New Mexico Administrative Code › Title 3 - TAXATION › Chapter 2 - GROSS RECEIPTS TAXES › Part 205 - DEDUCTION - GROSS RECEIPTS TAX - SALE OF TANGIBLE PERSONAL PROPERTY FOR RESALE › Section 3.2.205.13 - PACKAGING AND RELATED MATERIALS

Current through Register Vol. 35, No. 13, July 16, 2024
A. Containers, wrapping paper and other
				packaging products.
(1) Nonreturnable
				containers. Sales of nonreturnable containers to persons who use them to
				package tangible personal property so that the containers become part of the
				products ultimately sold are sales for resale. The buyer of this type of
				container may give a nontaxable transaction certificate (nttc) for the
				containers purchased. Thus a person who sells nonreturnable containers to one
				who has delivered an nttc and uses the containers in packaging food which is
				then sold may deduct the receipts from the sales to the person who delivered
				the nttc under Section
				7-9-47
				NMSA 1978.
(2) Returnable
				containers. Sales of returnable containers to persons who use the containers
				for the delivery of their goods are not sales for resale. The purchase of the
				returnable containers by the person who packages the goods for sale is a
				purchase for use. Therefore, the seller of the containers must pay the gross
				receipts tax on the receipts from the sale. Normally included in the category
				of returnable containers are glass milk bottles, some gasoline and oil cans,
				water bottles and milk and soft drink cases.
(3) Wrapping materials. The sale of bags,
				wrapping paper, twine and similar articles to persons who use the materials to
				package merchandise which has been sold is a sale for resale. The receipts from
				these sales may be deducted by a seller who has received an nttc from the
				buyer. The buyer of the bags, wrapping paper and twine may give an nttc for
				their purchase.
(4) Paper towels,
				sales slips. Sales of paper towels, toilet tissue, and like items, when sold to
				a person engaged in the business of performing a service are not sales for
				resale. The seller must pay the gross receipts tax on these sales. The sale of
				sales slips is subject to tax unless the buyer resells the sales slips in the
				ordinary course of business.
(5)
				Crowns, bottles, crates, cartons.
(a) Crowns.
				The sale of caps or crowns to persons who use them in bottling soft drinks are
				treated as sales for resale. The sale of caps or crowns as a part of the
				bottled beverage to a person selling the beverage for ultimate consumption also
				is a sale for resale.
(b) Bottles.
				The sale of nonreturnable bottles, cans or other types of containers to a
				bottler or canner for use in packaging soft drinks is a sale for resale. The
				sale of the bottle or can as a part of the drink to a person selling the
				beverage for ultimate consumption also is a sale for resale.
(c) Crates. The sale of crates, made of any
				material, to a soft drink bottler is not a sale for resale. The seller of the
				crate must pay the gross receipts tax if the sale is made in New Mexico. If the
				sale is not made in this state then the compensating tax must be paid by the
				buyer.
(d) Cartons or cases. The
				sale of paper, cardboard or plastic cartons and can and bottle holders to a
				soft drink bottler or canner is a sale for resale. The sale of the carton to a
				person engaged in selling soft drinks to consumers also is a sale for
				resale.
(6) Labels,
				product name tags, price tags. Receipts from selling labels, product name tags
				or price tags to a person who delivers a Type 2 nttc to the seller may be
				deducted from gross receipts. The buyer delivering the nttc must resell the
				labels, product name plates or price tags either by themselves or in
				combination with other tangible personal property in the ordinary course of
				business, or the buyer is subject to the compensating tax on their value. These
				items are resold in combination with tangible personal property if they are
				affixed to and sold along with the other property.
(7)
Example:
Z, a book and
				stationery store, is engaged in the business of selling office supplies. Among
				the items Z carries for sale to other merchants are sales slips which Z
				purchases from X. The sales slips which Z sells to its customers who use the
				sales slips in the regular course of their businesses are not sales for resale.
				Z must pay the gross receipts tax on its receipts from selling sales slips to
				other stores. X Company will be allowed to treat the sale of sales slips to Z
				as sales for resale if it has received an nttc from Z. Z also uses some of the
				sales slips which it purchases to record transactions between itself and its
				customers and to bill the customers. As to these purchases, Z may abide by the
				following procedure: Z may give X an nttc for the total purchases and then pay
				compensating tax on those sales slips which it uses because Z is in the
				business of purchasing sales slips for resale and its own use of the slips is
				minor in comparison to the total number of slips purchased.