Category: 2018

I was planning to write about taxes, but this is my first blog post since the holidays, and I don’t want to try my readers’ patience. So we’re going to start out with a vaguely humorous and slightly relevant comment about Java Joe’s.

There’s a triangular-shaped shopping center where three roads near my house meet. Turns out there is both a Java Joe’s and a Joe’s Diner in that same shopping center. This became highly relevant when I was trying to meet up with one of those freelance tax accountants who have no office. I was so focused on the fact that I did not know what this tax consultant looked like, and wondering how I would recognize her, that it didn’t occur to me to wonder whether I was in the wrong place!

So the funny thing (in an ironic sort of not actually very funny at all way) is that I was meeting up with a tax consultant because I am out-of-compliance with my New Mexico State taxes. And the ironic bit is that I work in a compliance and enforcement department for New Mexico State. Therefore, I knew what it meant when the first two out-of-compliance letters came from New Mexico Taxation and Revenue, but the third letter came from the Audit and Compliance Division. Uh-oh, I’m caught in the cogs now. And unfortunately, air quality has nothing to do with tax evasion, so I can’t just go talk with a friendly coworker.

It’s not that I’m deliberately evading taxes. It’s just that at first I didn’t think I had to file gross receipts tax, and now I’m trying to file and can’t figure out how. In case you’re wondering, yes, we filed our regular state and federal income taxes last spring. But New Mexico has something else called a gross receipts tax. It’s like a sales tax, except it also covers services like plumbing and yard work and – guess what – life coaching. Pretty much anyone providing a service – lawyers, real estate agents, CPA’s, contractors, etc. have to pay it. Most of these professionals have local clients who know about the gross receipts tax, so they just add it to their bill.

But I don’t add it to my clients’ bills because none of them live in New Mexico and they’ve never heard of it, and I think it would make them grumpy. Plus, last time I lived in New Mexico I didn’t have to pay it because back then, my clients were considered exempt, because none of them lived in New Mexico. That is why I initially thought I didn’t have to pay it. I didn’t used to have to pay it. But now I’m hearing that the rules have changed and it doesn’t matter anymore where my clients live; it only matters where I live. (I admit, exactly where I live has been a little unclear recently, but it is still definitely New Mexico).

So I’ve gone online to try to file, but they have my account messed up. The only account that’s showing up in my online profile is our PIT, which is our personal taxes. I need the CRS account for my coaching to show up so I can file. That I can’t fix myself. It’s their system. So I’ve hired some CPA type person to go hassle them for me because I’m not willing/able to keep fighting this one by myself.

Are you miserable yet, listening to all this?

The kicker is today, while doing online research, I noticed that gross receipts tax might also apply to rental income. Oh shit. So I’m trying to get an answer on that, and I’ve seen everything from “Yes, it does” to “No, it doesn’t”, or “Only if you have three or more properties” or “Only if you have more than 3 properties” or “Only if they’re short term rentals.” Ugh. Which is it? Because we have exactly 3 rental properties, unless they count our second residence in Santa Fe as a rental property since it’s not our primary residence.

We already pay income tax on the income from the rentals. But gross receipts tax is different – it’s on top of income tax. I guess the way they can get away with that double taxation is that it’s officially the leaser/purchaser/client/customer who is supposed to pay the tax, not the service provider. But in practice, it’s the service provider whom the state comes after for the money. Anyway, let’s just hope it doesn’t apply to rental income, because it’s going to be bad enough having to pay gross receipts tax on a year and a half of coaching income (plus late fees).

Which leads us all to wonder – why don’t we just have one job and watch TV in the evenings like normal people?