Tax-free weekend approaches

The New Mexico Gross Receipts Tax Holiday begins at 12:01 a.m. Aug. 2 and runs through midnight Aug. 4.

"Coming soon to a retail store near you is the annual New Mexico Gross Receipts Tax Holiday. If you have school-age children, it’s nothing short of a bonanza. For that weekend, the state suspends collection of gross receipts tax on sales of qualifying items so you can buy the items tax free. Because many merchants also absorb the tax on a number of non-qualifying items, you are the beneficiary all around," New Mexico Tax and Revenue states in a release.

Rio Rancho Public Schools starts Aug. 6. Last year, the tax free weekend occurred after Rio Rancho kids started school. According to Observer archives, tax-free weekend has not moved but many school districts — including RRPS and APS — had extended their school years last year, starting in July or early August. This year, tax free weekend takes place the weekend before.

According to Tax and Revenue, the law provides a deduction from gross receipts for retail sales of qualifying tangible personal property, in effect allowing the retailer to sell the items “tax free.”

Nontaxable transactions during the tax holiday

According to NMTR, the law limits the tax-holiday deduction to receipts of retailers from sales of the following types of items.

• Clothing or shoes sold for less than $100; however, accessories and special clothing or footwear primarily designed for athletic activity or protective use and not normally worn beyond the scope of the athletic activity or protective use remain taxable;

• Desktop, laptop, notebook or tablet computers sold for no more than $1,000 and any associated monitor, speaker or set of speakers, printer, keyboard, microphone or mouse sold for no more than $500, and

• School supplies students normally use in a standard classroom for educational purposes. The law specifically lists notebooks, paper, writing instruments, crayons, art supplies, rulers, bookbags, backpacks, handheld calculators, maps and globes as deductible during the tax holiday. The law specifically excludes watches, radios, compact disc players, headphones, sporting equipment, portable desktop telephones, copiers, office equipment, furniture or fixtures. The law does not consider such items to be school supplies that students normally use in a standard classroom. Sales of those items are taxable during the three-day period.

Taxable transactions during the tax holiday

Even when the transactions take place during the gross receipts tax holiday, gross receipts tax is due and payable on gross receipts from:

• Sales of services performed on otherwise qualifying tangible personal property; for example, clothing alterations, repair and dry cleaning, or computer services, installation and repair;

• Sales of all other services performed in New Mexico during the tax holiday, including, but not limited to, construction, repair, maintenance, landscaping, medical treatment, physical examinations for school purposes;

• Leasing or renting tangible personal property that would be deductible if sold by a retailer during the tax holiday, and receipts from all other leasing or rental activity conducted during that weekend;

• Sales of licenses and other intangible personal property;

• Sales of all tangible personal property not identified by law or regulation as deductible during the tax holiday;

• Sales of tangible personal property that the law specifically identifies as taxable if sold at retail during the tax holiday. Such property includes watches, radios, compact disc players, headphones, sporting equipment, portable desktop telephones, copiers, office equipment, furniture or fixtures, everyday clothing priced at $100 or more, clothing designed for special athletic activity or protective use, accessories, and

• Sales of qualifying items that exceed the allowable value established by statute or regulation.

For more specific information on the legislation, definitions or types of sales, see FYI-203,Gross Receipts Tax Holiday.