SANTA FE—This afternoon, the Senate Finance Committee unanimously approved House Bill 194, an effort sponsored by Rep. Jason Harper (R-Rio Rancho) to ease burdensome paperwork requirements for New Mexico taxpayers. The bipartisan bill is co-sponsored by Rep. Carl Trujillo (D-Santa Fe), Rep. Cathrynn Brown (R-Carlsbad), and Sen. Clemente Sanchez (D-Grants).
HB 194 allows New Mexico gross receipts taxpayers to offer alternative evidence proving that certain transactions qualify for deductions. Currently, taxpayers can only claim a gross receipts tax (GRT) deduction if they can produce a Non-Taxable Transaction Certificate (NTTC) for each qualifying transaction. This requirement places a tremendous administrative burden on both taxpayers and the New Mexico Taxation and Revenue Department (TRD). HB 194 gives taxpayers the option of producing other documentation to prove they qualify for the deduction, such as invoices and contracts.
The bill was specifically developed to prevent “gotcha” audits that penalize taxpayers who cannot produce properly executed NTTCs for every qualifying nontaxable transaction. Taxpayers who are missing NTTCs or who have NTTCs with even minor mistakes on them are assessed the entire tax plus penalties on every affected transaction, even if the taxpayer can otherwise prove that the transaction qualified for the deduction. In some cases, this situation has put some small businesses on the brink of bankruptcy.
“The current NTTC statute is unfairly punitive towards New Mexico small businesses and contractors,” said Rep. Harper. “Having to produce and maintain an NTTC for every nontaxable transaction is an administrative nightmare for many business owners, and performing NTTC audits is time-consuming and expensive for TRD. Enacting this common-sense fix will provide relief for taxpayers and save the state money in the long run.”
HB 194 now goes to the Senate floor for consideration.