N.M. Code R. § 3.16.4.9 – Deduction - Sales to Other Distributors

A. Gasoline received by a distributor and sold to another distributor may not be deducted from the amount of gasoline received in New Mexico, even though the other distributor is bonded and registered, because the purchasing distributor did not “receive” gasoline within the meaning of the act.
B. The tax consequences of sales to other distributors and sales by them to the United States are illustrated by the following examples. These examples concern only the liability of the parties to the department and do not affect the obligation of any party to pay the price for the gasoline to the seller. The fact that the price may include an amount corresponding to the tax does not make that amount a tax on the purchaser.
C. Examples:
(1) A, a registered gasoline distributor in New Mexico, received one thousand (1,000) gallons of gasoline in June. B, also a registered distributor who is located in the same city as A, needed one thousand (1,000) gallons of gasoline of the type A had received and arranged to purchase the one thousand (1,000) gallons from A. A may not deduct the one thousand (1,000) gallons from the amount of gasoline A received in June. B is not liable for tax on this gasoline because B did not receive it.
(2) In addition to the facts in example 1, B delivered the one thousand (1,000) gallons of gasoline purchased from A to the United States. A must report the one thousand (1,000) gallons of gasoline as received. A may deduct one thousand (1,000) gallons from the amount of gasoline received as provided in Subsection B of Section 7-13-4 NMSA 1978 if A provides satisfactory proof as required in Section 3.16.4.8 NMAC.
[1/23/73, 8/31/96; 3.16.4.9 NMAC - Rn & A, 3 NMAC 16.4.9, 6/14/01; A, 10/15/02]