LIQUOR TAX CHANGES

SB0217

SENATE BILL 217

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Antoinette Sedillo Lopez
and
Shannon D. Pinto

and
Joanne J. Ferrary
and
Cristina Parajón

AN ACT

RELATING TO TAXATION; AMENDING THE DISTRIBUTIONS OF THE LIQUOR
EXCISE TAX; AMENDING DEFINITIONS IN THE LIQUOR EXCISE TAX ACT;
IMPOSING A LIQUOR EXCISE SURTAX ON RETAILERS; DISTRIBUTING THE
REVENUE FROM THE SURTAX TO A NEW TRIBAL ALCOHOL HARMS
ALLEVIATION FUND; EXCLUDING THE TAXES IMPOSED BY THE LIQUOR
EXCISE TAX FROM THE DEFINITION OF "GROSS RECEIPTS" IN THE GROSS
RECEIPTS AND COMPENSATING TAX ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 7-1-6.40 NMSA 1978 (being Laws 1997,
Chapter 182, Section 1, as amended) is amended to read:

"7-1-6.40. DISTRIBUTION OF LIQUOR EXCISE TAX--LOCAL DWI
GRANT FUND--CERTAIN MUNICIPALITIES--DRUG COURT FUND.--

A. A distribution pursuant to Section 7-1-6.1 NMSA
1978 in an amount equal to forty-five percent of the net
receipts attributable to the liquor excise tax shall be made to
the local DWI grant fund.

B. A distribution pursuant to Section 7-1-6.1 NMSA
1978 of twenty thousand seven hundred fifty dollars ($20,750)
monthly from the net receipts attributable to the liquor excise
tax shall be made to a municipality that is located in a class
A county and that has a population according to the most recent
federal decennial census of more than thirty thousand but less
than sixty thousand and shall be used by the municipality only
for the provision of alcohol treatment and rehabilitation
services for street inebriates.

C. Beginning July 1, 2019, a distribution pursuant
to Section 7-1-6.1 NMSA 1978 in an amount equal to five percent
of the net receipts attributable to the liquor excise tax shall
be made to the drug court fund.

D. A distribution pursuant to Section 7-1-6.1 NMSA
1978 shall be made to the tribal alcohol harms alleviation fund
in an amount equal to the net receipts attributable to the
liquor excise surtax.
"

SECTION 2.
Section 7-9-3.5 NMSA 1978 (being Laws 2003,
Chapter 272, Section 3, as amended) is amended to read:

"7-9-3.5. DEFINITION--GROSS RECEIPTS.--

A. As used in the Gross Receipts and Compensating
Tax Act:

(1) "gross receipts" means the total amount of
money or the value of other consideration received from selling
property in New Mexico, from leasing or licensing property
employed in New Mexico, from granting a right to use a
franchise employed in New Mexico, from selling services
performed outside New Mexico, the product of which is initially
used in New Mexico, or from performing services in New Mexico.
In an exchange in which the money or other consideration
received does not represent the value of the property or
service exchanged, "gross receipts" means the reasonable value
of the property or service exchanged;

(2) "gross receipts" includes:

(a) any receipts from sales of tangible
personal property handled on consignment;

(b) the total commissions or fees
derived from the business of buying, selling or promoting the
purchase, sale or lease, as an agent or broker on a commission
or fee basis, of any property, service, stock, bond or
security;

(c) amounts paid by members of any
cooperative association or similar organization for sales or
leases of personal property or performance of services by such
organization;

(d) amounts received from transmitting
messages or conversations by persons providing telephone or
telegraph services;

(e) amounts received by a New Mexico
florist from the sale of flowers, plants or other products that
are customarily sold by florists where the sale is made
pursuant to orders placed with the New Mexico florist that are
filled and delivered outside New Mexico by an out-of-state
florist;

(f) the receipts of a home service
provider from providing mobile telecommunications services to
customers whose place of primary use is in New Mexico if: 1)
the mobile telecommunications services originate and terminate
in the same state, regardless of where the services originate,
terminate or pass through; and 2) the charges for mobile
telecommunications services are billed by or for a customer's
home service provider and are deemed provided by the home
service provider. For the purposes of this section, "home
service provider", "mobile telecommunications services",
"customer" and "place of primary use" have the meanings given
in the federal Mobile Telecommunications Sourcing Act; and

(g) receipts collected by a marketplace
provider engaging in business in the state from sales, leases
and licenses of tangible personal property, sales of licenses
and sales of services or licenses for use of real property that
are sourced to this state and are facilitated by the
marketplace provider on behalf of marketplace sellers,
regardless of whether the marketplace sellers are engaging in
business in the state; and

(3) "gross receipts" excludes:

(a) cash discounts allowed and taken;

(b) New Mexico gross receipts tax,
governmental gross receipts tax, leased vehicle gross receipts
tax, [
and
] cannabis excise tax
and taxes imposed pursuant to
the Liquor Excise Tax Act
payable on transactions for the
reporting period;

(c) taxes imposed pursuant to the
provisions of any local option gross receipts tax that is
payable on transactions for the reporting period;

(d) any gross receipts or sales taxes
imposed by an Indian nation, tribe or pueblo; provided that the
tax is approved, if approval is required by federal law or
regulation, by the secretary of the interior of the United
States; and provided further that the gross receipts or sales
tax imposed by the Indian nation, tribe or pueblo provides a
reciprocal exclusion for gross receipts, sales or gross
receipts-based excise taxes imposed by the state or its
political subdivisions;

(e) any type of time-price differential;

(f) amounts received solely on behalf of
another in a disclosed agency capacity; and

(g) amounts received by a New Mexico
florist from the sale of flowers, plants or other products that
are customarily sold by florists where the sale is made
pursuant to orders placed with an out-of-state florist for
filling and delivery in New Mexico by a New Mexico florist.

B. When the sale of property or service is made
under any type of charge, conditional or time-sales contract or
the leasing of property is made under a leasing contract, the
seller or lessor may elect to treat all receipts, excluding any
type of time-price differential, under such contracts as gross
receipts as and when the payments are actually received. If
the seller or lessor transfers the seller's or lessor's
interest in any such contract to a third person, the seller or
lessor shall pay the gross receipts tax upon the full sale or
leasing contract amount, excluding any type of time-price
differential."

SECTION 3.
Section 7-17-2 NMSA 1978 (being Laws 1966,
Chapter 49, Section 2, as amended) is amended to read:

"7-17-2. DEFINITIONS.--As used in the Liquor Excise

Tax Act:

A. "alcoholic beverages" means distilled or
rectified spirits, potable alcohol, brandy, whiskey, rum, gin,
aromatic bitters or any similar beverage, including blended or
fermented beverages, dilutions or mixtures of one or more of
the foregoing containing more than one-half of one percent
alcohol by volume, but "alcoholic beverages" does not include
medicinal bitters;

B. "barrel" means the equivalent of thirty-one
gallons;

[
B.
]
C.
"beer" means an alcoholic beverage obtained
by the fermentation of any infusion or decoction of barley,
malt and hops or other cereals in water and includes porter,
beer, ale and stout;

[
C.
]
D.
"cider" means an alcoholic beverage made
from the normal alcoholic fermentation of the juice of sound,
ripe apples or pears that contains not less than one-half of
one percent of alcohol by volume and not more than eight and

one-half percent of alcohol by volume;

[
D.
]
E.
"department" means the taxation and revenue
department, the secretary of taxation and revenue or any
employee of the department exercising authority lawfully
delegated to that employee by the secretary;

[
E.
]
F.
"fortified wine" means wine containing more
than fourteen percent alcohol by volume when bottled or
packaged by the manufacturer, but "fortified wine" does not
include:

(1) wine that is sealed or capped by cork
closure and aged two years or more;

(2) wine that contains more than fourteen
percent alcohol by volume solely as a result of the natural
fermentation process and that has not been produced with the
addition of wine spirits, brandy or alcohol; or

(3) vermouth and sherry;

[
F.
]
G.
"microbrewer" means a person who produces
less than two hundred thousand barrels of beer per year;

[
G.
]
H.
"person" includes, to the extent permitted
by law, a federal, state or other governmental unit or
subdivision or an agency, department, institution or
instrumentality thereof;

I. "retailer" means a person having a place of
business in New Mexico, excluding winegrowers, persons issued a
small brewer's license pursuant to Section 60-6A-26.1 NMSA 1978
and persons issued a craft distiller's license pursuant to
Section 60-6A-6.1 NMSA 1978, that sells alcoholic beverages in
New Mexico, offers alcoholic beverages for sale in New Mexico
or possesses for the purpose of selling alcoholic beverages in
New Mexico;

[
H.
]
J.
"small winegrower" means a winegrower who
produces less than one million five hundred thousand liters of
wine in a year;

[
I.
]
K.
"spirituous liquors" means alcoholic
beverages, except fermented beverages such as wine, beer, cider
and ale;

[
J.
]
L.
"wholesaler" means a person holding a
license issued under Section 60-6A-1 NMSA 1978 or a person
selling alcoholic beverages that were not purchased from a
person holding a license issued under Section 60-6A-1 NMSA
1978;

[
K.
]
M.
"wine" means an alcoholic beverage other
than cider that is obtained by the fermentation of the natural
sugar contained in fruit or other agricultural products, with
or without the addition of sugar or other products, and that
does not contain more than twenty-one percent alcohol by
volume; and

[
L.
]
N.
"winegrower" means a person licensed
pursuant to Section 60-6A-11 NMSA 1978."

SECTION 4.
A new section of the Liquor Excise Tax Act,
Section 7-17-5.2 NMSA 1978, is enacted to read:

"7-17-5.2. [
NEW MATERIAL
] IMPOSITION AND RATE OF LIQUOR
EXCISE SURTAX.--Beginning July 1, 2027, there is imposed on a
retailer that sells alcoholic beverages not for resale an
excise surtax, to be referred to as the "liquor excise surtax",
at the rate of three percent of the price paid for alcoholic
beverages sold by the retailer."

SECTION 5.
Section 7-17-6 NMSA 1978 (being Laws 1984,
Chapter 85, Section 4, as amended) is amended to read:

"7-17-6. DEDUCTION--INTERSTATE SALES--WINEGROWER-TO-WINEGROWER TRANSFERS.--

A. A wholesaler may deduct the liters of spirituous
liquors, gallons of beer and liters of wine sold and shipped to
a person in another state from the units of alcoholic beverages
subject to the [
tax
]
taxes
imposed by the Liquor Excise Tax
Act; provided that the department may require the wholesaler to
submit evidence satisfactory to the department that the units
have been sold and shipped to a person in another state.

B. A winegrower may deduct the liters of wine
transferred to the winegrower from another winegrower for
processing, bottling or storage and subsequent return to the
transferor from the units of wine subject to the [
liquor

excise tax
]
taxes imposed by the Liquor Excise Tax Act
on the
licensed premises of the winegrower."

SECTION 6.
Section 7-17-9 NMSA 1978 (being Laws 1966,
Chapter 49, Section 7, as amended) is amended to read:

"7-17-9. EXEMPTION--CERTAIN SALES TO OR BY
INSTRUMENTALITIES OF ARMED FORCES.--Exempted from the [
tax
]

taxes
imposed by [
Section 7-17-5 NMSA 1978
]
the Liquor Excise
Tax Act
are alcoholic beverages sold to or by any
instrumentality of the armed forces of the United States
engaged in resale activities."

SECTION 7.
Section 7-17-10 NMSA 1978 (being Laws 1966,
Chapter 49, Section 8, as amended) is amended to read:

"7-17-10. DATE PAYMENT DUE.--The [
tax
]
taxes
imposed by
the Liquor Excise Tax Act [
is
]
are
to be paid on or before the
twenty-fifth day of the month following the month in which the
taxable event occurs."

SECTION 8.
Section 7-17-11 NMSA 1978 (being Laws 1969,
Chapter 80, Section 1, as amended) is amended to read:

"7-17-11. REFUND OR CREDIT OF [
TAX
]
TAXES
.--The
department shall allow a claim for refund or credit as provided
in Sections 7-1-26 and 7-1-29 NMSA 1978 for the [
tax
]
taxes

imposed by [
Section 7-17-5 NMSA 1978
]
the Liquor Excise Tax Act

and paid on alcoholic beverages destroyed in shipment, spoiled
or otherwise damaged as to be unfit for sale or consumption
upon submission of proof satisfactory to the department of such
destruction, spoilage or damage."

SECTION 9.
Section 7-17-12 NMSA 1978 (being Laws 1984,
Chapter 85, Section 8, as amended) is amended to read:

"7-17-12. INTERPRETATION OF ACT--ADMINISTRATION AND
ENFORCEMENT OF [
TAX
]
TAXES
.--

A. The department shall interpret the provisions of
the Liquor Excise Tax Act.

B. The department shall administer and enforce the
collection of the [
liquor excise tax
]
taxes imposed by the
Liquor Excise Tax Act
, and the Tax Administration Act applies
to the administration and enforcement of the [
tax
]
taxes
."

SECTION 10.
[
NEW MATERIAL
] TRIBAL ALCOHOL HARMS
ALLEVIATION FUND.--The "tribal alcohol harms alleviation fund"
is created as a nonreverting fund in the state treasury. The
fund consists of distributions, appropriations, gifts, grants,
donations and income from investment of the fund. The fund
shall be administered by the Indian affairs department, and
money in the fund is subject to appropriation by the
legislature for alcohol and substance use harms prevention,
treatment and recovery services to individuals.

SECTION 11.
Section 60-6A-11.1 NMSA 1978 (being Laws
2011, Chapter 109, Section 1) is amended to read:

"60-6A-11.1. DIRECT WINE SHIPMENT PERMIT--
AUTHORIZATION--RESTRICTIONS.--

A. A licensee with a winegrower's license or a
person licensed in a state other than New Mexico that holds a
winery license may apply to the director for and the director
may issue to the applicant a direct wine shipment permit. An
application for a direct wine shipment permit shall include:

(1) contact information for the applicant in a
form required by the department;

(2) an annual application fee of fifty dollars
($50.00) if the applicant does not hold a winegrower's license;

(3) the number of the applicant's winegrower's
license if the applicant is located in New Mexico or a copy of
the applicant's winery license if the applicant is located in a
state other than New Mexico; and

(4) any other information or documents
required by the director. Upon approval of an applicant for a
permit, the director shall forward to the taxation and revenue
department the name of each permittee and the contact
information for the permittee.

B. A direct wine shipment permit shall be valid for
a permit year. A permittee shall renew a direct wine shipment
permit annually as required by the department to continue
making direct shipments of wine to New Mexico residents.

C. A permittee may ship:

(1) not more than two nine-liter cases of wine
monthly to a New Mexico resident who is twenty-one years of age
or older for the recipient's personal consumption or use, but
not for resale; and

(2) wine directly to a New Mexico resident
only in containers that are conspicuously labeled with the
words:

"CONTAINS ALCOHOL

SIGNATURE OF PERSON 21 YEARS OR OLDER REQUIRED

FOR DELIVERY".

D. A permittee shall:

(1) register with the taxation and revenue
department for the payment of
the
liquor excise tax,
liquor
excise surtax
and gross receipts taxes due on the sales of wine
pursuant to the permittee's activities in New Mexico;

(2) submit to the jurisdiction of New Mexico
courts to resolve legal actions that arise from the shipping by
the permittee of wine into New Mexico to New Mexico residents;

(3) monthly, by the twenty-fifth day of each
month following the month in which the permittee was issued a
direct wine shipment permit, pay to the taxation and revenue
department the liquor excise tax, [
due
]
liquor excise surtax

and [
the
] gross receipts tax due; and

(4) submit to an audit by an agent of the
taxation and revenue department of the permittee's records of
the wine shipped pursuant to this section to New Mexico
residents upon notice and during usual business hours.

E. As used in this section:

(1) "permit year" means the period between
July 1 and June 30 of a year; and

(2) "permittee" means a person that is the
holder of a direct wine shipment permit."

SECTION 12.
EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2026.

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