How do I collect sales tax legally?

How to Collect Sales Tax Legally in New Mexico

Collecting sales tax correctly is essential for operating a compliant business in New Mexico. Here are the key steps to ensure you collect sales tax legally and efficiently.

Register for a CRS Identification Number

Before collecting sales tax, you must register with the New Mexico Taxation and Revenue Department to obtain a Combined Reporting System (CRS) identification number. This number allows you to report and remit gross receipts tax (GRT), which functions as sales tax in New Mexico.

Understand Gross Receipts Tax (GRT)

New Mexico does not have a traditional sales tax but instead imposes a Gross Receipts Tax on businesses selling goods and services. The tax rate varies by location, combining state, county, and municipal rates. It is important to know the applicable rates for your business location.

Collect the Correct Tax Amount

• Determine Taxable Transactions: Identify which products or services are subject to GRT, as some items may be exempt.
• Apply the Correct Rate: Use the combined GRT rate for your business location to calculate the tax on each sale.
• Include Tax in Pricing or Add Separately: Decide whether to include GRT in your prices or add it as a separate line item on customer invoices.

Maintain Accurate Records

Keep detailed sales records showing the amount of gross receipts and the tax collected. Accurate bookkeeping supports compliance and simplifies reporting.

File and Remit GRT on Time

As of 2026, businesses must file GRT returns monthly, quarterly, or annually based on their tax liability. Use your CRS number to file returns and remit collected taxes to the New Mexico Taxation and Revenue Department by the due dates.

Consider Automation and Compliance Tools

Implementing sales tax automation software can help calculate the correct GRT rates, generate reports, and manage filing deadlines. Staying compliant reduces risk and administrative burden.

Additional Operational Considerations

• Employee Training: Train staff on how to apply GRT correctly at the point of sale.
• Audit Preparedness: Maintain organized records to facilitate any tax audits.
• Business Licensing: Ensure your business registration and licenses are current to avoid compliance issues.