If you’re starting a limited liability company (LLC) in New Mexico and planning to sell goods subject to sales tax, you’ll need to get a resale certificate, or several of them, before doing business.
But don’t worry; this guide lays out all you need to do to get a resale certificate in New Mexico.
What Is a Resale Certificate?
If your LLC expects to sell tangible goods in New Mexico, a resale certificate will enable you to purchase those goods without paying sales tax. This prevents your goods from being double taxed, as you will need to charge your customer’s sales tax when they buy the goods.
If you purchase goods without paying sales tax and neglect to charge sales tax to customers who buy those goods, or if you fail to sell the goods, you and your LLC will be responsible for the sales tax and could face steep fines.
If you purposely purchase an item not intended for resale, such as office equipment, and use your resale certificate to avoid paying sales tax, that’s tax fraud, a federal offense.
In New Mexico, the penalty for tax fraud is repayment of the tax owed plus interest and penalties and possibly a $10,000 fine and nine years in prison.
Each resale certificate applies to only one vendor, so you’ll need one for each vendor.
Suppliers and vendors do not have to accept resale certificates. However, a vendor might refuse a resale certificate because if your certificate is invalid, the vendor would be responsible for the sales tax.
How to Obtain a Resale Certificate in New Mexico
To obtain a resale or non-taxable transaction certificate in New Mexico, visit the Department of Taxation and Revenue website to download the form.
Search for form ACD-31050 and then open the file to download the form.
You’ll need to mail the application to:
New Mexico Taxation and Revenue Department
PO Box 5557
Santa Fe, New Mexico 87502-5557
The certificate is free, and you should receive it within seven days.
Once you have the certificate, present it to your vendor and keep a copy for your records.
Does a Resale Certificate Expire in New Mexico?
New Mexico’s non-taxable transaction certificates do not expire. Therefore, reviewing them every few years is a good idea to ensure the information is up to date.
In New Mexico, a resale certificate is relatively easy to obtain yet provides significant savings. It will also help you and your LLC avoid potentially significant penalties.
Be sure to present the correct certificate to your vendors and keep track of expiration dates, so your certificates are always current. You don’t want to find yourself paying sales tax when you don’t have to.