SENATE BILL 431

48th legislature - STATE OF NEW MEXICO - first session, 2007

INTRODUCED BY

Ben D. Altamirano

FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE

AN ACT

RELATING TO TAXATION; PROVIDING A PARTIAL CREDIT AGAINST COMPENSATING TAX OWED WITH RESPECT TO ELECTRIC GENERATING FACILITIES ON THE NAVAJO NATION.

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

     Section 1. A new Section 7-29C-3 NMSA 1978 is enacted to read:

     "7-29C-3. [NEW MATERIAL] INTERGOVERNMENTAL TAX CREDIT--COMPENSATING TAX.--

          A. A taxpayer who is liable for the payment of the compensating tax with respect to the ownership, construction, maintenance or operation of a qualified generating facility located on Navajo Nation land is entitled to a credit to be computed pursuant to this section and to be deducted from the payment of the compensating tax otherwise due. The credit provided by this section is intended to reduce the economic burden caused by the dual Navajo Nation and New Mexico taxation with respect to that facility and may be referred to as the "intergovernmental compensating tax credit".

          B. Subject to the provisions of Subsections C and D of this section, the intergovernmental compensating tax credit shall be determined for each reporting period and shall be an amount equal to eighty-five percent of the compensating tax due for that reporting period by the taxpayer with respect to the ownership, construction, maintenance or operation of the qualified generating facility.

          C. The aggregate amount of intergovernmental compensating tax credit that may be claimed with respect to a qualified generating facility during its construction and operational life shall not exceed eighty-five million dollars ($85,000,000).

          D. Beginning one year from the date a taxpayer first claims the intergovernmental compensating tax credit with respect to a qualified generating facility and annually thereafter, the taxpayer shall report to the taxation and revenue department evidence of the cumulative amount of Navajo Nation taxes it has paid with respect to that facility and the cumulative amount of intergovernmental compensating tax credit it has claimed with respect to that facility. If the department determines that as of December 31, 2020, or as of December 31 of any subsequent year, all taxpayers have claimed, with respect to that facility, a greater cumulative amount in intergovernmental compensating tax credits than all taxpayers have paid, with respect to that facility, in cumulative Navajo Nation taxes, the taxpayer who has made the greatest cumulative claim for intergovernmental compensating tax credits, as determined by the department, shall be obligated to remit the difference to the department on or before December 31 of the following year, without interest or penalty. In addition, no taxpayer shall thereafter be entitled to claim the intergovernmental compensating tax credit with respect to that facility.

          E. The burden of showing entitlement to the intergovernmental compensating tax credit is on the taxpayer claiming it. The taxpayer shall furnish, in the manner determined by the taxation and revenue department, proof of payment of any Navajo Nation taxes it has paid with respect to the qualified generating facility and any other information the department deems necessary to administer the credit.

          F. The taxation and revenue department shall administer and interpret the provisions of this section in accordance with the provisions of the Tax Administration Act.

          G. For the purposes of this section:

                (1) "Navajo Nation land" means land in New Mexico that on July 1, 2007, was located within the exterior boundaries of the Navajo Nation reservation;

                (2) "Navajo Nation taxes" means the sum of:                      (a) the amount of possessory interest tax, business activity tax and ad valorem tax imposed by the Navajo Nation with respect to the qualified generating facility and paid by the taxpayer; and

                     (b) the amount paid by the taxpayer pursuant to an agreement under which the Navajo Nation grants the taxpayer an exemption from taxation with respect to the qualified generating facility in exchange for annual payments; and

                (3) "qualified generating facility" means a coal-fired electric generating facility, the construction of which commences after January 1, 2007 but no later than December 31, 2008."

     Section 2. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2007.

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