Form Rpd-41378 - Application For Type 11 Or 12 Nontaxable Transaction Certificates (Page 7 of 14) in pdf

RPD-41378

State of New Mexico - Taxation and Revenue Department

Rev. 04/30/2013

Application for Type 11 or 12 Nontaxable Transaction Certificates

Deduction for Tangibles Consumed in the Manufacturing Process

Instructions

Page 2 of 9

Example 8: B develops custom software for C, a customer. The terms of the transaction restrict C’s ability to sell the

software to another or to authorize another to use the software, without B’s consent. The seller’s receipts from C are

receipts from the performance of a service. B is not manufacturing because B performs software design services.

About Deductions for Certain Tangibles sold to Manufacturers:

Receipts from selling certain tangible personal property may be deducted from gross receipts or from govern-

mental gross receipts if the sale is made to a person engaged in the business of manufacturing who delivers an

appropriate nontaxable transaction certificate (NTTC) to the seller. A seller may accept a Type 2 NTTC for the

sale of tangible personal property sold to a manufacturer that becomes an ingredient or component part of the

manufactured product (Section 7-9-46A). On or after January 1, 2013, the seller may also accept a Type 11 or Type

12, for the sale of tangible personal property that is consumed in the manufacturing process (Section 7-9-46B).

Type 2 NTTC -

A buyer delivering the NTTC must incorporate the tangible personal property as an ingredi-

ent or component part of the product that the buyer is in the business of manufacturing.

Type 11 NTTC -

On or after January 1, 2013, a buyer delivering the NTTC must use the tangible personal

property*, in such a way that the property is consumed in the manufacturing of a product,

provided the tangible personal property is not a tool or equipment used to create the manu-

factured product. (See the footnote below if the tangible personal property to be sold is elec-

tricity, natural gas, water or another utility.)

Type 12 NTTC -

On or after January 1, 2013, the buyer delivering the NTTC must use the utilities purchased

in such a way that the utilities are consumed in the manufacturing of a product.

* Generally, the sale of tangible personal property that is electricity, natural gas, water or any other utility con-

sumed in the manufacturing of a product, requires the execution of a Type 12 NTTC to substantiate a deduc-

tion taken under Section 7-9-46B. Under limited circumstances, however, when the utility purchased is 100%

consumed in the manufacturing of a product, the seller may accept a Type 11 NTTC.

Tangible personal property consumed in the manufacturing process is...

• Tangible personal property that is incorporated into, destroyed, depleted or transformed in the process of

manufacturing a product, including electricity, fuels, water, manufacturing aids and supplies, checmicals,

gases, repair parts, spares and other tangibles used to manufacture a product;

• Effective July 1, 2013, tangible personal property consumed in the manufacturing does not include tangible

personal property used in the generation of power; the processing of natural resources, including hydrocar-

bons; and the preparation of meals for immediate consumption on- or off- premeses.

How to Apply for the Nontaxable Transaction Certificates:

In order to take advantage of the deductions under Section 7-9-46 NMSA 1978, the manufacturer must apply with

the Department for the applicable NTTC.

• If applying for a Type 2 NTTC for tangibles that become an ingredient or component part of the final product,

the manufacturer must apply for the NTTCs using Form ACD-31050, Application for Nontaxable Transaction

Certificates. The application may be filed using either the online web file application, NTTC-NET, or by paper.

See Form ACD-31050 for details. When applying for a Type 2 NTTC, you do not need to submit this Form

RPD-41378, Application for Type 11 or 12 Nontaxable Transaction Certificates.

Form Rpd-41378 - Application For Type 11 Or 12 Nontaxable Transaction Certificates Page 7

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