New Mexico Computer, Software, and SaaS Tax Guide

Prepared by Sales Tax Helper

Table of Contents

1. Introduction
2. Nexus Considerations
3. General Rules and Compliance Considerations
4. Specific Exemptions
5. Sourcing Rules
6. Audit Considerations
7. Voluntary Disclosure Agreements (VDAs)
8. Conclusion
9. References & Resources

1. Introduction

For software companies, SaaS providers, and technology firms conducting business in New
Mexico, the state's tax rules present unique challenges. Unlike traditional sales tax in most states,New Mexico implements a Gross Receipts Tax (GRT) system that functions differently and has
broader application. New Mexico's tax treatment of software and technology-related services
depends on multiple factors, including whether the business has established nexus, the nature of the product or service being sold, and the location of customers.

Purpose of This Guide

This guide is designed to help businesses navigate New Mexico's gross receipts tax rules related to software and technology services. It focuses on:

• Nexus Considerations: Understanding when businesses must register and collect New
  Mexico gross receipts tax due to physical or economic presence.
• Taxability of Software & Services: Clarifying the tax treatment of prewritten vs. custom
  software, cloud computing services, and related technology offerings.
• Sourcing Rules: Determining how and where transactions are taxed based on customer
  location and method of software delivery.
• Audit Considerations: Identifying common tax audit triggers and best practices for
  compliance.
• Voluntary Disclosure Agreements (VDAs): Explaining the process for businesses to
  rectify past noncompliance while mitigating penalties and limiting back-tax liability.

Why This Matters for Technology Companies

New Mexico's gross receipts tax laws impact software companies, SaaS providers, and
technology firms in multiple ways:

• Gross Receipts Tax Obligations: Businesses that sell software or related services to
  New Mexico customers may have a duty to collect and remit New Mexico gross receipts
  tax, depending on how the product is classified and delivered.
• Digital Products and Services Complexity: New Mexico treats digital goods, including
  downloadable software and SaaS, as taxable items, which differs from some states where
  these may be exempt.
• Destination-Based Sourcing: New Mexico has shifted to a destination-based sourcing
  approach for many transactions, requiring vendors to collect tax at rates based on the
  customer's location rather than the vendor's location.
• Compliance Risks: Failure to correctly assess and collect gross receipts tax can result in
  significant penalties, interest, and extended audit exposure.

This guide will walk through New Mexico's specific tax rules governing software, SaaS, and
technology-related services while referencing applicable statutes, administrative rules, and New Mexico Taxation and Revenue Department guidance. Throughout the guide, official New
Mexico Taxation and Revenue Department sources will be linked for further reference.

You're currently viewing a preview. To access the full guide and unlock tools designed to simplify your sales tax obligations, just create a free account.

Your free Sales Tax Helper account gives you:

• Full access to this and other expert-written guides
• Our Nexus Checker to assess your exposure across states
• State- and industry-specific insights and compliance tips
• Updates on new rules and best practices to stay ahead

No credit card required — just expert tools built to keep you compliant and confident.
Create your free account now to unlock the rest of this guide.