New Mexico’s Marketplace Facilitator Sales Tax Law, Explained
by May 28, 2021
Good news for marketplace sellers — the state of New Mexico now requires marketplaces to collect sales tax on behalf of sellers on online marketplaces like Amazon, and Walmart.
This means that if you sell on a platform like Amazon, then Amazon will collect sales tax from your New Mexico buyers on your behalf, and remit it to the state.
But as usual, there are always a few wrinkles here when it comes to e-commerce sales tax.
This post will explain what online sellers need to know about the New Mexico marketplace facilitator law, and answer your frequently asked questions.
Overview of the New Mexico Marketplace Facilitator Law
New Mexico’s marketplace facilitator law requires that marketplace facilitators must collect and remit gross receipts tax on behalf of their marketplace sellers once the provider reaches the $100,000 threshold.
Quick Facts about the New Mexico Marketplace Facilitator Law
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- Effective date: July 1, 2019
- Threshold: This law requires that marketplace facilitators must collect and remit gross receipts tax on behalf of their marketplace sellers once the provider reaches the $100,000 threshold.
- State law information: Read the full text of the New Mexico Market Facilitator Law
- Marketplaces that have adopted this law:
Frequently asked Questions about Marketplace Facilitator Laws
What exactly is a marketplace facilitator in New Mexico?
New Mexico law defines marketplace facilitators as a “(i) listing or otherwise making available listing or otherwise making available for sale the tangible personal property of the marketplace seller through a marketplace owned or operated by the marketplace facilitator; and (ii) processing sales or payments for marketplace sellers.”
Online sales platforms like Amazon and eBay are considered marketplace facilitators under New Mexico law.
A software like Shopify or Magento that allows online sellers to build and manage their own stores would not be considered a marketplace facilitator.
Does this mean I can stop collecting New Mexico sales tax?
It depends. Every business’s sales tax situation is unique to that business.
If you have nexus in the state (physical or economic) and you make sales to customers in New Mexico on platforms outside of the marketplace that is automatically collecting and remitting, you will also need to collect tax on your end on the New Mexico orders that are processed on the other platforms.
Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.
Does this mean I can cancel my New Mexico sales tax permit?
No, marketplace-only sellers should not cancel their New Mexico gross receipts tax registration.
Do I still need to file a New Mexico sales tax return?
Yes–once you register for a license, you will be required to file a return based on the frequency the state has assigned you.
- If you’ve previously registered, the state expects you to remain registered and continue to file returns.
- If all your sales are Marketplace collected, you would still need to file a return stating reporting no sales activity.
- You may be able to request a filing frequency change but would need to contact the state TRD directly.
What do I do with any New Mexico sales tax I have already collected?
If you have already collected New Mexico sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Does TaxJar handle this for me?
Yes.
TaxJar AutoFile Handles New Mexico Sales Tax Automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of New Mexico wants it filed. For example, many states, New Mexico included, want sellers to break down their sales tax collected interstate (sales originating in New Mexico sent to another state) and intrastate (sales made from New Mexico to New Mexico.)
If a marketplace has collected sales tax on your behalf, TaxJar reports that directly to the state so that the state is aware you have met your sales tax obligations.
If you currently AutoFile your New Mexico sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar Reports Give You all the Info You need to File Manually
If you prefer to file manually, your TaxJar Reports also reflect what the [State Department of Revenue] wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Further reading on New Mexico sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- New Mexico Sales Tax Guide for Businesses
