During the special legislative session which was held in October, a push was made to “do something” to apply New Mexico’s gross receipts tax to sales of goods shipped into New Mexico via online vendors. Although the analysis provided by the Legislature is unclear as to exactly HOW GRT would be collected on Internet sales, the intent is clearly there. The provision was rejected by the Republican House, but will undoubtedly return now that Democrats have control of both houses.
I was quoted along with several legislators and others with knowledge of the issue in this article by Andrew Oxford at the Santa Fe New Mexican.
Unfortunately for legislators looking to boost New Mexico’s bottom line, collecting taxes by online vendors is not as easy as it sounds. As I wrote back in 2000 for the National Taxpayers Union, there is nothing exempting Internet sales from taxation. Rather, it is the 1992 Supreme Court decision in Quill which exempts out of state vendors (lacking a physical presence in a state) from that state’s demands to collect and remit taxes to them.
Congress could act to force small businesses to collect these taxes, but a Republican-controlled Congress is not likely to do something that hasn’t been done in nearly two decades including eight years of Democrat control. Looks like legislators will have to look elsewhere for revenue…or, maybe even make some tough decisions to streamline government.