Section 13. Advertising And Broadcast Services

A. Advertising service: radio and television stations. The receipts of a radio or television broadcasting station from the sale of advertising services to an advertising agency for resale may be deducted from gross receipts if the advertising agency delivers a nontaxable transaction certificate (nttc) to the broadcasting station. The subsequent sale must be in the ordinary course of business and subject to the gross receipts tax or the advertising agency will be subject to the compensating tax on the value of the advertising service at the time it was rendered. 3.2.206 NMAC 3 (1) If a radio or television broadcasting station sells advertising services to an advertising agency for resale but refuses to accept delivery of an nttc offered it by the advertising agency, the gross receipts tax consequences are: (a) the net receipts of the broadcasting station from the transaction are subject to the gross receipts tax; and (b) the receipts of the advertising agency, which are the full amount paid to the advertising agency by its customer (the advertiser), are subject to the gross receipts tax. (2) This version of Subsection A of Section 3.2.206.13 NMAC applies to transactions occurring on or after July 1, 2000. B. Advertising service: trading stamps. The sale of trading stamps constitutes the sale of an advertising or promotional service. Receipts from selling an advertising or promotional service for resale may be deducted from gross receipts if the sale is made to a person who delivers a nontaxable transaction certificate (nttc) to the seller. The subsequent sale must be in the ordinary course of business and be subject to the gross receipts tax. This version of Subsection B of Section 3.2.206.13 NMAC applies to transactions occurring on or after July 1, 2000. C. Sales of broadcast time for resale e may be deducted from gross receipts if the sale is made to a person who delivers a nontaxable transaction certificate (nttc) to the seller. The subsequent sale must be in the ordinary course of business and be subject to the gross receipts tax. This version of Subsection B of Section 3.2.206.13 NMAC applies to transactions occurring on or after July 1, 2000. C. Sales of broadcast time for resale. (1) A New Mexico radio or television broadcaster may deduct from its gross receipts the receipts derived from the sale of broadcast time to an advertising agency for resale so long as the broadcaster possesses a valid nontaxable transaction certificate (nttc) issued by the advertising agency and the contract under which the sale is made specifically states that the agency is not buying as an agent for its customer and that the agency, and not its customer, is liable for payment to the broadcaster for the purchase of broadcast time. The advertising agency must comply with the requirements of Section 7-9-48 NMSA 1978 by reselling the broadcast time in the normal course of business and by paying gross receipts tax upon the subsequent sale. If the agency fails to comply with these requirements, the agency will be liable for compensating tax on the broadcast time. This version of Paragraph (1) of Subsection C of Section 3.2.206.13 NMAC applies to transactions occurring on or after July 1, 2000. (2) This deduction is in addition to the deduction available under Section 7-9-55 NMSA 1978. Thus, if the subsequent sale of broadcast time by the agency is made to a national or regional seller or advertiser, receipts from the sale are deductible by both the agency and broadcaster under Section 7-9-55 NMSA 1978, no nttc shall be required and no compensating tax will be owed by the agency. [3/9/72, 11/20/72, 3/20/74, 7/26/76, 6/18/79, 4/7/82, 5/4/84, 3/3/86, 4/2/86, 11/26/90, 11/15/96, 3.2.206.13 NMAC - Rn, 3 NMAC 2.48.13 & A, 10/31/2000] 3.2.206.14 TRANSPORTATION SERVICES. A. Transporting property ser, receipts from the sale are deductible by both the agency and broadcaster under Section 7-9-55 NMSA 1978, no nttc shall be required and no compensating tax will be owed by the agency. [3/9/72, 11/20/72, 3/20/74, 7/26/76, 6/18/79, 4/7/82, 5/4/84, 3/3/86, 4/2/86, 11/26/90, 11/15/96, 3.2.206.13 NMAC - Rn, 3 NMAC 2.48.13 & A, 10/31/2000] 3.2.206.14 TRANSPORTATION SERVICES. A. Transporting property. Receipts of a carrier from transporting property for the seller of the property who prepays the transportation charges may be deducted from the carrier's gross receipts if the seller executes with the carrier a nontaxable transaction certificate. The sale of the transportation service and property must be in the ordinary course of the seller's business and subject to the gross receipts tax on its subsequent sale. Otherwise, the seller will be liable for compensating tax on such transaction. This version of Subsection A of Section 3.2.206.14 NMAC applies to transactions occurring on or after July 1, 2000. B. Transporting property. (1) If a seller of tangible personal property employs a contract or common carrier to transport that property and delivers a nontaxable transaction certificate (nttc) to the carrier, and if the receipts from the sale of the property are not subject to the gross receipts tax, the seller will be subject to the compensating tax on the value of the transportation service purchased. (2) Example: X sells tangible personal property to Y, a governmental entity, and hires a carrier to transport the tangible personal property to Y. X will be subject to compensating tax on the value of the transportation service if X delivers an nttc to the carrier. It is immaterial that X separately states the value of the transportation service in the billing to Y. C. Hauling prefabricated buildings Example: X sells tangible personal property to Y, a governmental entity, and hires a carrier to transport the tangible personal property to Y. X will be subject to compensating tax on the value of the transportation service if X delivers an nttc to the carrier. It is immaterial that X separately states the value of the transportation service in the billing to Y. C. Hauling prefabricated buildings. (1) The hauler of prefabricated buildings may take a deduction from gross receipts pursuant to Section 7-9-48 NMSA 1978 if: (a) the prefabricated builder resells the hauling service to customers who contract to purchase the building which has been moved to a permanent site; and (b) the prefabricated builder executes with the hauler a nontaxable transaction certificate (nttc); and (c) the subsequent sale is in the ordinary course of the prefabricated builder's business and subject to the gross receipts tax. 3.2.206 NMAC 4 (2) This version of Subsection C of Section 3.2.206.14 NMAC applies to transactions occurring on or after July 1, 2000. D. Transportation services. (1) A person who subcontracts to haul property for a person who holds a certificate of public convenience and necessity issued by the public regulation commission of the state of New Mexico may accept a nontaxable transaction certificate (nttc) for the services. Receipts from hauling such property may be deducted from gross receipts provided the person provides both the transporting equipment and the operator. (2) If the issuer of the nttc fails to meet the criteria of Section 7-9-48 NMSA 1978, the issuer will become liable for compensating tax on the value of the services at the time they were rendered. (3) If the subcontractor provides only the transporting equipment, the subcontractor is engaged in the business of leasing property and the receipts are subject to the gross receipts tax. The issuance or receipt of an nttc in this situation would be improper of Section 7-9-48 NMSA 1978, the issuer will become liable for compensating tax on the value of the services at the time they were rendered. (3) If the subcontractor provides only the transporting equipment, the subcontractor is engaged in the business of leasing property and the receipts are subject to the gross receipts tax. The issuance or receipt of an nttc in this situation would be improper. [6/18/79, 11/5/81, 4/7/82, 5/4/84, 4/2/86, 11/26/90, 11/15/96, 3.2.206.14 NMAC - Rn, 3 NMAC 2.48.14 & A, 10/31/2000; A, 5/31/01] 3.2.206.15 MEDICAL SERVICES. A. Medical laboratory services. Receipts from the sale of medical laboratory services, such as blood test analysis, urine analysis and similar test analysis, to a practitioner of the healing arts may be deducted from gross receipts if the practitioner delivers to the seller a nontaxable transaction certificate and the subsequent sale is in the ordinary course of the practitioner's business and is subject to the gross receipts tax. This version of Subsection A of Section 3.2.206.15 NMAC applies to transactions occurring on or after July 1, 2000. B. Anesthetists' services. The receipts of an anesthetist from performance of service for a surgeon may be deducted from gross receipts if the surgeon resells the service to a patient and delivers a nontaxable transaction certificate (nttc) to the anesthetist. The surgeon delivering the nttc must separately state the value of the service purchased in the charge for the service on its subsequent sale, and the subsequent sale must be in the ordinary course of business and subject to the gross receipts tax. If these conditions are not satisfied, the surgeon will be subject to the compensating tax on the value of the service purchased.