Food delivery tax joins the list of confusing GRT rules and regulations

Food delivery tax joins the list of confusing GRT rules and regulations

  • Post published:September 3, 2020
  • Post category:News

The New Mexico Taxation and Revenue Department recently addressed the lack of clarity on how delivered groceries will be taxed by adding more stipulations for when the taxes will apply. State law provides a tax deduction for sales at a retail food establishment, and a bulletin from the tax agency outlines the exact circumstances for waiving taxes on food. According to the bulletin, taxes are not due when “the customer orders the groceries from the retail food store online and pays the retail food store online with a credit card,” the memo states. Taxes still are due on delivery service charges and prepared food from restaurants and stores.

The tax exemption on delivered food may not last for long. The state switches to “destination-based sourcing” on taxes come July 1, 2021, in a move that “will make the reporting location where goods are delivered the location of sale,” the taxation department said in its memo. You can read that memo HERE

This newest round of tweaks and adjustments to the state’s Gross Receipts Tax illustrates just how over complicated and inefficient the tax code currently is, and why NMBC is a stark proponent of a sales tax replacement. New Mexico is one of only a handful of states with a gross receipts tax, which is often considered one of the most economically damaging taxes. Moving NM away from gross receipts taxes would represent a pro-growth change to make the tax code friendlier to businesses and consumers alike, which is especially necessary now in the wake of the coronavirus crisis. Read more HERE.