SENATE BILL 118

51st legislature - STATE OF NEW MEXICO - second session, 2014

INTRODUCED BY

Peter Wirth

FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE

AN ACT

RELATING TO TAXATION; AMENDING THE UNIFORM DIVISION OF INCOME FOR TAX PURPOSES ACT TO DETERMINE IN-STATE SALES OF INTANGIBLES AND SERVICES BASED ON MARKET SOURCING RATHER THAN COST OF PERFORMANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 7-4-18 NMSA 1978 (being Laws 1965, Chapter 203, Section 18) is amended to read:

     "7-4-18. DETERMINATION OF SALES IN THIS STATE OF SERVICES AND OTHER [THAN TANGIBLE PERSONAL] PROPERTY FOR INCLUSION IN SALES FACTOR.--

          A.  Sales, other than sales [of tangible personal property] described in Section 7-4-17 NMSA 1978, are in this state if

          [A. the income-producing activity is performed in this state; or

          B. the income-producing activity is performed both in and outside this state and a greater proportion of the income-producing activity is performed in this state than in any other state based on costs of performance] the sales are from the:

                (1) sale, rental, lease or license of real property and the real property is located in this state;

                (2) rental, lease or license of tangible personal property and the tangible personal property is located in this state;

                (3) sale of a service and the service is delivered to a location in this state; and

                (4) sale, rental, lease or license of intangible property and the intangible property is used in this state.

          B. If the state or states of assignment under Subsection A of this section cannot be determined, the state or states of assignment shall be reasonably approximated.

          C. If the taxpayer is not taxable in a state to which a sale is assigned pursuant to Subsection A of this section or if the state of assignment cannot be determined or reasonably approximated pursuant to Subsection B of this section, that sale shall be excluded from the numerator and denominator of the sales factor.

          D. The department may promulgate rules as necessary or appropriate to carry out the purposes of this section."

     SECTION 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2015.

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