New Mexico - In-state subscribers subjects out-of-state web-based solutions provider to gross receipts tax

March 2013


A web-based solutions provider (with no employees, property, or activity in New Mexico) selling to New Mexico subscribers a license to use certain software programs subjects the provider to New Mexico gross receipts tax. Pursuant to a New Mexico ruling, the provider is selling a “license to use in New Mexico,” which is a form of property, and therefore the out-of-state provider “is engaging in business in New Mexico.” Out-of-state businesses providing licenses to use web-based software to New Mexico customers should be aware that the state could view the license as creating a gross receipts tax obligation. [Ruling No. 401-13-1, New Mexico Taxation and Revenue Department, 1/31/13]

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