NMSA 1978, § 7-9-7 — 7-9-7

Imposition and rate of tax; denomination as "compensating
tax".

# A.

For the privilege of making taxable use of tangible personal property in New
Mexico, there is imposed on the person using the property an excise tax equal to five
percent prior to July 1, 2023 and four and seven-eighths percent beginning July 1, 2023,
except as provided in Subsection G of this section, of the value of tangible property that
was:
(1) manufactured by the person using the property in the state; or
(2) acquired in a transaction for which the seller's receipts were not subject to
the gross receipts tax.

# B.

For the purpose of Subsection A of this section, value of tangible personal
property shall be the adjusted basis of the property for federal income tax purposes
determined as of the time of acquisition or introduction into this state or of conversion of
the property to taxable use, whichever is later. If no adjusted basis for federal income
tax purposes is established for the property, a reasonable value of the property shall be
used.

# C.

For the privilege of making taxable use of a license or franchise in New Mexico,
there is imposed on the person using the license or franchise an excise tax equal to the
rate provided in Subsection A or G of this section, as applicable, against the value of the
license or franchise in its use in this state. The department by rule, ruling or instruction
shall fairly apportion, where appropriate, the value of a license or franchise to its value
in use in New Mexico. The tax shall apply only to the value of a license or franchise
used in New Mexico where the license or franchise was acquired in a transaction the
receipts from which were not subject to the gross receipts tax.

# D.

For the privilege of making taxable use of services in New Mexico, there is
imposed on the person using the services an excise tax equal to the rate provided in
Subsection A or G of this section, as applicable, against the value of the services at the
time the services were performed or the product of the service was acquired. For use of
services to be a taxable use pursuant to this subsection, the services shall have been
acquired in a transaction the receipts from which were not subject to the gross receipts
tax.

# E.

For purposes of this section, receipts are not subject to the gross receipts tax if
the person responsible for the gross receipts tax on those receipts lacked nexus in New
Mexico or the receipts were exempt or allowed to be deducted pursuant to the Gross
Receipts and Compensating Tax Act.

# F.

The tax imposed by this section shall be referred to as the "compensating tax".

# G.

If the gross receipts tax is increased to five and one-eighth percent pursuant to
Subsection C of Section 7-9-4 NMSA 1978, the rate of the compensating tax shall be
five and one-eighth percent.

# H.

As used in this section, "taxable use" means use by a person who acquires
tangible personal property, a license, a franchise or a service, and the use of which
would not have qualified for an exemption or deduction pursuant to the Gross Receipts
and Compensating Tax Act.