What Is a Gross Receipts Tax?

What exactly is a gross receipts tax? Here is the New Mexico Taxation and Revenue Department's definition:

"The gross receipts tax is a tax on the privilege of doing business in the state. It applies to the total amount of money or other considerations (barter, for instance) that a business receives for its transactions here in New Mexico. The taxable amount is the gross amount--not net after business expenses--and the tax liability belongs to the business instead of the customer. The gross taxable amount includes all reimbursed expenses billed to the customer: meals, travel, hotels, shipping, handling, postage, etc."

According to Harry Messenheimer, a senior fellow with the New Mexico-based Rio Grande Foundation, this definition is similar to the definition of gross receipts taxes levied in other states.

-- Paul J. Gessing