Short Answer
In most cases, yes.
If you’re an independent contractor working in New Mexico—whether you’re a painter, plumber, electrician, HVAC contractor, landscaper, roofer, handyman, concrete contractor, or another service professional—you are generally responsible for New Mexico Gross Receipts Tax (GRT).
However, there are several deductions and exemptions that may apply depending on the type of work you perform and who you’re working for.
Understanding the difference can save you from costly mistakes.
What Is New Mexico Gross Receipts Tax?
One of the most confusing parts of operating a business in New Mexico is the Gross Receipts Tax.
Unlike a traditional sales tax, New Mexico Gross Receipts Tax is imposed on the seller for the privilege of doing business in the state.
While many businesses choose to pass that cost on to their customers, the legal responsibility for paying the tax belongs to the business—not the customer.
Whether you separately state the tax on your invoice or include it in your pricing, you’re still responsible for reporting and paying it.
Do Independent Contractors Pay Gross Receipts Tax?
Generally, yes.
If you’re providing services directly to customers, your receipts are usually subject to Gross Receipts Tax.
This includes businesses such as:
- Painters
- Plumbers
- Electricians
- HVAC contractors
- Landscapers
- Handymen
- Roofers
- Concrete contractors
- Consultants
- Freelancers
- Many other service businesses
Simply being an independent contractor does not exempt you from Gross Receipts Tax.
Do I Still Owe Gross Receipts Tax If I Work for a Nonprofit?
This is one of the biggest misconceptions we see.
Many business owners assume that because a nonprofit organization is tax-exempt, they don’t have to pay Gross Receipts Tax on work performed for that organization.
In most service situations, that’s not true.
For example:
A church hires a painter to repaint its sanctuary.
Even though the church is a Section 501(c)(3) organization, the painter is generally still responsible for Gross Receipts Tax because the transaction is for services, not the sale of tangible personal property.
Being paid by a nonprofit does not automatically eliminate your Gross Receipts Tax responsibility.
Then Why Does Google Say Nonprofits Are Exempt?
This is where many business owners become confused.
If you search Google, you’ll often find references to a Type 9 Non-Taxable Transaction Certificate (NTTC).
Many people read that and assume:
“If I work for a nonprofit, I don’t owe Gross Receipts Tax.”
That’s not what the deduction says.
The Type 9 NTTC generally applies to the sale of tangible personal property to qualifying nonprofit organizations—not to most services.
Example Where a Type 9 NTTC Works
A church purchases 100 folding chairs from a New Mexico office furniture supplier.
The chairs are tangible personal property.
The church provides the seller with a properly executed Type 9 NTTC.
Because the chairs are being used in the church’s exempt activities, the seller may generally deduct those receipts and not charge Gross Receipts Tax.
Example Where It Doesn’t Work
The same church hires a painter to paint the building.
Painting is a service—not the sale of tangible personal property.
Even if the church provides a Type 9 NTTC, the painter generally still owes Gross Receipts Tax on the services performed.
What About Subcontractors?
Another common deduction involves subcontractors.
If you’re hired by another contractor rather than directly by the customer, you may qualify for a deduction if the proper NTTC is provided.
Common examples include:
- Type 5 NTTC – Services for resale
- Type 6 NTTC – Construction and construction-related services
These deductions don’t happen automatically.
The proper documentation must be obtained and retained.
Gross Receipts vs. Gross Receipts Tax
Another area that creates confusion is the difference between Gross Receipts and Gross Receipts Tax.
These are not the same thing.
Gross Receipts
Gross Receipts are all of your business income before deductions.
Gross Receipts Tax
Gross Receipts Tax is the tax calculated after applying any deductions or exemptions you’re entitled to claim.
Here’s a common example.
A wholesale business accepts NTTCs from every customer.
Because they never collect Gross Receipts Tax, the owner assumes they don’t need to file Gross Receipts Tax returns.
That’s incorrect.
The business still reports all gross receipts to New Mexico.
Then it claims the deductions supported by its NTTCs.
The same mistake happens with businesses that have both retail and wholesale sales.
Some owners report only the taxable retail sales and leave out the wholesale transactions entirely.
New Mexico wants to see all gross receipts, then determine which receipts are deductible.
The Bottom Line
New Mexico Gross Receipts Tax is one of the most misunderstood taxes in the state.
Between different NTTC types, deductions, exemptions, and special rules for contractors, it’s easy to misunderstand what you’re required to report.
The good news is that you don’t have to figure it out alone.
At Arsenault CPA Firm, we help New Mexico contractors and small businesses stay compliant with Gross Receipts Tax requirements, apply available deductions correctly, and avoid costly filing mistakes.
Instead of spending your evenings trying to interpret tax regulations or wondering if Google gave you the right answer, let us handle the filings so you can focus on growing your business.