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AN ACT

RELATING TO TAXATION; EXPANDING THE KINDS OF TAXES THAT MAY

BE REPORTED ON AN ESTIMATED BASIS; INCLUDING REPORTING OF

HELIUM AND NONHYDROCARBON GAS ON OIL AND GAS TAX RETURNS FOR

REFUND PURPOSES; EXCLUDING HELIUM AND NONHYDROCARBON GAS AS

NATURAL RESOURCES IN THE RESOURCES EXCISE TAX ACT.

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

Section 1. Section 7-1-10 NMSA 1978 (being Laws 1965,

Chapter 248, Section 15, as amended) is amended to read:

"7-1-10. RECORDS REQUIRED BY STATUTE--TAXPAYER

RECORDS--ACCOUNTING METHODS--REPORTING METHODS--INFORMATION

RETURNS.--

A. Every person required by the provisions of any

statute administered by the department to keep records and

documents and every taxpayer shall maintain books of account

or other records in a manner that will permit the accurate

computation of state taxes or provide information required by

the statute under which the person is required to keep

records.

B. Methods of accounting shall be consistent for

the same business. A taxpayer engaged in more than one

business may use a different method of accounting for each

business.

C. Prior to changing the method of accounting in

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keeping books and records for tax purposes, a taxpayer shall

first secure the consent of the secretary or the secretary's

delegate. If consent is not secured, the department upon

audit may require the taxpayer to compute the amount of tax

due on the basis of the accounting method earlier used.

D. Prior to changing the method of reporting

taxes, other than for changes required by law, a taxpayer

shall first secure the consent of the secretary or the

secretary's delegate. Consent shall be granted or withheld

pursuant to the provisions of Section 7-4-19 NMSA 1978. If

consent is not secured, the secretary or the secretary's

delegate upon audit may require the taxpayer to compute the

amount of tax due on the basis of the reporting method

earlier used.

E. Upon the written application of a taxpayer and

at the sole discretion of the secretary or the secretary's

delegate, the secretary or the secretary's delegate may enter

into an agreement with a taxpayer allowing the taxpayer to

report values, gross receipts, deductions or the value of

property on an estimated basis for gross receipts and

compensating tax, oil and gas severance tax, oil and gas

conservation tax, oil and gas emergency school tax and oil

and gas ad valorem production tax purposes for a limited

period of time not to exceed four years. As used in this

section, "estimated basis" means a methodology that is

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reasonably expected to approximate the tax that will be due

over the period of the agreement using summary rather than

detail data or alternate valuation applications or methods,

provided that:

(1) nothing in this section shall be

construed to require the secretary or the secretary's

delegate to enter into such an agreement; and

(2) the agreement must:

(a) specify the receipts, deductions or

values to be reported on an estimated basis and the

methodology to be followed by the taxpayer in making the

estimates;

(b) state the term of the agreement and

the procedures for terminating the agreement prior to its

expiration;

taxpayer's representative and the secretary or the

secretary's delegate; and

(d) contain a declaration by the

taxpayer or the taxpayer's representative that all statements

of fact made by the taxpayer or the taxpayer's representative

in the taxpayer's application and the agreement are true and

correct as to every material matter.

F. The secretary may, by regulation, require any

person doing business in the state to submit to the

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department information reports that are considered reasonable

and necessary for the administration of any provision of law

to which the Tax Administration Act applies."

Section 2. Section 7-1-26 NMSA 1978 (being Laws 1965,

Chapter 248, Section 28, as amended) is amended to read:

"7-1-26. CLAIM FOR REFUND.--

A. Any person who believes that an amount of tax

has been paid by or withheld from that person in excess of

that for which the person was liable, who has been denied any

credit or rebate claimed or who claims a prior right to

property in the possession of the department pursuant to a

levy made under authority of Sections 7-1-31 through 7-1-34

NMSA 1978 may claim a refund by directing to the secretary,

within the time limited by the provisions of Subsections D, E

and F of this section, a written claim for refund. Except as

provided in Subsection J of this section, a refund claim

shall include the taxpayer's name, address and identification

number, the type of tax for which a refund is being claimed,

the sum of money being claimed, the period for which

overpayment was made and the basis for the refund. As used

in this subsection, "basis for the refund" means a brief

statement of the facts and the law on which the claim is

based.

B. The secretary or the secretary's delegate may

allow the claim in whole or in part or may deny the claim.

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(1) If the claim is denied in whole or in

part in writing, no claim may be refiled with respect to that

which was denied but the person, within ninety days after

either the mailing or delivery of the denial of all or any

part of the claim, may elect to pursue one, but not more than

one, of the remedies in Subsection C of this section.

(2) If the department has neither granted

nor denied any portion of a claim for refund within one

hundred twenty days of the date the claim was mailed or

delivered to the department, the person may refile it within

the time limits set forth in Subsection D of this section or

may within ninety days elect to pursue one, but only one, of

the remedies in Subsection C of this section. After the

expiration of the two hundred ten days from the date the

claim was mailed or delivered to the department, the

department may not approve or disapprove the claim unless the

person has pursued one of the remedies under Subsection C of

this section.

C. A person may elect to pursue one, but only one,

of the remedies in Paragraphs (1) and (2) of this subsection.

In any case, if a person does timely pursue more than one

remedy, the person shall be deemed to have elected the first

remedy invoked. The remedies are as follows:

(1) the person may direct to the secretary a

written protest against the denial of, or failure to either

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allow or deny the claim or portion thereof, which shall be

set for hearing by a hearing officer designated by the

secretary promptly after the receipt of the protest in

accordance with the provisions of Section 7-1-24 NMSA 1978,

and pursue the remedies of appeal from decisions adverse to

the protestant as provided in Section 7-1-25 NMSA 1978; or

(2) the person may commence a civil action

in the district court for Santa Fe county by filing a

complaint setting forth the circumstance of the claimed

overpayment, alleging that on account thereof the state is

indebted to the plaintiff in the amount stated, together with

any interest allowable, demanding the refund to the plaintiff

of that amount and reciting the facts of the claim for

refund. The plaintiff or the secretary may appeal from any

final decision or order of the district court to the court of

appeals.

D. Except as otherwise provided in Subsections E

and F of this section, no credit or refund of any amount may

be allowed or made to any person unless as the result of a

claim made by that person as provided in this section:

(1) within three years of the end of the

calendar year in which:

(a) the payment was originally due or

the overpayment resulted from an assessment by the department

pursuant to Section 7-1-17 NMSA 1978, whichever is later;

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(b) the final determination of value

occurs with respect to any overpayment that resulted from a

disapproval by any agency of the United States or the state

of New Mexico or any court of increase in value of a product

subject to taxation under the Oil and Gas Severance Tax Act,

the Oil and Gas Conservation Tax Act, the Oil and Gas

Emergency School Tax Act, the Oil and Gas Ad Valorem

Production Tax Act or the Natural Gas Processors Tax Act; or

to the provisions of the Tax Administration Act;

(2) when an amount of a claim for credit

under the provisions of the Investment Credit Act, Laboratory

Partnership with Small Business Tax Credit Act or Technology

Jobs Tax Credit Act or for the rural job tax credit pursuant

to Sections 7-2E-1 and 7-2E-2 NMSA 1978 or similar credit has

been denied, the taxpayer may claim a refund of the credit no

later than one year after the date of the denial;

(3) when a taxpayer under audit by the

department has signed a waiver of the limitation on

assessments on or after July 1, 1993 pursuant to Subsection F

of Section 7-1-18 NMSA 1978, the taxpayer may file a claim

for refund of the same tax paid for the same period for which

the waiver was given, until a date one year after the later

of the date of the mailing of an assessment issued pursuant

to the audit, the date of the mailing of final audit findings

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to the taxpayer or the date a proceeding is begun in court by

the department with respect to the same tax and the same

period;

(4) if the payment of an amount of tax was

not made within three years of the end of the calendar year

in which the original due date of the tax or date of the

assessment of the department occurred, a claim for refund of

that amount of tax can be made within one year of the date on

which the tax was paid; or

(5) when a taxpayer has been assessed a

tax on or after July 1, 1993 under Subsection B, C or D of

Section 7-1-18 NMSA 1978 and when the assessment applies to a

period ending at least three years prior to the beginning of

the year in which the assessment was made, the taxpayer may

claim a refund for the same tax for the period of the

assessment or for any period following that period within one

year of the date of the assessment unless a longer period for

claiming a refund is provided in this section.

E. No credit or refund shall be allowed or made to

any person claiming a refund of gasoline tax under Section

7-13-11 NMSA 1978 unless notice of the destruction of the

gasoline was given the department within thirty days of the

actual destruction and the claim for refund is made within

six months of the date of destruction. No credit or refund

shall be allowed or made to any person claiming a refund of

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gasoline tax under Section 7-13-17 NMSA 1978 unless the

refund is claimed within six months of the date of purchase

of the gasoline and the gasoline has been used at the time

the claim for refund is made.

F. If, as a result of an audit by the internal

revenue service or the filing of an amended federal return

changing a prior election or making any other change for

which federal approval is required by the Internal Revenue

Code, any adjustment of federal tax is made with the result

that there would have been an overpayment of tax if the

adjustment to federal tax had been applied to the taxable

period to which it relates, claim for credit or refund of

only that amount based on the adjustment may be made as

provided in this section within one year of the date of the

internal revenue service audit adjustment or payment of the

federal refund or within the period limited by Subsection D

of this section, whichever expires later. Interest computed

at the rate specified in Subsection B of Section 7-1-68 NMSA

1978 shall be allowed on any such claim for refund from the

date one hundred twenty days after the claim is made until

the date the final decision to grant the credit or refund is

made.

G. If as a result of an audit by the department or

a managed audit covering multiple periods an overpayment of

tax is found in any period under the audit, that overpayment

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may be credited against an underpayment of the same tax found

in another period under audit pursuant to Section 7-1-29 NMSA

1978, provided that the taxpayer files a claim for refund for

the overpayments identified in the audit.

H. Any refund of tax paid under any tax or tax act

administered under Subsection B of Section 7-1-2 NMSA 1978

may be made, at the discretion of the department, in the form

of credit against future tax payments if future tax

liabilities in an amount at least equal to the credit amount

reasonably may be expected to become due.

I. For the purposes of this section, the term "oil

and gas tax return" means a return reporting tax due with

respect to oil, natural gas, liquid hydrocarbons, carbon

dioxide, helium or nonhydrocarbon gas pursuant to the Oil and

Gas Severance Tax Act, the Oil and Gas Conservation Tax Act,

the Oil and Gas Emergency School Tax Act, the Oil and Gas Ad

Valorem Production Tax Act, the Natural Gas Processors Tax

Act or the Oil and Gas Production Equipment Ad Valorem Tax

Act.

J. The filing of a fully completed original income

tax return, corporate income tax return, corporate income and

franchise tax return, estate tax return or special fuel

excise tax return that shows a balance due the taxpayer or a

fully completed amended income tax return, an amended

corporate income tax return, an amended corporate income and

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franchise tax return, an amended estate tax return, an

amended special fuel excise tax return or an amended oil and

gas tax return that shows a lesser tax liability than the

original return constitutes the filing of a claim for refund

for the difference in tax due shown on the original and

amended returns."

Section 3. Section 7-25-3 NMSA 1978 (being Laws 1966,

Chapter 48, Section 3, as amended) is amended to read:

"7-25-3. DEFINITIONS.--As used in the Resources Excise

Tax Act:

A. "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;

B. "natural resource" means timber and any product

thereof and any metalliferous or nonmetalliferous mineral

product, combination or compound thereof, severed in New

Mexico but does not include oil, natural gas, liquid

hydrocarbon individually or any combination thereof, carbon

dioxide, helium or nonhydrocarbon gas;

C. "person" means any individual, estate, trust,

receiver, cooperative association, club, corporation,

company, firm, partnership, joint venture, syndicate or other

entity;

D. "processing" means smelting, leaching,

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refining, reducing, compounding or otherwise preparing for

sale or commercial use any natural resource so that its

character or condition is materially changed in mills or

plants located in New Mexico;

E. "processor" means any person engaging in the

business of processing natural resources that the person

owns, or any person who is the owner of natural resources and

who has another person perform the processing of such natural

resources;

F. "service charge" means the total amount of

money or the reasonable value of other consideration received

for severing or processing any natural resource by any person

who is not the owner of the natural resource. However, if

the money received does not represent the value of the

severing or processing performed, "service charge" means the

reasonable value of the severing or processing performed;

G. "severer" means any person engaging in the

business of severing natural resources that the person owns,

or any person who is the owner of natural resources and who

has another person perform the severing of such natural

resources;

H. "severing" means mining, quarrying, extracting,

felling or producing any natural resource in New Mexico for

sale, profit or commercial use; and

I. "taxable value" means the value after severing

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or processing, without deduction of any kind other than

specified in this subsection, of any natural resource severed

or processed in New Mexico. It is presumed, in the absence

of preponderant evidence of another value, that the taxable

value means the total amount of money or the reasonable value

of other consideration received for the severed or processed

natural resource. However, if the amount of money received

does not represent the value of the severed or processed

natural resource or if the severed or processed natural

resource is not sold, the taxable value shall be the

reasonable value of the severed or processed natural

resource. All natural resources severed or processed in New

Mexico shall be included in determining taxable value,

regardless of the place of sale or the fact that delivery may

be made to points outside of New Mexico. If any person shall

ship, transmit or transport natural resources out of New

Mexico without making sale of them or shall ship, transmit or

transport natural resources out of New Mexico in an

unfinished condition, the value of the natural resources in

the condition in which they existed when shipped, transmitted

or transported out of New Mexico and before they enter

interstate commerce, without deduction of any kind other than

specified in this subsection, shall be the basis for

determining the taxable value. Amounts received from selling

natural resources, other than metalliferous mineral ores,

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whether processed or unprocessed, to the United States or any

agency or instrumentality thereof, the state of New Mexico or

any political subdivision thereof, or to organizations that

have demonstrated to the department that they have been

granted exemption from the federal income tax by the United

States commissioner of internal revenue as organizations

described in Section 501 (c) (3) of the United States

Internal Revenue Code of 1954, as amended or renumbered,

which employ the natural resource in the conduct of functions

described in Section 501 (c) (3) and not in the conduct of an

unrelated trade or business as defined in Section 513 of the

United States Internal Revenue Code of 1954, as amended or

renumbered, may be deducted from taxable value. Any royalty

or other similar interest, whether payable in cash or in

kind, paid to the United States or any agency or

instrumentality thereof, or the state of New Mexico or any

political subdivision thereof, or any Indian tribe, Indian

pueblo or Indian that is a ward of the United States may be

deducted from taxable value. In computing taxable value, any

owner of natural resources may deduct any service charge on

which the service tax imposed by Section 7-25-6 NMSA 1978 is

payable."

Section 4. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.