Alert

Gross Receipts Tax Deduction for New Mexico Food and Beverage Businesses

Qualifying New Mexico food and beverage establishments may claim a temporary gross receipts tax (GRT) deduction on sales of food and beverages from March 1, 2021, through July 1, 2021.

New Mexico Senate Bill 1 (SB1) allows qualified entities the option to charge GRT and keep the funds as a stimulus incentive, or simply not charge customers the tax for the qualified period.

Establishments can receive the temporary GRT deduction on sales of prepared food or nonpackaged beverages—alcoholic or nonalcoholic—that are:

  • Served at the establishment for immediate consumption
  • Picked up by customers
  • Delivered to customers for immediate consumption

New Mexico Senate Bill 1 (SB1) allows qualified entities the option to charge GRT and keep the funds as a stimulus incentive, or simply not charge customers the tax for the qualified period.

Qualified Establishments

The following establishments and businesses are eligible for the temporary deduction as it relates to the sale of food and nonpackaged beverages.

  • Restaurants that don’t serve fast food
  • Mobile food services with a permit
  • Bars or licensed dispensers where alcoholic beverages are prepared and served for on-premise consumption
  • Wineries and winegrowers
  • Licensed craft distillers
  • Brewers

Nonqualified Fast Food Establishments

Fast food restaurants don’t qualify for this temporary deduction. A fast food restaurant is defined as an establishment that meets both of the following definitions:

  • Sells food intended to be ordered, prepared, and served quickly with minimal or no table service
  • Prepared in quantity by standardized methods for consumption on and off premises

The deduction is only available from March 1, 2021, through July 1, 2021, so food and beverage businesses will need to act quickly to benefit from the opportunity.

In addition, an establishment is considered to be a fast food establishment for this deduction when it tends to have any of the following characteristics:

  • A menu consisting primarily of precooked items or items prepared in advance and heated quickly
  • Placement of orders at a fast serve drive-through or walk-up window
  • Service of food solely in disposable wrapping or containers
  • A menu that exclusively sells hamburgers, sandwiches, salads, and other fast foods

How to Report the Deductions in GRT Returns

Businesses opting for this deduction during the allowable period may choose one of the following options for monthly or quarterly reporting purposes.

  • Don’t charge customers on deductible receipts that qualify for the deduction.
  • Charge the applicable GRT on amounts received from customers and keep the collected GRT. GRT collected from customers won’t be considered gross receipts, and restaurants shouldn’t report these tax payments as gross receipts or claim the deduction with respect to these payments.

Paper and electronic filers need to follow specific instructions based on filing methods to report these deductions in the GRT returns.  

We’re Here to Help

The deduction is only available from March 1, 2021, through July 1, 2021, so food and beverage businesses will need to act quickly to benefit from the opportunity.

To learn more about the temporary GRT and other savings opportunities for food and beverage businesses, reach out to your Moss Adams professional.