a gross receipts tax (GRT.) Unlike sales tax, a gross receipts tax is a tax on businesses for the privilege of doing business in New Mexico. However, like sales tax, businesses can choose to pass their GRT onto their buyers rather than pay it out of pocket.
Here is what the New Mexico Administrative Code has to say about sales tax on shipping charges:
This is a little convoluted, so I’ll summarize. In this scenario, I’m going to assume that you are an online seller who sells items on a marketplace like Amazon FBA or eBay, or via a shopping cart like Shopify or Magento. If you, as the seller, pay the delivery charges to a carrier (USPS, USP, FedEx, etc.) in order for that carrier to ship the product to your customer, then shipping is considered a taxable part of that transaction.
And since shipping is a taxable part of the transaction, you as the seller should either:
- charge the buyer sales tax on that shipping charge
- pay out of pocket, but remit gross receipts tax (GRT) on that shipping charge when you file your GRT return (remember, in New Mexico you can choose to pay GRT out of pocket rather than collect it from your customer)
In New Mexico, shipping charges are almost always taxable. Unlike in many other states, you can choose to pass this tax onto your buyer, or remit it yourself out of your own pocket when it comes time to file your GRT returns.
Have questions or comments on shipping taxability in New Mexico? Start the conversation in the comments!