How to File New Mexico Form PTE: Withholding and Schedule PTE-D

To file New Mexico Form PTE, submit the return by the same date your federal partnership return is due, attach pages 1 through 5 of federal Form 1065 along with Schedules PTE-A, PTE-B, and PTE-D, withhold 5.9 percent on each nonresident owner’s share of New Mexico net income (or elect the entity-level tax at the same rate), and file through the Taxpayer Access Point if you have 51 or more payees. The rest is knowing which owners are exempt, what income to apportion, and which vouchers and statements have to travel with the return.

Who Has to File

Form PTE is the return for pass-through entities that file a federal partnership return (Form 1065). That covers partnerships, joint ventures, common trust funds, limited associations, and LLCs taxed as partnerships, if they are doing business in New Mexico or receiving income from New Mexico sources. “Doing business” is defined broadly: registering in the state, transacting business in, into, or from the state, or receiving any income from property or employment within the state each trigger the requirement.¹

S corporations don’t use this form. They file Form S-Corp. Trusts file Form FID-1. Sole proprietorships aren’t pass-through entities for New Mexico purposes, and an LLC that elected corporate treatment at the federal level files the corporate income and franchise tax return instead.²

What to Gather Before You Start

Pull these together before opening the form:

Federal Form 1065, pages 1 through 5. These get attached, and the federal taxable income is your starting point.
Every owner’s federal Schedule K-1, showing ordinary income, rental income, guaranteed payments, capital gains, dividends, and royalties.
The entity’s federal EIN and its New Mexico Business Tax Identification Number (CRS number).
Each owner’s name, Social Security number or EIN, mailing address, residency status, and ownership percentage. Residency status determines whether withholding applies, so accuracy matters.
Records of any PTE-ES estimated payments and any PTE-EXT extension payment already made for the year.

Figuring the New Mexico Portion

If all the entity’s income was earned in New Mexico, you report the full amount. If income was earned both in and outside the state, you can’t just report the total. Schedule PTE-A calculates the New Mexico share of business income using an evenly weighted three-factor formula based on property, payroll, and sales in the state relative to those factors everywhere. Non-business income (things like investment income unrelated to the entity’s regular trade or business) goes on Schedule PTE-B and is allocated rather than apportioned.³

Qualifying manufacturers and entities whose principal New Mexico activity is a headquarters operation may elect special apportionment formulas, and if the standard three-factor formula does not fairly represent the entity’s activity, factors may be dropped.

Withholding on Nonresident Owners

The entity must withhold New Mexico tax at 5.9 percent on each nonresident owner’s share of net income allocable to the state. This is the default obligation. You report the withholding on Schedule PTE-D, one line per owner, showing each owner’s share of New Mexico net income and the tax withheld.¹

Several categories of owners are exempt from withholding: New Mexico residents (individuals living in the state or corporations with a principal place of business here), owners with a New Mexico address as reflected on the entity’s 1099-MISC or equivalent, federal, state, and local government entities, federally recognized Indian nations, tribes, or pueblos located wholly or partly in New Mexico, and 501(c)(3) organizations (unless the income is unrelated business income).⁴

Even for exempt owners, you still list them on Schedule PTE-D with the appropriate exemption reason code. Schedule PTE-D isn’t optional just because everyone is a New Mexico resident.

The Entity-Level Tax Election

Instead of (or in addition to) owner-level withholding, the entity can elect to pay tax at its own level. This is New Mexico’s workaround for the federal $10,000 SALT deduction cap: entity-level tax is deductible as a business expense on the federal return.²

Some things to know before choosing this route:

The rate is 5.9 percent, the same as withholding.
You make the election on Form PTE itself. There’s no separate election form.
The election is for one tax year at a time and binds all owners.
Once filed with the election, you cannot reverse it by amending the return.
Single-owner pass-through entities other than S corporations are not eligible. A single-member LLC taxed as a disregarded entity cannot make this election.

The entity also cannot pay entity-level tax on behalf of certain owners: federal, state, or local government entities; federally recognized tribal governments located wholly or partly in New Mexico; 501(c)(3) organizations; corporate partners whose income would be included in their own New Mexico unitary business return; and other pass-through entities that own an interest in the electing entity.⁵

Owners of an electing entity claim a credit for their share of the entity-level tax on their own New Mexico returns, and the entity reports the amount to them using Form RPD-41359.⁶

Filling Out Schedule PTE-D

Schedule PTE-D is where most of the work happens. Each owner gets a separate line showing their share of New Mexico net income and the withholding, composite tax, or entity-level tax attributable to them. If you elected entity-level tax for some owners, report the net income subject to entity-level tax separately from net income subject to standard withholding. The two pools cannot overlap on the same owner’s income.³

Totals from PTE-D feed the summary lines on the front of Form PTE. Mismatches between the schedule and the form are one of the most common reasons returns get flagged for review, so reconcile them before you submit.

Assemble the Return in Order

The department processes returns faster when the parts arrive in a predictable order:

Form PTE (the main return)
Schedule PTE-A, if income was earned both in and outside New Mexico
Schedule PTE-B, for allocated non-business income
Schedule PTE-D, owner-by-owner detail
PTE-PV, the payment voucher, if you’re mailing a payment
Federal Form 1065, pages 1 through 5
Any other attachments called for by the line-by-line instructions

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If you made PTE-ES estimated payments or a PTE-EXT extension payment, include records of those to reduce the balance due.¹

How to Submit

If the entity has 51 or more payees receiving New Mexico net income, electronic filing is required, either through the Taxpayer Access Point (TAP) or approved third-party software. With 50 or fewer payees, you may file electronically or on paper.

To file through TAP, create a business logon at tap.state.nm.us. From there you can file and amend returns, make payments, and manage the pass-through entity account. The system returns a confirmation number when a return is successfully submitted, and filings typically update within a few business days.⁷

Paper returns go to:

Taxation and Revenue Department
Corporate Income and Franchise Tax Unit
P.O. Box 25127
Santa Fe, New Mexico 87504-5127

Paper takes several weeks to process.³

Deadline and Extensions

Form PTE is due on or before the due date of the entity’s federal return. For calendar-year partnerships filing federal Form 1065, that’s March 15. For a fiscal-year entity, it’s the 15th day of the third month after the fiscal year ends. You enter your federal due date on Form PTE itself.

If you already have a federal automatic extension (IRS Form 7004), New Mexico accepts it. Attach a copy to your PTE return when you file. If you didn’t get a federal extension or need more time than it allows, file New Mexico Form RPD-41096 on or before the original due date. Initial state extensions are typically granted for 60 days.⁸

An extension only extends the time to file, not the time to pay. Any tax owed is still due on the original date, and interest starts accruing on the unpaid balance from that date.

Penalties and Interest If You’re Late

Late filing or late payment triggers a penalty of 2 percent per month (or any fraction of a month) on the unpaid tax, capped at 20 percent.⁹

Interest accrues daily on top of the penalty. The daily rate is set quarterly and has been 7 percent annualized for recent quarters, though it can change. Interest has no cap and keeps running until the balance is paid.

If you can’t finish the return on time, pay your best estimate of the tax owed before the deadline. An extension avoids the late-filing penalty; nothing avoids interest on unpaid tax.

Issuing Owner Statements After Filing

Once Form PTE is filed, each owner needs a reporting document showing their share of New Mexico net income and the tax withheld or paid on their behalf. For standard withholding, you can use Form RPD-41359, a 1099-MISC, or a pro forma 1099-MISC. For entity-level or composite tax, RPD-41359 is the only acceptable document. A 1099-MISC won’t work for those components.⁶

Nonresident owners use the withholding amount as a credit on their New Mexico individual return; owners of an electing entity claim the entity-level tax as a credit. Get these statements out as soon as the return is filed so your partners or members aren’t held up on their own filings.

1
New Mexico Taxation and Revenue Department. 2024 Instructions for PTE New Mexico Pass-Through Entities Tax Return
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New Mexico Taxation and Revenue Department. Pass-Through Entity
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New Mexico Taxation and Revenue Department. 2025 Instructions for PTE New Mexico Pass-Through Entities Tax Return
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Justia. New Mexico Code 7-3A-3 – Withholding From Oil and Gas Proceeds and Net Income
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FindLaw. New Mexico Code 7-3A-10
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New Mexico Taxation and Revenue Department. RPD-41359 Annual Statement of Pass-Through Entity Withholding
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New Mexico Taxation and Revenue Department. Online Services
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New Mexico Taxation and Revenue Department. Request an Extension to File – Businesses
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Justia. New Mexico Code 7-1-69 – Civil Penalty for Failure to File Return or Pay Tax