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| SPONSOR: | Sanchez | DATE TYPED: | 02/09/00 | HB | 261/aHTRC | ||
| SHORT TITLE: | Clarify Call Center Taxation | SB | |||||
| ANALYST: | Eaton | ||||||
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY00 | FY01 | |||
| Positive* | Recurring | General Fund | ||
| Positive* | Recurring | Local Govt. | ||
*The extent of increase in revenue is unknown at this time.
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of HTRC Amendment
This bill makes a technical correction to the definition of what "activity" does not mean, by adding words (page 11, last paragraph) to a sentence to clarify the orders are forwarded to a location outside of New Mexico for filling.
Synopsis of Bill
This bill is intended to create a "safe harbor" for businesses which currently are immune from gross receipts tax and the duty to collect compensating tax because they lack a physical presence in the state (e.g., mail-order and Internet businesses) if those businesses choose to use a "call center" in the state to receive and process orders. If a business already has a physical presence in the state, such as an office or salespersons visiting the state on a systematic basis, that business will still owe gross receipts and/or compensating tax on its sales into the state. Some call centers act as service representatives; that is, they advise customers on how to use a product, or take care of billing problems. This bill does not provide an immunity to taxpayers who hire call centers to provide this kind of service.
FISCAL IMPLICATIONS
TRD does not know to what extent this bill would increase revenues. If the proposed measure is not enacted, TRD could interpret current statute as saying that the out-of-state clients of call centers addressed by the proposal would have nexus in New Mexico. Their activities would therefore become taxable under the gross receipts tax statutes and possibly under the corporate income tax statutes.
TRD reports that if the proposed measure is not enacted, the probable impact will be to limit growth in New Mexico of the third-party call centers.
ADMINISTRATIVE IMPLICATIONS
Minimal.
JBE/gm