Transaction Tax Talk

New Mexico has become the newest state to attempt to follow in New York's footsteps and establish an "Amazon Tax". House Bill 50, introduced January 15, would establish a rebuttable presumption that certain Internet sales of goods and services are subject to the gross receipts tax.

The bill provides that a business owner whose business has no physical presence in New Mexico would be presumed to have nexus with the state if they meet the following conditions:

1) The person enters into an agreement with a resident of the state under which the resident for a commission or other consideration, directly or indirectly refers potential customers, whether by link or an Internet website or otherwise, to that person; and

2) the cumulative gross receipts from sales by that person to customers in the state who are referred to that person by all residents with an agreement in excess of $10,000 during the preceding 12 months ending June 30Th of any year.

The presumption may be rebutted if the person can provide proof that the resident made no solicitation in the state that would satisfy the nexus requirements of the U.S. constitution on behalf of the person.

Update: HB50 has been tabled for now. This does not necessarily mean that we have heard the last of it, however. It is possible that HB50 could be resurrected or incorporated into another bill. We will continue to monitor its status.