Incorporator The Journal of U.S. Formation
Start Free Quiz
Editorial 9 MIN READ

New Mexico in March 2021: the fee schedule that refused to move

A $50 LLC filing, no annual report in its fifth decade, and a gross receipts tax base that keeps doing the collecting the Secretary of State never asks to do

The Editors
Staff, Incorporator.org
9 min read Updated
Contents 6 sections
  1. The mechanics, unchanged
  2. The registered agent requirement
  3. Maintenance is still the piece that is not there
  4. The gross receipts tax, with a lower base rate
  5. Who this state actually makes sense for in 2021
  6. Sources

he New Mexico LLC fee schedule in March 2021 is the same schedule that was in force a decade ago: $50 to file the Articles of Organization, $25 to dissolve, and nothing in between. There is still no annual report. The Secretary of State has spent most of the last five years rebuilding the business filings portal, not the fee table.

If you read our January 2017 guide, most of it stands. What has changed is the tax side, not the filing side, and the tax side is where a New Mexico formation is usually won or lost.

The mechanics, unchanged

You file Articles of Organization with the Secretary of State's Business Services Division. Since July 1, 2013, corporate and LLC filings have been with the Secretary of State rather than the Public Regulation Commission, and in 2016 the office launched its Corporations and Business Services online portal, which is now the default channel for new filings. The paper form still exists, accepted by mail or at the Santa Fe counter, and the walk-in counter at 325 Don Gaspar is open by appointment during 2021 under the state's public-health orders.

The required contents of the Articles have not moved. Under NMSA 1978 § 53-19-8, the filing must contain the LLC's name (meeting the distinguishability test in § 53-19-3), the street address of the initial registered office, the name and address of the initial registered agent at that address, the current principal place of business if different, the period of duration if not perpetual, and, where applicable, a statement that management is vested in a manager or that the company is single-member. Member names are not required and the state does not index them. That omission, not any marketing line, is the privacy product.

The filing fee is $50, set under NMSA 1978 § 53-19-63, the schedule of filing, service, and copying fees under the Limited Liability Company Act. The number has not changed since the schedule was last adjusted. Articles of Dissolution are $25. Certificates of Good Standing are available from the Secretary of State for a small fee. There is no tiered expedite menu comparable to Delaware's; standard processing on online filings generally runs a few business days, faster when the portal is not queued.

You will still need an EIN from the IRS (Form SS-4, online, a few minutes once the daily limit resets). You will want an operating agreement, which New Mexico does not require you to file and no one will see unless the LLC ends up in litigation. You will then decide, for federal tax purposes, whether to let the LLC default to disregarded (single-member) or partnership (multi-member) status, or to elect S-corp or C-corp treatment. None of those choices are a New Mexico filing; they live entirely with the IRS.

The registered agent requirement

NMSA 1978 § 53-19-5 requires every New Mexico LLC to continuously maintain a registered office and a registered agent in New Mexico. The agent can be a New Mexico resident individual or a domestic or qualified foreign entity authorized to do business in the state. The address must be a physical New Mexico street address; a post office box does not satisfy § 53-19-5.

Commercial registered-agent pricing in New Mexico in 2021 runs from roughly $35 a year at the commodity tier to $150 to $200 at the full-service tier. The cheap end has crept up a few dollars as national brands have consolidated the market, but New Mexico's formation volume still supports smaller independent agents who undercut the nationals. A cheap agent is fine here for the same reason the maintenance calendar is forgiving: there is no June tax notice to miss, no annual report window to blow, and the agent's practical job is service of process and mail forwarding. If you expect to be sued, buy the better agent. Otherwise, the commodity tier is adequate.

Maintenance is still the piece that is not there

Chapter 53, Article 19 of NMSA 1978 (the Limited Liability Company Act, §§ 53-19-1 through 53-19-74) contains no periodic report provision for LLCs. There is no annual filing, no biennial filing, no report fee, no late penalty, no administrative dissolution calendar keyed to a missed report. The statute has not acquired one in the 28 years since the Act was adopted. Once the Articles of Organization are accepted, the state's recurring ask of the LLC is, in cash terms, zero.

Compare the nearest analogues. A Delaware LLC owes $300 a year under 6 Del. C. § 18-1107(b). A California LLC owes $800 a year under R&TC § 17941 plus a Statement of Information every two years and a gross-receipts fee on top once revenue crosses the first tier. A Texas LLC owes no filing fee on the Public Information Report but still owes a franchise tax return, zero-owed or not. A Wyoming LLC owes a $60 annual report with a license-tax floor. A New Mexico LLC, dormant or active, owes the Secretary of State nothing after day one.

This is the piece that keeps New Mexico on the short list for passive holding vehicles five years into a stable fee regime. A single member who parks intellectual property, a brokerage account, or a single-asset subsidiary in a New Mexico LLC pays the $50 once, pays an agent annually, and is otherwise invisible to Santa Fe until the entity is dissolved.

The caveat, as in 2017, is that "no state filing" is not "no state tax." A New Mexico LLC that actually operates in New Mexico meets the state again immediately, through the tax system rather than the corporate-registry system, and that meeting in 2021 is at a different rate than it was four years ago.

The gross receipts tax, with a lower base rate

New Mexico does not have a conventional retail sales tax. It has a gross receipts tax (GRT), administered by the Taxation and Revenue Department, imposed on the seller rather than the buyer, and applied to services as well as tangible goods. The state portion of the GRT has moved. Under the 2019 revenue legislation, the state-level rate dropped from 5.125 percent to 5.000 percent effective July 1, 2019, and then to 4.875 percent effective July 1, 2020, where it sits in March 2021. Counties and municipalities layer local options on top, so the combined rate across the state in early 2021 ranges from the 4.875 percent floor to roughly 8.9375 percent at the highest-rate locations, per the Taxation and Revenue Department's semiannual schedule.

The 2019 and 2020 legislation did more than move the headline number. It also extended the GRT to remote sellers above an economic-nexus threshold (following South Dakota v. Wayfair), reworked the destination sourcing rules so that local rates generally follow the buyer's location for most sales of goods and a growing list of services, and created a new deduction for professional services sold to out-of-state clients. That last change matters to the Albuquerque consultant who was the archetypal awkward case under the old rules: services delivered to an out-of-state buyer may now qualify for a deduction, subject to the department's guidance on what counts as "delivered out of state." The GRT still reaches services; it just reaches fewer of them at the margins where the buyer is not in New Mexico.

GRT is reported and paid monthly, quarterly, or semiannually depending on receipts, after registering with the department for a Business Tax Identification Number (BTIN, the successor to the older CRS identification number). The registration is free and done through the Taxpayer Access Point.

Layered on top: a personal income tax with a new top bracket added in 2019 legislation, so 2021 filers pay 1.7 percent at the low end up to 5.9 percent on income over $210,000 single / $315,000 married filing jointly, and a corporate income tax at 4.8 percent on the first $500,000 of New Mexico taxable income and 5.9 percent above that. A pass-through LLC pushes its income onto its members' personal returns. A C-corp election keeps it at the corporate level. Neither election changes the LLC's zero-cost status at the Secretary of State.

Who this state actually makes sense for in 2021

The three-way cut from 2017 has not changed, but the margins have moved enough to say again.

The first fit is a pure holding company with no operations anywhere. The zero-maintenance, no-disclosure formation is the product, and the state does not tax income the entity does not earn in New Mexico. For passive ownership of IP, domains, investment accounts, or single-asset subsidiaries, New Mexico still undercuts Wyoming's $60 formation and $60 annual report at both ends. The comparison to Delaware's $300 annual tax has not moved either; over ten years of a dormant vehicle that is a $3,000 difference in favor of New Mexico.

The second fit is a privacy-sensitive ownership structure where the operating entity is formed and qualified elsewhere and the top-level holder wants to stay off public rolls. New Mexico's refusal to collect member information at formation is still the cleanest version of that product among U.S. states. Pending federal beneficial-ownership reporting is a separate question at a separate layer; the state-registry privacy is intact.

The third is an actual New Mexico business whose owners would have formed in-state anyway. For them, the GRT is the decision, not the Articles of Organization, and the 2019-2020 rate cut plus the new out-of-state-services deduction makes the GRT picture marginally friendlier than it was in 2017. For a Santa Fe consultant who bills coastal clients, the right answer in 2021 may now be form in New Mexico and claim the out-of-state-services deduction rather than form elsewhere to avoid the issue.

Everything else (the California operator attracted by the privacy language, the Arizona real-estate investor who heard New Mexico was cheap) should still think in two entities. Form the New Mexico LLC for the privacy and no-maintenance parent. Form or qualify separately wherever the operations actually sit. The failure mode is treating a New Mexico LLC as a tax shelter for activity that happens elsewhere; it is not, and the home state's franchise tax, sales tax, or apportioned income tax will find the operating activity regardless of what Santa Fe does or does not collect.

If you are forming this quarter and the entity is passive, file the Articles this week through the online portal, pay an agent for the year, and move on. If the entity will operate inside the state, register for a BTIN the same week, check your location's combined GRT rate against the department's January 2021 schedule, and start tracking receipts from day one. The quiet part of the New Mexico product is still on the formation side. The GRT side, even at 4.875, is not quiet.

Sources

Keep reading

More from the journal.