Effective July 1, 2023, New Mexico’s House Bill 547 expands Gross Receipts Tax (GRT) deductions available to healthcare practitioners by allowing a new medical services deduction for receipts from copayments and deductibles paid by insureds. Special reporting requirements are necessary to claim this new deduction.
New Mexico GRT Deductions: Special Rate Code & Qualifications for Healthcare
The new regulation is limited to healthcare providers classified as “healthcare practitioners”. Each qualified provider must use rate code “M” in column C in the Taxpayer Access Point (TAP) system to claim the new medical services deduction.
Organizations licensed as a hospital, hospice, nursing home, outpatient facility, or intermediate care facility do not qualify for the deduction because they do not meet the definition of “healthcare practitioner” as defined in Section 7-9-93 NMSA 1978.
Which payments qualify?
The new deduction permits a healthcare practitioner, or an association of health care practitioners, to deduct receipts from a copayment or deductible paid by an insured or enrollee. All other available deductions must be taken against the payments prior to being permitted to use this new deduction category.
Indemnity plans receipts from fee-for-service payments by an insurer do not qualify.
The new deduction expands the original four criteria that must be met to qualify for the health care services deduction of Section 7-9-93(A) NMSA 1978:
- The services must be provided by one of the allowed groups of healthcare practitioners or an association of healthcare practitioners.
- The healthcare services must be within their recognized scope of practice.
- The services must be either commercial contract services or Medicare Part C services.
- The receipts must be from a payment by a managed care organization or healthcare insurer.
Gross Receipts Tax: Resources
If you file your own gross receipts tax returns, consider using New Mexico’s updated GRT Filers Kit to ensure that you are using the updated rates and codes and following all current regulations. You can find additional Gross Receipts Tax guidance from the New Mexico Taxation and Revenue Department in FYI-202 and FYI-105.
REDW is Here to Help
Managing your medical practice requires your expertise, leadership, and dedication to remain current, accessible and compliant. We’re here to make this part of your job a little simpler.
If you need relief from keeping up with the mass of tax regulations governing your practice, or guidance to ensure your team is capturing all available deductions, reach out to REDW’s trusted State and Local Tax (SALT) team.
To get in touch with an advisor, use the How can we help? form on this page.
