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Establishing nexus means that your business has sufficient connection or presence in New Mexico for the state to have taxing authority.

This connection might mean that you have a permanent presence in the state; for example, you may have a business location, resident employees or property (tangible or intangible). The other type of connection may be a temporary presence in which you engage in regular and systematic solicitation of business. You or your employees or representatives conduct activities here to establish and maintain the business’s economic market, for example.

Determining Corporate Income Tax Nexus

Liability for New Mexico corporate income tax often depends on whether your corporation has nexus in New Mexico. Any corporation with income from the transaction of business in, into or from New Mexico or from property or employment in the state has nexus. This means that the business has enough presence for New Mexico to impose the corporate income tax. An example of “enough presence” is employees or representatives who conduct business activities in the state to establish and maintain the business’s economic market. The only exception is if the business’s activities are immune under federal Public Law (P.L.) 86-272 (31 USCA 351).

Gross Receipts Tax Nexus

A person may perform research and development services outside New Mexico but then use the product of the service in New Mexico. In this case the person is subject to gross receipts tax if he or she has gross receipts tax nexus. Criteria sufficient to establish nexus in New Mexico include, but are not limited to, the following:

  • having a business location in New Mexico;
  • having property stored in New Mexico;
  • employing any person in New Mexico;
  • contracting with a salesperson or other agent in New Mexico;
  • leasing equipment used in New Mexico;
  • performing services in New Mexico;
  • licensing the use of intangible property in New Mexico, or transporting property in New Mexico using the taxpayer’s vehicles.


FYI-350: Corporate Income Tax and Corporate Franchise Tax
FYI-270: Information on Research and Development

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