Receipts from selling tangible personal property or licenses may be deducted from gross receipts or from governmental gross receipts if the sale is made to a person who delivers a nontaxable transaction certificate to the seller. The buyer delivering the nontaxable transaction certificate must resell the tangible personal property or license either by itself or in combination with other tangible personal property or licenses in the ordinary course of business.
History: 1953 Comp., § 72-16A-14.2, enacted by Laws 1969, ch. 144, § 37; 1992, ch. 39, § 6; 1992, ch. 100, § 5; 1994, ch. 45, § 4.
ANNOTATIONSThe 1994 amendment, effective July 1, 1994, inserted "or licenses" in the section heading and in both sentences, and "or license" in the second sentence.
The 1992 amendment, effective July 1, 1992, inserted "governmental gross receipts" in the section heading; and inserted "or from governmental gross receipts" in the first sentence.
Ordinary course of business. — Where taxpayer, whose typical business practices included owning, operating, leasing, and controlling generating plants and facilities for the generation, transmission and distribution of electricity to the public at retail, purchased turbines and related equipment to be used in the construction of a generating plant that would be conveyed to a municipality as an industrial revenue bond project, the sale of the turbines and related equipment was not in the taxpayer's ordinary course of business because the taxpayer had not previously purchased turbines and related equipment and did not plan to do so in the future, the taxpayer had not previously constructed generating plants, and there was no evidence that the transaction at issue was typical or customary within the taxpayer's industry. Pub. Serv. Co. of N.M. v. NM Taxation & Revenue Dept., 2007-NMCA-050, 141 N.M. 520, 157 P.3d 85.
The phrase "ordinary course of business" contemplates some evidence that a transaction is customary, normal, or regular within the company's own business or within the relevant industry at large. Pub. Serv. Co. of N.M. v. N.M. Taxation & Revenue Dept., 2007-NMCA-050, 141 N.M. 520, 157 P.3d 85.
Legislature possesses great freedom of classification in taxation field. — In the field of taxation, more than in other fields, the legislature possesses the greatest freedom in classification, and to attack such a classification as a violation of U.S. Const., amend. XIV places the burden on the one attacking to negative every conceivable basis which might support the classification and unless the classification is clearly arbitrary and capricious or void for uncertainty, the appellate court cannot substitute its views in selecting and classifying for those of the legislature. N.M. Newspapers, Inc. v. Bureau of Revenue, 1971-NMCA-022, 82 N.M. 436, 483 P.2d 317 (Ct. App. 1971).
Scope of authority. — Commissioner (now secretary) has authority to issue regulations interpreting and exemplifying statutes concerning the possession of nontaxable transaction certificates and he also has such authority as may be fairly implied from the statutory authorization. This authority, however, does not extend to imposing a time requirement which would abridge or modify the deduction authorized by the legislature. Rainbo Baking Co. v. Comm'r of Revenue, 1972-NMCA-139, 84 N.M. 303, 502 P.2d 406.
Certificate required. — Since there was no evidence that contractors provided "nontaxable transaction certificates" to their vendors when they purchased property to be used in fulfilling their government contracts, the technical requirements of this section were not met. United States v. New Mexico, 581 F.2d 803 (10th Cir. 1978), aff'd, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed. 2d 580 (1982).
Form of certificate. — A seller's failure to possess a non-taxable transaction certificate in the form prescribed by the department and to procedurally present the form in a timely and proper manner provided a valid basis for denying the deductions claimed. A "blanket exemption certificate," issued by the buyer and relied upon by the seller, failed to meet this section's requirements. Proficient Food Co. v. N.M. Taxation & Revenue Dep't, 1988-NMCA-042, 107 N.M. 392, 758 P.2d 806, cert. denied, 107 N.M. 308, 756 P2d 1203.
Reimbursement for services not sale. — Reimbursements for materials and supplies consumed in performing services under certain government contracts were merely reimbursements for those services and did not involve a sale by the contractors of tangible personal property to the United States nor qualify for a deduction under this section. United States v. New Mexico, 581 F.2d 803 (10th Cir. 1978), aff'd, 455 U.S. 720, 102 S. Ct. 1373, 71 L. Ed. 2d 580 (1982).