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Gross Receipts Tax: Probably not Something you have to deal with

February 19th, 2015 at 11:06 am

I just received a check at work (final payment for a project! Yay! It's always good to get the final payment because that basically means they're ok with the project). When I got the check I logged it in as usual, and checked to see if any of it was reimbursable so that I could put it properly in my check register. None of it is reimbursable, but I had a weird moment where I saw two checks from last month and realized those did have reimbursables (a lot) and I just knew I didn't log them correctly.

This would be ok in just about any other state, but in New Mexico (and about six other states) we have gross receipts tax. It's like sales tax, but on everything (not just goods, but also services). I don't charge my clients gross receipts tax on reimbursables, though (things like permits and printing) because I've already paid the tax and they'd be double taxed. So I don't pay the tax to the State either.

Except I logged it wrong and made it all look like it was taxable, and I already paid the state for last month. Ugh.

Panicked call to the Gross Receipts Division, and the woman helped me amend my gross receipts tax return. I just saved myself 177.88! Yay!!! The payment is still going through wrong, but she said call back tomorrow so they could fix that (the system needs 24 hours). And she gave me a direct telephone number to call.

You should be very thankful your state doesn't have gross receipts. It's a pain! Are any of you other states like mine and have experienced this, too?

5 Responses to “Gross Receipts Tax: Probably not Something you have to deal with”

  1. creditcardfree Says:

    I don't think we have that here. Glad you found the error and it is in the process of getting corrected.

  2. FrugalTexan75 Says:

    I don't remember anything like that when I lived in NM, but then I also didn't have SE income. Doesn't sound fun.

  3. snafu Says:

    Another country but similar system except it's an annual [operational year end] procedure. Most SE solve it by making up some type of pseudo deposit slip that we attach to our copy of the invoice or billing document that goes out electronically or hard copy if required. The self designed form shows any reimbursables, direct expenditures like professional printing/binding, DSL/mail costs etc. and is completed for our records when the payment shows via Direct Deposit or cheque.

    Any verifiable system will do, even a notebook that tracks deposits but systemizing it is an important action. It's surprising how much these little expenditures add up in a year.

  4. Buendia Says:

    We've had gross receipts tax (GRT) since 1966! That's the year I was born! Gross receipts tax (known as GRT) is paid by every business here, and it's on every receipt you get in a store, too... Most people just see it as sales tax... it's not exclusively for self employed people.

    Some businesses here filed yearly, but most file monthly and pay the tax monthly (I'm a monthly filer). Ours shows the same (reimbursables) when we file, but I messed up and put it all in gross receipts... oops!

    From a really interesting article about possible reform: “Over the last 10 to 15 years, we’ve made a mess of the gross-receipts tax,” said Brian McDonald, an economist and former director of the University of New Mexico Bureau of Business and Economic Research. “From an economist’s point of view, we’d like to have a broad GRT base so the rate is low. Instead we’ve significantly shrunk what is subject to tax, but to keep revenue up we raised the rates.” http://www.abqjournal.com/380096/biz/state-struggles-with-how-to-reform-grt.html

  5. chloe Says:

    Sounds like a hassle -- glad you were able to get your money back!

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