Help! Gross Receipts tax in NM: Uber or Driver?

TecJay

Member
I have searched high and low on the net and have yet to find any information in regards to gross receipts tax implemented by New Mexico. The Transportation Network Company Bill states this in reference:

"No municipality or other local entity may impose a tax on or require a license for a transportation network company, a transportation network company driver or a vehicle used by a transportation network company driver where the tax or licenses relates to providing prearranged rides or subject a transportation network company to the municipality or other local entity's rate, entry, operational or other requirements, except for generally applicable business licenses or business-related taxes imposed on transportation network company drivers at the local level."

The highlighted statement in red is what I am curious about. Does business related taxes mean we are responsible for the gross receipts tax even if we don't take the payment directly? Do we need to register as a business and obtain a license for Uber Driver?

If anyone has filed their taxes from the previous year and has some insight please respond. I greatly appreciate it!
 

Anon Driver

New Member
I've been only driving for Uber for 6 weeks so I have the same questions.

It seems that the general understanding seems to be that yes, you should register as a business in your locality, and yes, being an "independent contractor" as Uber describes us means we need to pay the gross receipts tax out of our earnings even though we don't take the payment directly. As you know, there is no way to add this to the Uber fare, so but to operate as a legitimate business it must be paid so it comes out of your earnings. I haven't read anything that contradicts, but I'd be curious to know if anyone's CPA or accountant has offered different advice.

My moderately successful work-around is to only work for the minimum ride requirements during guarantee pay hours to earn the $20/hour available (really $16/hour after Uber takes their cut), so that most of the money I am earning is not from rider fares, but Uber guarantees. Gross receipts tax should not apply to any guaranteed hourly earnings since it is not a taxable sale or service being provided. I'm not driving in ABQ and the volume of rides is small, so frequently I barely make the minimum ride/hour and then drive outside the central zone and wait out the clock for the maximum guarantee I am entitled to, then log off.
 

raquela2020

Member
You get a guarantee?? Where in NM is that happening???

YES, you should be paying gross receipts. A service is being provided...by us....You'll still receive a 1099-Misc for your guarantees, which is what you've made, no matter what you call it. There is NO work around.
 

TecJay

Member
  • Thread Starter Thread Starter
  • #4
There have been so many contradicting statements in response to these questions from CPAs to drivers. I even requested information from Uber Support and was still given an indirect conclusion. I don't know what algorithm I captured by the 20th rephrasing of the question. But, I finally got verification from none other than the Albuquerque Uber site itself. You are both correct.

I can't enter links yet so......

Search albuquerque Ubermovement for more info.
 

Anon Driver

New Member
You get a guarantee?? Where in NM is that happening???

YES, you should be paying gross receipts. A service is being provided...by us....You'll still receive a 1099-Misc for your guarantees, which is what you've made, no matter what you call it. There is NO work around.
Perhaps you are confusing personal income taxes with gross receipts taxes. Income tax is collected on the amount of income you earn after deductions and yes, that applies to guarantee pay. Gross receipt tax applies only to the gross amount collected for the sale of a product or service - in other words, your fare. Guarantee pay is what Uber gives you when your fares fall short of what they guarantee you per hour when logged in earning fares. You owe the gross receipts taxes on the amount you collect in fares, not on the guarantee pay. You owe income tax on all your earnings after deductions.

What's really screwed up is that technically we probably owe gross receipts taxes on Ubers percentage of the fare as well as our own. This is because it is a GROSS receipts tax , which means the tax is owed on the full amount the passenger paid, including what Uber keeps since those "expenses" aren't deductible under a gross receipts tax. What confuses the situation is that generally speaking, gross receipts aren't applicable to out of state sales, and Uber is a CA company....m
 
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Sembo

New Member
I've yet to start driving for Uber but I am not new to the "independent contractor" status in New Mexico. I think the confusion comes down to what Uber is and what the driver is. As an independent contractor you are a business in New Mexico and the local county and city. When you become an independent contractor you must sign up for a CRS number with Tax and Rev. Then obtain a business license (typically for your home) within the city. With that you then start paying gross receipts tax separate of your income tax.

The confusion I seem to see on all the forums relates to Uber being an out-of-state company and therefore their drivers should not have to pay local gross receipts. The issue here is that you are a company (sole proprietorship) and you must pay local taxes. You don't drive for Uber, you drive for your company and contract Uber for their services (ride-share linking, credit card merchant accounting, driver/passenger rating service, tracking and payment accounting, etc). Uber then takes a cut of each fare in fees from your company before sending the remaining amount to your company. If Lyft ever returns to New Mexico then it will be the same thing. As I recently learned, as a company contracting a service from a TNC you are not obligated to eschew one over another. You may use Uber and Lyft to get more fares for your business.

A question I have and may have to get a CPA to answer me is: If my company is paying Uber a per-fare service fee then is that service fee an expense to my company that I can write off? If so that will help make a large dent in the gross receipts at the end of the year.
 

Maximus23

New Member
I would agree with Sembo -- though am also new to driving and am not a CPA. But, in what I've read online and heard from other people making money as independent contractors, we as Uber drivers are definitely on the hook for paying the gross receipts tax to NM. Another 7.3125% cut right off the top. My take on it is that we have to pay this percentage based on the total fare...not just the 75% we get from Uber. Gross receipts, by definition, implies the total amount paid by the customer for the service or goods you provide. No deducting the 25% Uber fee and then paying 7.3125% of what we have left. Now, certainly, for the INCOME tax we also have to pay, we should be able to deduct the 25% Uber fee as this is clearly a business expense, along with the IRS mileage deduction.

Don't know about the rest of you...but now that I am seeing all the expenses, fees, and taxes involved in driving, I don't see how this is very profitable for anyone. I'm only doing slightly better than minimum wage...and that's including tips.
 

Sembo

New Member
Bah! I just read my post and realized my error. I was thinking about income tax when I typed gross receipts in the last sentence. Although there are credits for gross receipts there are no deductions.
I know a CPA in Rio Rancho, I'll ask but I think we are correct. Deduct Ubers cut as an expense.
I don't think the ride share system is designed for sole profit. I think it's designed as a way to earn extra money easily. In that respect you make a little money when you would otherwise be doing nothing or spending money.
I can see certain people in certain places making a decent living but those are going to be rare.
 

Benz Guy

New Member
I just found this resource from H&R Block titled "UBER PARTNER REPORTING GUIDE"... it seems to answer a few common tax liability questions, one of which is Gross Receipts Tax... *can't post link, but you can google ->> h&r block uber partner reporting guide <<- and see the first hit.

Was wondering if any of you have received feedback from a CPA yet as to the process for collecting GRT funds (accounting for proper amount) and if the ABQ forum drivers have reached acceptance that this tax is just another cost of doing business in NM... looking at the low profit margins, I really don't see much $$ being made here from ride share driving...?
 

tomabq

Active Member
Haven't posted in quite awhile but this caught my attention. My first year driving for uber I stood my ground when other drivers asked me this question. N.M. law states that the party that collects the money is responsible for the gross receipt taxes. So tell me what you think! By law who should be required?
 

tomabq

Active Member
I just found this resource from H&R Block titled "UBER PARTNER REPORTING GUIDE"... it seems to answer a few common tax liability questions, one of which is Gross Receipts Tax... *can't post link, but you can google ->> h&r block uber partner reporting guide <<- and see the first hit.

Was wondering if any of you have received feedback from a CPA yet as to the process for collecting GRT funds (accounting for proper amount) and if the ABQ forum drivers have reached acceptance that this tax is just another cost of doing business in NM... looking at the low profit margins, I really don't see much $$ being made here from ride share driving...?
You are correct!
 

ACMDrives

New Member
NM Tax and Rev is pretty clear on this subject.
If drivers will get a Form 1099 at the end of the year they register as Sole Proprietors or Corporations (another conversation), get a CRS Tax ID # and they are Independent Contractors. You can see this on their site.

All payments contracted drivers are paid for services or goods is subject to NM Gross Receipts Tax.

In NM this is not sales tax, it is a tax on the "receipts" or transactional gross revenue that may or may not be charged to the payor (passenger) but must by law be reported and paid by the payee... in this case drivers. Our transaction takes place when Uber pays us each week. I don't like it but I know it is just a cost of doing business... in this case driver business.
Any thoughts?
 

tomabq

Active Member
NM Tax and Rev is pretty clear on this subject.
If drivers will get a Form 1099 at the end of the year they register as Sole Proprietors or Corporations (another conversation), get a CRS Tax ID # and they are Independent Contractors. You can see this on their site.

All payments contracted drivers are paid for services or goods is subject to NM Gross Receipts Tax.

In NM this is not sales tax, it is a tax on the "receipts" or transactional gross revenue that may or may not be charged to the payor (passenger) but must by law be reported and paid by the payee... in this case drivers. Our transaction takes place when Uber pays us each week. I don't like it but I know it is just a cost of doing business... in this case driver business.
Any thoughts?
Heard from a customer that uber charges N.Y. customers the tax in their state.
 

ACMDrives

New Member
NY has a Sales Tax (customer taxed on purchase) NM has a Gross Receipts (technically vendor taxed on revenue but most pass it along to customer at time of transaction). Uber may collect Sales tax from passengers in NY but who is responsible for paying that tax to NY Tax Authority? Do they pass it along to drivers to declare and pay or does Uber declare? Or both?
 

tomabq

Active Member
NY has a Sales Tax (customer taxed on purchase) NM has a Gross Receipts (technically vendor taxed on revenue but most pass it along to customer at time of transaction). Uber may collect Sales tax from passengers in NY but who is responsible for paying that tax to NY Tax Authority? Do they pass it along to drivers to declare and pay or does Uber declare? Or both?
We are responsible for all taxes according to the agreement we all agreed to. This is why Uber issues us a 1099K. N.M. law requires that the one that collects the monies is responsible for paying gross receipt taxes, however a 1099 K passes the burden onto drivers. My point earlier was simply that Uber could collect the taxes from the customer and with the push of a button pay it every month. Unfortunately for us Uber wants the customer to think they are getting the lowest possible ride at our expence. Uber is forever raising their take while lowering ours!
 

Lessthanminimum

Well-Known Member
I'm new to Uber but spent a lot of time researching before driving. I decided not to drive. I'm trying to understand why anyone does this in NM?

If a customer is charged $20 for a fare what do I clear after the following are subtracted.

1) Uber fee
2) Gross Receipts Tax
3) Personal Income Tax
4) Fees to register as legitimate business in NM
5) Gas (now 2.35 gallon) plus wear and tear on auto.

I'm sorry but it appears to me this job is far less than minimum wage. I don't understand why anyone would drive for uber in NM unless they choose to ignore the math.

EDIT BELOW

Wow I forgot the part about what happens when your insurance company finds out you drive for Uber. I'm sure your rates go up. What about your warranty on your car? Assuming you have a newer car, using it for Uber will surely void your warranty. There are so many financial pitfalls with this arrangement, and Uber is passing them on to drivers in the hopes they never figure it out. I figured it out.
 

ACMDrives

New Member
Not a career, just a job. Depending on overall income from this and other sources it can be worthwhile.
Worth noting that minimum wage in Santa Fe is higher than most of New Mexico, stuck at $7.50-$8.50 per hour for the last 8 years!
Some drivers make a science of deducting for mileage and other expenses on taxes, driving only during surges, playing at the strategy...
Some use it to pitch their other hustles.
One thread indicated that it may satisfy requirements for work when applying for public assistance.
Min wage jobs can be soul crushing. With Uber/Lyft no one is looking over your shoulder, denying you time to care for sick kids or checking to see if you took too many bathroom breaks, etc.
 

Lessthanminimum

Well-Known Member
I agree our new American economy for many is soul crushing. I'm living it with many others. Living wages having been replaced by piecing together side gigs. It's just in this case the math adds up to a waste time for me in NM.

I've delivered pizzas on the side before and the math is better than this. I was just trying avoid being a 40 year old pizza guy, but I guess for extra money it makes more sense to deliver pies. At least you're guaranteed an hourly wage and mileage reimbursement, and you can avoid all these tax pitfalls because you are not a 1099 person.

As far as looking over your shoulder, Uber can deactivate you at anytime for any reason they see fit. They are still your "employer" they've just figured out a clever way to avoid all the regulatory burdens of being so on paper.

This GRT is is one more way Uber escapes paying taxes. In fact, drivers are stuck paying GRT on Ubers fee. That is messed up.
 

ABQ Uber Driver

New Member
First of I'm not a CPA, however this is my point of view.

I have a contract with Uber. Uber is not located in NM. The "transaction" is between Uber and me. The transaction takes place in California. There is NO transaction taking place between me and the rider, I don't solicit sales, I have no contract with them, I don't set the price, and the rider doesn't pay me so that is where it ends.

There is a separate transaction between Uber and the rider which has nothing to do with me. The rider made a separate agreement with Uber.

So, because the transaction takes place in California, I'm not filing, collecting, or paying NM GRT or CA sales tax.

To me, It would be no different than having a website with google ads or affiliate commissions - the transaction doesn't happen in NM.

Again, that's my interpretation of my transaction and that is the position I wil take with NM tax and Revenue. Haven't gotten there yet.
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