Sale to Tribe-Owned Corporation Not Subject to Tax in New Mexico

Thursday, May 22nd, 2014


The New Mexico Taxation and Revenue Department ("Department") recently released a ruling on a sale of gravel to a tribe-owned corporation.

The taxpayer sold gravel and delivered it to a mine on tribal land. The owner of the mine was a corporation wholly owned by a federally recognized Indian Tribe. The taxpayer's sales contract was with the mine's operator, an agent of the corporation.

New Mexico taxes gross receipts from persons engaging in business in New Mexico. There is an exemption, however, for certain sales to tribes on their own territory. To avoid interference with tribal sovereignty, federal law prohibits states from taxing these sales. To claim this exemption, a taxpayer must show that a sale was to a tribe or a tribe member and that the sale took place on the tribe's territory.

The Department ruled that the taxpayer's sale was exempt. Because the taxpayer delivered the gravel to a mine on tribal land, the sale took place on the tribe's territory. Because the buyer was an agent of a tribe-owned corporation, the sale was to a tribe member. The state's taxation of this sale would interfere with tribal sovereignty. The taxpayer could, with appropriate documentation, claim the exemption.

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TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

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