S-corporations, limited liability companies and other pass-through entities doing business in the state must file a New Mexico income tax return.
This requirement includes entities registered to do business in the state, transacting business in, into or from the state, or receiving any income from property or employment within the state.
The federal return that a pass-through entity is required or elects to file determines the New Mexico income tax return that the pass-through entity files. A pass-through entity may be required to file Form PTE, New Mexico Information Return for Pass-Through Entities, Form S-Corp, New Mexico Sub-Chapter S Corporate Income and Franchise Tax Return, or Form FID-1, New Mexico Fiduciary Income Tax Return.
Effective January 1, 2012, a pass-through entity means a personal services business or any other business association other than:
- a sole proprietorship, an estate or trust that does not distribute income to beneficiaries;
- a corporation, limited liability company, partnership or other entity not a sole proprietorship taxed as a corporation for federal income tax purposes for the tax year;
- a partnership that is organized as an investment partnership in which the partners’ income is derived solely from interest, dividends and sales of securities;
- a single-member limited liability company, qualified subchapter S subsidiary or other entity type that is treated as a disregarded entity for federal income tax purposes; or
- a publicly-traded partnership as defined in Subsection(b) of Section 7704 of the Internal Revenue Code.
If your business is a pass-through entity, file in New Mexico on or before the due date of your federal return for the tax year. New Mexico also requires you to deduct and withhold tax from each non-resident owner’s allocable share of net income. The tax withheld is required to be remitted to the Department annually. See Bulletin B-200.25 for a description of the new requirements.
The pass-through entity must file and pay the tax using form RPD-41367, Annual Withholding of Net Income From a Pass-Through Entity Detail Report. Form RPD-41367 can be filed and paid electronically on the Department’s web file services page or through a third-party software. If more than 50 payees, this report must be filed electronically. Annual statements of withholding should not be submitted to the Department, but must be submitted to the taxpayer using form RPD-41359, Annual Statement of Pass-Through Entity Withholding, or 1099-Misc.
If the PTE has more than 50 New Mexico payees, and is unable to file electronically because a hardship exists and there is no reasonable access to the Internet in the taxpayer’s community, the PTE may request Department approval to file by paper. The PTE may request approval by filing form RPD-41350, E-file Exception Request Form. The request must be received by the Department at least 30 days before the taxpayer’s electronic report is due.
In 2021, the State Legislature passed Senate Bill 410, which was signed into law. The law allows PTEs to pay the withholding tax due from an owner as the result of a positive federal adjustment. Beginning 1/1/2021, all federal adjustments will be reported on form TRD-41413, Federal Adjustment Report. For more information and guidance, refer to the 2022 PTW-D Pass-Through Entity Withholding Detail Report (NM Form #RPD-41367)
In 2022, the State Legislature passed House Bill 102, which was signed into law. The law allows PTE to make estimated payments in anticipation of having to file a Federal Adjustment Report (Form #RPD41413) with a composite return (Form #RPD-41367). The estimated payments are made using voucher AMD-FAR. Typically this is done to minimize underpayment penalties and interest.
Taxation and Revenue Department
P.O. Box 25127
Santa Fe, NM 87504-5127
For assistance understanding the forms, call (866)285-2966 or (505) 827-0825.
Or for tax return help, email us at CIT.TaxReturnHelp@state.nm.us.
For assistance about state tax policies, legislation, regulations and ruling email us at firstname.lastname@example.org