Section 7. Definitions

[RESERVED] [11/15/1996, 3.2.10.7 NMAC - Rn, 3 NMAC 2.7.7, 4/30/2001] 3.2.10.8 TANGIBLE PERSONAL PROPERTY ACQUIRED OUTSIDE NEW MEXICO FOR USE IN NEW MEXICO: A. Tangible personal property acquired inside or outside New Mexico as a result of a transaction with a person located outside New Mexico which would have been subject to the gross receipts tax had the tangible personal property been acquired from a person with nexus with New Mexico is subject to the compensating tax if that tangible personal property is subsequently used in New Mexico. For compensating tax purposes, a transaction would have been “subject to the gross receipts tax” when the transaction would have been within New Mexico’s taxing jurisdiction, the receipts from the transaction would have been defined as gross receipts, the receipts would not have been deductible or exempt and taxation by New Mexico would not be pre-empted by federal law. B. Example 1: X, a New Mexico business, purchases the furniture for a new office from an El Paso, Texas, merchant. X brings this furniture into New Mexico in X's truck and puts it in the office. If X had purchased the furniture from a New Mexico business, the transaction would have been subject to the gross receipts tax. Therefore, X is liable for compensating tax measured by the sale price of the furniture. However, X may take a credit of up to 5% of the sale price of the furniture against the compensating tax liability on this furniture for any sales tax which was paid in Texas on the purchase of the furniture. Also, X pays no separate tax if tax collected by the seller is shown on the invoice as the New Mexico compensating tax collected by the El Paso, Texas, merchant. C. Example 2: G operates a carnival concession. G has purchased tangible personal property in Iowa, to be used as prizes for persons performing certain skills at the carnival concession. G is subject to the compensating tax on the value of the tangible personal property acquired in Iowa, which is used as prizes in New Mexico he New Mexico compensating tax collected by the El Paso, Texas, merchant. C. Example 2: G operates a carnival concession. G has purchased tangible personal property in Iowa, to be used as prizes for persons performing certain skills at the carnival concession. G is subject to the compensating tax on the value of the tangible personal property acquired in Iowa, which is used as prizes in New Mexico. [9/29/1967, 12/5/1969, 3/9/1972, 11/20/1972, 3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990, 10/28/94, 11/15/1996, 3.2.10.8 NMAC - Rn, 3 NMAC 2.7.8, 4/30/2001; A, 4/30/07; A, 8/15/12] 3.2.10.9 PERSONAL RATHER THAN COMMERCIAL USE OF TANGIBLE PERSONAL PROPERTY OR SERVICES: A. When a person has delivered a nontaxable transaction certificate for a taxable purpose but then uses the service or tangible personal property in a manner other than indicated on the nontaxable transaction certificate, then the person who delivered the nontaxable transaction certificate is liable for the compensating tax on the value of the service or the tangible personal property. 3.2.10 NMAC 2 B. Example 1: Z operates a furniture store in New Mexico. Z issues a nontaxable transaction certificate to all of Z's suppliers. Z decides to take a refrigerator out of stock for use in Z's home. Because the gross receipts tax was not paid at the time of the acquisition, Z must now pay the compensating tax on the value of the refrigerator. C. Example 2: A, a garage operator, has the radiator on A's service truck repaired by B, a radiator repair specialist. A has previously delivered a nontaxable transaction certificate to B. Therefore, B does not pay gross receipts tax on this transaction. In this case A is not reselling the radiator repair service to one of A's customers; therefore A must pay the compensating tax on the value of the repair service a garage operator, has the radiator on A's service truck repaired by B, a radiator repair specialist. A has previously delivered a nontaxable transaction certificate to B. Therefore, B does not pay gross receipts tax on this transaction. In this case A is not reselling the radiator repair service to one of A's customers; therefore A must pay the compensating tax on the value of the repair service. If A does not pay the compensating tax when due, A is also liable for penalty and interest, and if A does not pay the compensating tax within one year of the due date A may have the right to use nontaxable transaction certificates suspended by the secretary for up to one year. See prior example. D. Example 3: G owns and operates a grocery store. G bought two dozen brooms for resale and delivered a nontaxable transaction certificate. G then removed six of these brooms from stock for use in cleaning the store. G is subject to the compensating tax on the value of the six brooms removed from stock. [9/29/1967, 12/5/1969, 3/9/1972, 11/20/1972, 3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990, 11/15/1996, 3.2.10.9 NMAC - Rn, 3 NMAC 2.7.9, 4/30/2001] 3.2.10.10 [RESERVED] [3/9/1972, 11/20/1972, 3/20/1974, 7/26/1976, 6/18/1979, 4/7/1982, 5/4/1984, 4/2/1986, 11/26/1990, 11/15/1996, 3.2.10.10 NMAC - Rn, 3 NMAC 2.7.10, 4/30/2001; Repealed, 7/7/2021] 3.2.10.11 TANGIBLE PERSONAL PROPERTY ON WHICH THE COMPENSATING TAX HAS BEEN PREVIOUSLY PAID: A. Persons who have previously paid the compensating tax on tangible personal property introduced into this state are not required to pay the compensating tax again on the reintroduction into the state of the same property if the property has been under the same ownership continuously since the time it was initially introduced into the state. B. Example: A, a Colorado construction company, is awarded the contract for the improvement of a portion of the interstate highway in northern New Mexico into this state are not required to pay the compensating tax again on the reintroduction into the state of the same property if the property has been under the same ownership continuously since the time it was initially introduced into the state. B. Example: A, a Colorado construction company, is awarded the contract for the improvement of a portion of the interstate highway in northern New Mexico. One of the pieces of equipment which A brings to perform the job is a tractor that A used on another New Mexico job earlier in the year. If A can prove that the compensating tax was paid at the time of the earlier use of the tractor and that A owned the tractor continuously since that time, A does not have to pay the compensating tax again.