[1] NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

 

Only the most recent FIR version (in HTML & Adobe PDF formats) is available on the Legislative Website.  The Adobe PDF version includes all attachments, whereas the HTML version does not.  Previously issued FIRs and attachments may be obtained from the LFC’s office in Suite 101 of the State Capitol Building North.

 

 

F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Komadina

 

DATE TYPED:

1-29-02

 

HB

 

 

SHORT TITLE:

Technology Startup Tax Credit Act

 

SB

222

 

 

ANALYST:

Neel

 

 

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY02

FY03

 

 

 

 

($1,250.0)

($1,350.0)

Recurring

General Fund

 

 

 

 

 

(Parenthesis ( ) Indicate Revenue Decreases)

 

Duplicates HB 19 & SB 216

 

SOURCES OF INFORMATION

 

LFC files

Taxation and Revenue Department (TRD)

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 222 enacts “The Technology Startup Tax Credit Act (TSTCA)” to provide a favorable climate for startup technology businesses in New Mexico.  In order to qualify businesses must: 

 

 

Additionally the business in question cannot be over 50 percent owned by another business and expenditures made as part of an industrial revenue bond (IRB) project or other tax incentives do not qualify under provisions of the act.  Businesses can claim the credit for up to 59 consecutive calendar months. 

 

The Credit provided by the TSTCA is equal to any gross receipts, compensating, or withholding taxes due to the state.

 

FISCAL IMPLICATIONS

 

TRD notes that according to the 1997 Economic Census of Professional and Technical Services, New Mexico has over 110 research and development companies that employ fewer than 50 employees. Few, if any, of these firms have revenue in excess of $10 million.  Most of the R & D firms with significant gross receipts and fewer than 50 employees are able to deduct a large percentage of gross receipts. Thus they pay very little gross receipts or compensating tax. Withholding amounts tend to be small for most of these firms as well.  Consequently, this bill is not likely to encourage the typical high technology startup company at a time when the tax burden is small.

 

Effective Date – July 1, 2002

 

ADMINISTRATIVE IMPLICATIONS

 

TRD reports that it will be required to develop forms, instructions, and taxpayer seminar materials.

 

TECHNICAL ISSUES

 

TRD states that SB 222 does not require that a qualified business be newly formed or new to New Mexico.  Therefore, existing technology firms would qualify for the technology startup credit. Thus, some of the tax expenditure will benefit existing businesses that may require no additional incentive to operate and expand in New Mexico.

 

SN/njw

 


 [1]Begin typing on the * in replace mode.  Do not add or delete spaces.