As used in the Gross Receipts and Compensating Tax Act:

A. "buying" or "selling" means a transfer of property for consideration or the performance of service for consideration;

B. "department" means the taxation and revenue department, the secretary of taxation and revenue or an employee of the department exercising authority lawfully delegated to that employee by the secretary;

C. "digital good" means a digital product delivered electronically, including software, music, photography, video, reading material, an application and a ringtone;

D. "financial corporation" means a savings and loan association or an incorporated savings and loan company, trust company, mortgage banking company, consumer finance company or other financial corporation;

E. "initial use" or "initially used" means the first employment for the intended purpose and does not include the following activities:

(1) observation of tests conducted by the performer of services;

(2) participation in progress reviews, briefings, consultations and conferences conducted by the performer of services;

(3) review of preliminary drafts, drawings and other materials prepared by the performer of the services;

(4) inspection of preliminary prototypes developed by the performer of services; or

(5) similar activities;

F. "leasing" means an arrangement whereby, for a consideration, property is employed for or by any person other than the owner of the property, except that the granting of a license to use property is licensing and is not a lease;

G. "local option gross receipts tax" means a tax authorized to be imposed by a county or municipality upon a taxpayer's gross receipts and required to be collected by the department at the same time and in the same manner as the gross receipts tax;

H. "manufactured home" means a movable or portable housing structure for human occupancy that exceeds either a width of eight feet or a length of forty feet constructed to be towed on its own chassis and designed to be installed with or without a permanent foundation;

I. "manufacturing" means combining or processing components or materials to increase their value for sale in the ordinary course of business, but does not include construction;

J. "marketplace provider" means a person who facilitates the sale, lease or license of tangible personal property or services or licenses for use of real property on a marketplace seller's behalf, or on the marketplace provider's own behalf, by:

(1) listing or advertising the sale, lease or license, by any means, whether physical or electronic, including by catalog, internet website or television or radio broadcast; and

(2) either directly or indirectly, through agreements or arrangements with third parties collecting payment from the customer and transmitting that payment to the seller, regardless of whether the marketplace provider receives compensation or other consideration in exchange for the marketplace provider's services;

K. "marketplace seller" means a person who sells, leases or licenses tangible personal property or services or who licenses the use of real property through a marketplace provider;

L. "person" means:

(1) an individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, limited liability partnership, joint venture, syndicate or other entity, including any gas, water or electric utility owned or operated by a county, municipality or other political subdivision of the state; or

(2) a national, federal, state, Indian or other governmental unit or subdivision, or an agency, department or instrumentality of any of the foregoing;

M. "property" means:

(1) real property;

(2) tangible personal property, including electricity and manufactured homes;

(3) licenses, including licenses of digital goods, but not including the licenses of copyrights, trademarks or patents; and

(4) franchises;

N. "research and development services" means an activity engaged in for other persons for consideration, for one or more of the following purposes:

(1) advancing basic knowledge in a recognized field of natural science;

(2) advancing technology in a field of technical endeavor;

(3) developing a new or improved product, process or system with new or improved function, performance, reliability or quality, whether or not the new or improved product, process or system is offered for sale, lease or other transfer;

(4) developing new uses or applications for an existing product, process or system, whether or not the new use or application is offered as the rationale for purchase, lease or other transfer of the product, process or system;

(5) developing analytical or survey activities incorporating technology review, application, trade-off study, modeling, simulation, conceptual design or similar activities, whether or not offered for sale, lease or other transfer; or

(6) designing and developing prototypes or integrating systems incorporating the advances, developments or improvements included in Paragraphs (1) through (5) of this subsection;

O. "secretary" means the secretary of taxation and revenue or the secretary's delegate;

P. "service" means all activities engaged in for other persons for a consideration, which activities involve predominantly the performance of a service as distinguished from selling or leasing property. "Service" includes activities performed by a person for its members or shareholders. In determining what is a service, the intended use, principal objective or ultimate objective of the contracting parties shall not be controlling. "Service" includes construction activities and all tangible personal property that will become an ingredient or component part of a construction project. That tangible personal property retains its character as tangible personal property until it is installed as an ingredient or component part of a construction project in New Mexico. Sales of tangible personal property that will become an ingredient or component part of a construction project to persons engaged in the construction business are sales of tangible personal property; and

Q. "use" or "using" includes use, consumption or storage other than storage for subsequent sale in the ordinary course of business or for use solely outside this state.

History: Laws 1978, ch. 46, § 1; 1979, ch. 338, § 1; 1981, ch. 184, § 1; 1983, ch. 220, § 1; 1984, ch. 2, § 1; 1986, ch. 20, § 62; 1986, ch. 52, § 1; 1989, ch. 262, § 1; 1991, ch. 197, § 1; 1991, ch. 203, § 1; 1992, ch. 39, § 1; 1992, ch. 50, § 14; 1992, ch. 67, § 14; 1993, ch. 31, § 1; 1994, ch. 45, § 1; 1998, ch. 92, § 4; 1998, ch. 95, § 1; 1998, ch. 99, § 3; 1999, ch. 231, § 1; 2000, ch. 84, § 1; 2000, ch. 101, § 1; 2001, ch. 65, § 1; 2001, ch. 343, § 1; 2002, ch. 28, § 1; 2002, ch. 45, § 1; 2002, ch. 49, § 1; 2003, ch. 272, § 2 ; 2006, ch. 39, § 1; 2007, ch. 339, § 1; 2019, ch. 270, § 23; 2019, ch. 274, § 11.

Compiler's notes. — Laws 1988, ch. 19, § 5, effective July 1, 1988, repealed Laws 1986, ch. 20, § 128 and Laws 1986, ch. 52, § 4, which enacted amended versions of this section which were to take effect July 1, 1988.

Laws 1989, ch. 262, § 10, effective July 1, 1989, repealed Laws 1988, ch. 19, § 1, which enacted an amended version of this section which was to take effect July 1, 1990.

Laws 1993, ch. 31, § 13, effective July 1, 1993, repealed Laws 1990, ch. 27, § 1, Laws 1991, ch. 197, § 2, Laws 1991, ch. 203, § 2, Laws 1992, ch. 39, § 2, Laws 1992, ch. 50, § 15, and Laws 1992, ch. 67, § 15, all of which amended 7-9-3 NMSA 1978 to take effect July 1, 1993.

Laws 1993, ch. 31, § 13D, and Laws 1993, ch. 310, § 3, both effective July 1, 1993, repealed Laws 1992, ch. 40, § 2, which provided for the repeal of 7-9-3 NMSA 1978 as amended by Laws 1991, ch. 203, § 2, effective October 1, 1995, if the United States announced prior to July 1, 1995, that the space systems division of the department of the air force would be relocated to New Mexico. Laws 1993, ch. 31, § 13D and Laws 1993, ch. 310, § 3 also repealed Laws 1992, ch. 40, § 3, which provided for the repeal of the provisions of Laws 1992, ch. 40 on August 1, 1995, if the United States had not announced prior to July 1, 1995, that the space systems division of the department of the air force would be relocated to New Mexico.

2019 Multiple Amendments. — Laws 2019, ch. 270, § 23 and Laws 2019, ch. 274, § 11, both effective July 1, 2019, enacted different amendments to this section that can be reconciled. Pursuant to 12-1-8 NMSA 1978, Laws 2019, ch. 274, § 11, as the last act signed by the governor, is set out above and incorporates both amendments. The amendments enacted by Laws 2019, ch. 270, § 23 and Laws 2019, ch. 274, § 11 are described below. To view the session laws in their entirety, see the 2019 session laws on NMOneSource.com.

The nature of the difference between the amendments is that Laws 2019, ch. 270, § 23, defined "digital good", "marketplace provider" and "marketplace seller", and revised the definitions of certain terms, as used in the Gross Receipts and Compensating Tax Act, and Laws 2019, ch. 274, § 11, revised the definition of "local option gross receipts tax" as used in the Gross Receipts and Compensating Tax Act.

Laws 2019, ch. 270, § 23, effective July 1, 2019, defined "digital good", "marketplace provider" and "marketplace seller", and revised the definitions of certain terms, as used in the Gross Receipts and Compensating Tax Act; added a new Subsection C and redesignated former Subsections C through H as Subsections D through I, respectively; in Subsection G, deleted "'local option gross receipts tax' includes the taxes imposed pursuant to the Municipal Local Option Gross Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax Act, County Local Option Gross Receipts Taxes Act, Local Hospital Gross Receipts Tax Act, County Correctional Facility Gross Receipts Tax Act and such other acts as may be enacted authorizing counties or municipalities to imposes taxes on gross receipts, which taxes are to be collected by the department"; added new Subsections J and K and redesignated former Subsections I through N as Subsections L through Q, respectively; and in Subsection M, added new paragraph designations "(1)" through "(4)", in Paragraph M(2), after "property", added "including electricity and manufactured homes", in Paragraph M(3), after "licenses", deleted "other than" and added "including licenses of digital goods, but not including", in Paragraph M(4), after "franchises", deleted "Tangible personal property includes electricity and manufactured homes".

Laws 2019, ch. 274, § 11, effective July 1, 2019, revised the definition of "local option gross receipts tax" as used in the Gross Receipts and Compensating Tax Act; and in Subsection F, deleted "'local option gross receipts tax' includes the taxes imposed pursuant to the Municipal Local Option Gross Receipts Taxes Act, Supplemental Municipal Gross Receipts Tax Act, County Local Option Gross Receipts Taxes Act, Local Hospital Gross Receipts Tax Act, County Correctional Facility Gross Receipts Tax Act and such other acts as may be enacted authorizing counties or municipalities to imposes taxes on gross receipts, which taxes are to be collected by the department".

The 2007 amendment, effective June 15, 2007, defined "leasing" to mean that a license to use property is a license and not a lease and defined "property" to include licenses other than the licenses of copyrights, trademarks or patents.

The 2006 amendment, effective July 1, 2006, deleted from the definition of leasing in Subsection E the provision that the sale of a license is a granting of a license to use property and in Subsection J deleted from the definition of property, patents, trademarks and copyrights.

The 2003 amendment, effective July 1, 2003, rewrote this section to the extent that a detailed comparison is impracticable.

The 2002 amendment, effective July 1, 2002, inserted "or to provide services primarily to non-New Mexico customers" in Subsection E(2); and added Subsections F(1)(e) and F(2)(g).

The 2001 amendment, effective July 1, 2001, inserted Paragraph C(13) and redesignated the subsequent paragraphs; and added Subsection S.

The 2000 amendment, effective July 1, 2000, added Subsection E(2) and deleted "Special Municipal Gross Receipts Tax Act" preceding "County Local" in Subsection Q.

The 1999 amendment, effective July 1, 1999, in Subsection E, added "except that 'engaging in business' does not include having a world wide web site as a third-party content provider on a computer physically located in New Mexico but owned by another nonaffiliated person".

The 1998 amendment, effective January 1, 1999, added Subsection R and substituted "movable" for "moveable" in Subsection N.

The 1994 amendment, effective July 1, 1994, in Paragraph F(2), deleted "and" at the end of Subparagraph (d) and added Subparagraph (f); in Subsection N, inserted "for human occupancy" and deleted "for human occupancy" at the end; and substituted the list of gross receipt acts in Subsection Q for the former list.

The 1993 amendment, effective July 1, 1993, inserted "limited liability company, limited liability partnership," in Paragraph (1) of Subsection H; rewrote Paragraph (2) of Subsection H which read "the United States or any agency or instrumentality thereof or the state of New Mexico or any political subdivision thereof"; and substituted "modeling" for "modelling" in Paragraph (5) of Subsection P.

The 1992 amendment, effective March 9, 1992, rewrote Subsection F and in Subsection Q, inserted "Municipal Infrastructure Gross Receipts Tax Act" and "Local Hospital Gross Receipts Tax Act, County Health Care Gross Receipts Tax Act".

The 1991 amendment, effective July 1, 1991, deleted "or 'division'" following "'department'" in Subsection A; in Subsection F, substituted "any local option gross receipts tax that is" for "the County Fire Protection Excise Tax Act or any municipality or county sales or gross receipts tax which are" near the middle of the first paragraph and inserted "nation" following "Indian" in two places in the second sentence thereof; substituted "manufactured homes" for "mobile homes" at the end of Subsection I; added "except that the granting of a license to use property is the sale of a license and not a lease" at the end of Subsection J; deleted "'director' or" at the beginning of Subsection M; rewrote Subsection N, which read "'mobile home' means a house trailer that exceeds either a width of eight feet or a length of forty feet when equipped for the road"; added Subsection Q; and made a related stylistic change.

The 1989 amendment, effective July 1, 1989, in Subsection F inserted "from selling services performed outside New Mexico the product of which is initially used in New Mexico" near the beginning of the first sentence of the first paragraph and substituted "County Fire Protection Excise Tax Act or any municipality or county sales or gross receipts tax" for "County Sales Tax Act, the County Fire Protection Excise Tax Act, the County Gross Receipts Tax Act, the Municipal Gross Receipts Tax Act or the Supplemental Municipal Gross Receipts Tax Act" near the end of that sentence; and added Subsections O and P.

Language of this section is definite and unambiguous. Miller v. Bureau of Revenue, 1979-NMCA-005, 93 N.M. 252, 599 P.2d 1049, cert. denied, 92 N.M. 532, 591 P.2d 286.

Taxpayer should be given fair, unbiased and reasonable construction, without favor either to the taxpayer or the state, to the end that the legislative intent is effectuated and the public interests to be subserved thereby furthered. Baskin-Robbins Ice Cream Co. v. Revenue Div., 1979-NMCA-098, 93 N.M. 301, 599 P.2d 1098.

Taxes assessed only on receipts or future receipts. — A reading of the full act providing for gross receipts tax shows the legislative intent to be that taxes were to be assessed only on what was received or would be received. Davis v. Commissioner of Revenue, 1971-NMCA-129, 83 N.M. 152, 489 P.2d 660, cert. denied, 83 N.M. 151, 489 P.2d 659.

Legal incidence of gross receipts tax on seller. — The statutory language defining services places the legal incidence of the gross receipts tax on the seller. United States v. New Mexico, 581 F.2d 803 (10th Cir. 1978), aff'd, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed. 2d 580 (1982).

Taxpayers must treat transactions uniformly for all purposes within the tax scheme and not attempt to show, first, a lease for federal purposes and second, a nontaxable event for state purposes. Co-Con, Inc. v. Bureau of Revenue, 1974-NMCA-134, 87 N.M. 118, 529 P.2d 1239, cert. denied, 87 N.M. 111, 529 P.2d 1232.

If purchase order not transfer for consideration, then not sale. — The wording of taxpayer's purchase orders and contract, together with evidence that taxpayer invoiced only for chemicals and reagents delivered to a well and retained payment only for what was used, support the inference that a purchase order was not a transfer for consideration and therefore not a sale; therefore, since no single delivery or single day's delivery to a well ever amounted to 18 tons or more, of chemicals or reagents, although the amount specified in a purchase order might aggregate that much, taxpayer was not entitled to a deduction under Section 7-9-65 NMSA 1978. Runco Acidizing & Fracturing Co. v. Bureau of Revenue, 1974-NMCA-145, 87 N.M. 146, 530 P.2d 410.

Corporations separate entities for taxation purposes. — Taxpayers, a parent corporation and its 100%-owned subsidiary cannot escape corporate liability for joint use of equipment merely because the shareholders of one of the corporations own all the equipment in question. The two corporations must be treated as separate entities for taxation purposes. Co-Con, Inc. v. Bureau of Revenue, 1974-NMCA-134, 87 N.M. 118, 529 P.2d 1239, cert. denied, 87 N.M. 111, 529 P.2d 1232.

Renting or leasing is a "use" of property. Rust Tractor Co. v. Bureau of Revenue, 1970-NMCA-107, 82 N.M. 82, 475 P.2d 779, cert. denied, 82 N.M. 81, 475 P.2d 778.

Granting of license. — The 1991 amendments to this section marked a significant change in the treatment of the granting of a license. Kmart Corp. v. Taxation & Revenue Dep't., 2006-NMSC-006, 139 N.M. 172, 131 P.3d 22.

Receipts to owner and trainer of horse subject to tax. — The legislature, in enacting the Gross Receipts Tax Act, did not intend to exempt receipts from horse races. There is neither ambiguity nor doubt that the language used in the Gross Receipts Tax Act applies to the receipts of a horse owner paid to him for a winning purse and the receipts of a horse trainer paid to him as his percentage of a winning purse. Till v. Jones, 1972-NMCA-046, 83 N.M. 743, 497 P.2d 745, cert. denied, 83 N.M. 740, 497 P.2d 742. See Section 7-9-40 NMSA 1978 which now exempts receipts from horse race purses.

Disbursement agents of federal funds immune from gross receipts tax. — Agents for the disbursement of federal funds are constitutionally immune from application of the gross receipts tax to those funds. United States v. New Mexico, 624 F.2d 111 (10th Cir. 1980), aff'd, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed. 2d 580 (1982).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 68 Am. Jur. 2d Sales and Use Taxes §§ 63 to 67, 87 to 89, 173 to 176.