HOUSE BILL 413
46th legislature - STATE OF NEW MEXICO - second session, 2004
INTRODUCED BY
Nick L. Salazar
AN ACT
RELATING TO TAXATION; ENACTING THE ADVANCED ENERGY PRODUCT MANUFACTURERS TAX CREDIT ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--This act may be cited as the "Advanced Energy Product Manufacturers Tax Credit Act".
Section 2. DEFINITIONS.--As used in the Advanced Energy Product Manufacturers Tax Credit Act:
A. "advanced energy" means alternative fuels, renewable energy and fuel cells;
B. "advanced energy business" means a taxpayer whose business activity is manufacturing of equipment, component parts, materials, electronic devices, hybrid electric vehicle component devices and testing equipment and related systems that are solely related to advanced energy systems and alternative fueled vehicles;
C. "advanced energy system" means a system that converts renewable energy resources and hydrogen to electricity, including related cogeneration systems that produce heat or steam for space or water heating and agricultural or small industrial processes, or to create mechanical energy. An "advanced energy system" includes a:
(1) fuel cell energy system;
(2) photovoltaic energy system;
(3) solar-thermal energy system;
(4) wind energy system;
(5) combined heat and power energy system;
(6) microturbine energy system;
(7) mini-turbine energy system;
(8) sterling cycle energy system;
(9) battery cell energy system;
(10) electricity storage system; or
(11) hydrogen production or reforming system;
D. "alternative fuel" means natural gas, liquefied petroleum gas, electricity, hydrogen, a fuel mixture containing not less than eighty-five percent ethanol or methanol, a fuel mixture containing not less than twenty percent vegetable oil or a water-phased hydrocarbon fuel emulsion consisting of a hydrocarbon base and water in an amount not less than twenty percent by volume of the total water-phased fuel emulsion;
E. "alternative fueled vehicle" means a motor vehicle manufactured by an original equipment manufacturer that fully warrants and certifies that the motor vehicle meets the federal motor vehicle safety standards and is designed to be solely propelled by an alternative fuel;
F. "biomass" means agricultural or animal waste; thinnings from trees, slash and brush; lumber mill or sawmill residues; salt cedar and other phreatophytes removed from watersheds or river basins; and any organic matter that is available on a renewable or recurring basis, including agricultural crops and trees, wood waste and residues, plants, grasses, residues, fibers, and animal wastes, municipal wastes, landfill gases and other waste materials;
G. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;
H. "low or zero emissions" means an electric generation technology that produces zero emissions during operation or that produces emissions to or less than limits approved by the environmental improvement board;
I. "manufacturing equipment" means an essential machine, mechanism or tool, or a component or fitting thereof, used directly and exclusively in a manufacturing operation and subject to depreciation for purposes of the Internal Revenue Code of 1986 by the taxpayer carrying on the manufacturing operation. "Manufacturing equipment" does not include any vehicle that leaves the site of the manufacturing operation for purposes of transporting persons or property or any property for which the taxpayer claims the credit pursuant to Section 7-9-79 NMSA 1978;
J. "pass-through entity" means any business association other than:
(1) a sole proprietorship;
(2) an estate or trust;
(3) a corporation, limited liability company, partnership or other entity not a sole proprietorship taxed as a corporation for federal income tax purposes for the taxable year; or
(4) a partnership that is organized as an investment partnership in which the partners' income is derived solely from interest, dividends and sales of securities;
K. "qualified expenditure" means any expenditure made after July 1, 2004 by an advanced energy business during the first ten years of operation for:
(1) the purchase of manufacturing equipment, component parts, materials, electronic devices, hybrid electric motor vehicle component devices and testing equipment and related systems that are solely related to advanced energy systems, alternative fueled vehicles and associated research and development; or
(2) the purchase of land for and construction of a plant for the purpose of manufacturing equipment, component parts, materials, electronic devices, hybrid electric motor vehicle component devices and testing equipment and related systems that are solely related to advanced energy systems, alternative fueled vehicles and associated research and development. "Qualified expenditure" does not include any expenditure, contract or similar mechanism by another person or governmental entity;
L. "qualified facility" means a factory, mill, plant, refinery, warehouse, dairy, feedlot, building or complex of buildings located within New Mexico, including the land on which the facility is located and all equipment and tangible personal property located at or within the facility and used in connection with the operation of the facility;
M. "renewable energy" means thermal or electrical energy generated by means of a low or zero-emissions generation technology that has substantial long-term production potential, including solar, wind, geothermal, landfill gas or biomass, but does not include fossil fuel or nuclear power;
N. "research and development" means an activity engaged in for one or more of the following purposes:
(1) advancing technology in the area of advanced energy systems or alternative fueled vehicles;
(2) developing new or improved advanced energy systems or alternative fueled vehicles with new or improved function, performance, reliability or quality, whether or not the new or improved product, process or system is offered for sale, lease or other transfer;
(3) developing new uses or applications for existing advanced energy systems or alternative fueled vehicles, whether or not the new use or application is offered as the rationale for purchase, lease or other transfer of the product, process or system;
(4) developing analytical or survey activities incorporating technology review, application, trade-off study, modeling, simulation, conceptual design or similar activities for advanced energy systems or alternative fueled vehicles, whether or not offered for sale, lease or other transfer; or (5) designing and developing prototypes or integrating systems incorporating the advances, developments or improvements included in Paragraphs (1) through (4) of this subsection; and
O. "taxpayer" means:
(1) a person liable for payment of any tax;
(2) a person responsible for withholding and payment or collection and payment of any tax;
(3) a person to whom an assessment has been made if the assessment remains unabated or the assessed amount has not been paid; or
(4) for purposes of the additional credit against the taxpayer's income tax pursuant to the Advanced Energy Product Manufacturers Tax Credit Act and to the extent of their respective interest in that entity, the shareholders, members, partners or other owners of:
(a) a small business corporation that has elected to be treated as an S corporation for federal income tax purposes; or
(b) an entity treated as a partnership or disregarded entity for federal income tax purposes.
Section 3. ADMINISTRATION OF ACT.--The department shall administer the Advanced Energy Product Manufacturers Tax Credit Act pursuant to the Tax Administration Act.
Section 4. BASIC CREDIT--ADDITIONAL CREDIT--AMOUNTS--CLAIMANT.--
A. The basic credit provided for in the Advanced Energy Product Manufacturers Tax Credit Act is an amount equal to five percent of the taxpayer's qualified expenditures in a taxable year for a period of ten consecutive years.
B. The additional credit provided for in the Advanced Energy Product Manufacturers Tax Credit Act is an amount equal to five percent of the taxpayer's qualified expenditures in a taxable year for a period of ten consecutive years.
Section 5. ELIGIBILITY REQUIREMENTS.--
A. A taxpayer who manufactures advanced energy technology at a qualified facility and who has made qualified expenditures is eligible to claim the basic credit pursuant to the Advanced Energy Product Manufacturers Tax Credit Act.
B. A taxpayer who manufactures advanced energy technology at a qualified facility and who has made qualified expenditures is eligible to claim the additional credit pursuant to the Advanced Energy Product Manufacturers Tax Credit Act if:
(1) the taxpayer increases the taxpayer's annual payroll expense at the qualified facility by at least fifty thousand dollars ($50,000) over the base payroll expense of the taxpayer;
(2) the increase in Paragraph (1) of this subsection has not previously been used to meet the requirements of this subsection; and
(3) there is at least a fifty-thousand-dollar ($50,000) increase in the taxpayer's annual payroll expense for every one million dollars ($1,000,000) in qualified expenditures claimed by the taxpayer in a taxable year in the same claim.
Section 6. QUALIFIED EXPENDITURES.--The amount of the taxpayer's qualified expenditure is the purchase price for the relevant land, plant or equipment; provided that if the equipment has been owned by a taxpayer for more than one year before its introduction into New Mexico and installation into an advanced energy business, the qualified expenditure is the reasonable market value of the equipment at the time of its introduction into New Mexico.
Section 7. CLAIMING THE CREDIT.--
A. A taxpayer may apply for approval of a credit within one year following the end of the calendar year in which the qualified expenditure was made.
B. A taxpayer having applied for and been granted approval for a basic credit by the department pursuant to the Advanced Energy Product Manufacturers Tax Credit Act may claim the amount of the approved basic credit against the taxpayer's compensating tax, gross receipts tax or withholding tax due to the state of New Mexico, provided that no taxpayer may claim an amount of approved basic credit for any reporting period that exceeds the sum of the taxpayer's gross receipts tax, compensating tax and withholding tax due for that reporting period.
C. A taxpayer who has applied for and been granted approval for an additional credit by the department pursuant to the Advanced Energy Product Manufacturers Tax Credit Act may claim the amount of the approved additional credit against the taxpayer's income tax or corporate income tax due the state of New Mexico; provided that:
(1) no taxpayer may claim an amount of approved additional credit for any reporting period that exceeds the amount of the taxpayer's income tax or corporate income tax due for that reporting period; and
(2) a husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the additional credit that would have been allowed them on a joint return.
D. Any amount of approved basic credit not claimed against the taxpayer's gross receipts tax, compensating tax or withholding tax due and any amount of approved additional credit not claimed against the taxpayer's income tax or corporate income tax due for a reporting period may be claimed in subsequent reporting periods; provided that a husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the additional credit that would have been allowed them on a joint return. In the case of an advanced energy business that is operating as a pass-through entity, the business may pass through its credits to its owners, which may claim the credits against their personal income tax or personal income tax liability. A pass-through entity may take the credit based on its percentage of ownership in the business.
Section 8. CREDIT CLAIM FORMS.--The department shall provide credit claim forms. A credit claim shall accompany any return in which the taxpayer wishes to apply for an approved basic or additional credit, and the claim shall specify the amount and type of credit intended to apply to each return.
Section 9. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2004.
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